Executive decision to let heads roll
Not a great week for the folks at Yahoo. The embattled Internet company is facing renewed pressure from Microsoft and investor Carl Icahn to have its board members ousted, including Yahoo's iconic frontman, CEO and co-founder, Jerry Yang.
Hostile takeovers and involuntary removal of top honchos aren't new--they've been done before and sometimes, can result in a better economic outcome for beleaguered companies.
Take Dell Computer, for example. Former CEO Kevin Rollins resigned in February 2007, following a dismal year during which the computer maker lost its market leadership to Hewlett-Packard. While the company didn't confirm whether Rollins was forced to resign, it said board directors were involved in the decision.
Founder Michael Dell returned as CEO, and a year later, the company reported better-than-expected results.
When businesses fail to meet their numbers and produce less-than-stellar financial results, the fingers inevitably will point toward the head honcho. CEOs may not have a direct influence on the number of sales leads or revenue the company generates, but as figure heads for the organization, they are the ones to be held accountable for its every failure--or success.
Companies including HP, U.S. telecommunication services provider Sprint, and software maker VMware, are just a few that have seen their chief executives depart abruptly under undesirable circumstances.
It's never a pleasant sight to see CEOs come under the chopping board, but such corporate maneuvers are sometimes necessary to put companies back on the right track to profitability.
I'm not suggesting that Yahoo should give in to Icahn and Microsoft--in fact, I would be very sorry to see Yang leave because he's become such as iconic figure in the Internet space, and I'd be even sorrier to see Yahoo get swallowed up by Microsoft.
What I'm suggesting is that not every CEO ousting should be seen in the negative light, especially if it can lead to better things for the company.
But, it would be better for all parties involved if such squabbles--such as the Yahoo fiasco--are resolved as swiftly as possible. The longer these quarrels drag on, the worse it is for the company that's caught in the middle of the web.
Staff morale will be adversely affected, and customers will be unwilling to deal with a company that's shrouded in such uncertainty.
As Yahoo's Yang--whom himself had replaced ousted CEO Terry Semel--explains in an interview with the Wall Street Journal, the Icahn-Microsoft antics have a "destabilizing" effect on Yahoo amid his efforts to rebuild the company.
Now, if only governments can be held accountable in the same way underperforming enterprise CEOs are held accountable--particularly when the inertia of some ruling bodies can potentially affect the country's economic growth.