Why Yahoo CEO Marissa Mayer’s Strategy May Backfire

Yahoo Portal

In the eight months since Marissa Mayer was appointed CEO of Yahoo, she’s provided all employees with brand-new smartphones and free meals in the company cafeterias. The honeymoon appears to be over, however, as Mayer recently instituted a no-telecommuting policy that forces all employees who work from home to show up at the office beginning in June.

It is unclear how many of Yahoo’s 11,500 employees work full time from home, but the internal memo that announced the change also addressed those who “occasionally” work from home. The uncompromising policy from Mayer, who said her three priorities in life are “God, family and Yahoo,” is part of her overall plan to revive a company that dominated the pre-smartphone Internet.

And how much will Mayer pull in for taking the reins at Yahoo? According to the Wall Street Journal, she’ll receive up to a whopping $100 million in compensation, stock, bonus and retention awards over the next five years. The Los Angeles Times came up with a pay package that could be worth $129 million over the same time period. Mayer could invest her yearly base $1 million salary into 588 ounces of US Money Reserve gold, to at least block that portion of her total compensation from inevitable capital gains taxes. She’d be smart to diversify her investments and build a portfolio that includes several brand-name type investments and alternative investments like precious metals and real estate in her home state of California.

Musical CEOs

It has been a tumultuous four years for Yahoo, especially in upper management. Jerry Yang, who co-founded the company in April of 1995, stepped down (or was forced out, depending on whom you ask) in early 2009. Yang was largely blamed for turning down an offer by Microsoft to buy the company, as he wanted Yahoo to remain autonomous. Carol Bartz, the former CEO of Autodesk credited for growing Autodesk’s revenue 20 percent annually, was named “chief Yahoo” on January 13, 2009. Bartz, who had a propensity to using the F-word when speaking with investors and journalists, was fired in September 2011. Many pundits believe she failed to meet expectations or create a clear vision.

Scott Thompson, the former president of Paypal, took over as CEO in January 2012. But it was soon discovered Thompson lied on his resume about his educational background. He was fired six month later. Mayer left a prominent position with Google to join Yahoo as CEO a couple months later.

Statistics Don’t Lie

Mayer’s plan to eliminate telecommuting goes against virtually every study correlating worker satisfaction with company overall success. What makes the new policy all the more confusing is the fact Mayer comes from a company (Google) that offers its employees 20 percent “relax” time. Google, America’s third-most profitable company behind Exxon Mobile and Apple, was also named Careerbliss.com’s 18th-happiest company in 2013. Some use these facts to conclude that a happy, relaxed workforce means innovation and increased profits. Further, the Journal of Applied Psychology conducted a 20-year study that culminated in 2007, when it concluded that telecommuting is one of the key elements to a winning company culture and good for both employee and employer. Cisco did a similar study in 2009, finding near-identical results.

Only time will tell if Mayer’s strategy can revive Yahoo to the point of competing with Google and Facebook for Web supremacy.