Toxic Leader Transition

ABSTRACT Independent Case Investigation completed as part of Dr. Brown’s Industrial-Organizational Psychology Lab at the University of Arizona. TOXIC LEADER TRANSITION Mini Case Study: Yahoo! Inc. 2009-2012 Michael Campbell & Brandy A. Brown February 2015 Introduction Technology is a fast-paced industry and it can be a very difficult pace to maintain even for those who seem to be able to take giant steps, like Yahoo. As one of the original dot-coms, established in 1994, Yahoo has struggled with problems some would say stem from their organizational culture ever since the dot-com bubble burst in 2001. At that time the company became filled with anxiety and fear, hemorrhaging executives, as leadership attempted to cope with collapsed stock prices (Catalano & O’Reilly, 2004). The company never quite seemed to find its footing after that, with no strong culture emerging like observed in successful internet-based companies such as Google, Amazon, and Zappos. As recently as 2011 you could hear louder rumblings about the company being ‘unfixable’, with mentions of CEO problems, board issues, and public opinion saying users had moved on because the company couldn’t adapt to their needs (Jackson, 2012). Today Yahoo is a shrunken version of the internet giant it once was, but it’s still around, and some would say it is finally thriving again thanks to the hire of Marissa Mayer as both President and CEO. This case examines how one person at the top can make a difference, and how toxic leadership is often to blame when a company has persistent organizational culture issues. Brief Background In 2009 Carol Bartz was hired as the new CEO of Yahoo after former CEO and company co-founder, Jerry Yang, stepped down. Yahoo was considered by some not to be in the best of shape as Mr. Yang was heavily criticized for not being able to make tough strategic choices (Vascellaro, 2008). Therefore, hopeful expectations rested with Carol Bartz. While things seemed promising at first, Bartz began to exhibit the characteristics of a toxic leader by creating an environment filled with profanity and devoid of meaningful communication. Following Bartz’s firing in 2011, and a string of short-lived replacements, Marissa Mayer was hired as President and CEO of Yahoo in 2012. Early action taken by Mayer involved a complete reworking of the company’s method of communication. This case study will analyze and describe the behaviors of Bartz and Mayer in order to identify what made Carol Bartz a toxic leader and how Mayer’s leadership was a successful transition from toxicity. Leadership Isn’t All About the Leader Before we begin this case where we focus on two specific leaders, it’s important to note that leadership is not all about the leader. The process of leadership is best explained by considering it a triangle with three major required elements, (1) the leader, (2) the followers, and (3) the situation (Padilla, 2013). To take it a step further, toxic leadership situations cannot develop if all you have is a potentially (1) toxic leader, because you still need (2) enabling followers, and a (3) conducive situation (Padilla, Hogan, & Kaiser, 2007). A situation such as that at the pre-Mayer Yahoo, where the culture is weak, the company is in a painful period of change, employees are under high stress, and they fear the future and have little relationship with their leaders, is a situation some might see as one that could create a toxic leader no matter who ended up in charge. That’s for you to consider as you review this case. Did Bartz just succumb to the pressures around her? Or did she turn things toxic? Why has Mayer been able to avoid the label of toxicity and help usher in a new era at Yahoo? Carol Bartz and Toxic Leadership Before discussing Carol Bartz it is helpful to first have a basic overview of what it means to be a toxic leader in order to see how Bartz fits into the category. Characteristics of a toxic leader can cover a wide range of behaviors. A basic definition given by the United States Army is that “Toxic leadership is a combination of self-centered attitudes, motivations, and behaviors that have adverse effects on subordinates, the organization, and mission performance. This leader lacks concern for others and the climate of the organization, which leads to short- and long-term negative effects” (Lake, 2014). While it is a straightforward definition, it leaves a large amount of ambiguity as to how exactly those attitudes, motivations, and behaviors manifest. Jean Lipman-Blumen attempted to adjust the definition by suggesting that the intent behind the causing negative effects was a key component (Heppell, 2011). A strong example is the leadership of Joseph Stalin. History shows a leadership record of genocide, famine, and all around oppression for the sake of his consolidation of power and silencing of opposition. The leadership of someone like General Custer paints a different story. One can look at the crushing defeat at the Battle of Little Bighorn and say that Custer made poor decisions and caused the death of many soldiers, but that wouldn’t make Custer toxic, necessarily. History indicates his intent was to win battles and not purposefully orchestrate the deaths of his men. These are examples where intent can draw the dividing line between toxic and non-toxic leadership. In the case of Carol Bartz, she created a distance between her and her employees through secrecy and threatening remarks. When Bartz was first hired in 2009 she began making swift changes such as “upending the organizational structure, replacing executives and cutting costs including 675 jobs, or 5 percent of the workforce” that analysts said was “exactly the kind of shake-up needed at Yahoo” (Oreskovic, 2009). However, it was clear that there was a strained relationship present between CEO and employees. Shortly after being hired, Bartz was quoted as saying that if any employees talked to members of the press, she would “Drop kick them to fucking Mars” (Kamer, 2011). This kicks off one’s role as a leader to a rough start because it immediately alienates one’s employees with a threatening atmosphere. This kicked off her regime roughly, immediately alienating her employees by establishing a threatening atmosphere with a group already in turmoil postlayoffs and a CEO change. The threatening behavior did not end there. A few months later it was reported that, when talking about the lack of productivity in the company, Bartz described it as there’s “nobody fucking doing anything” (Kamer, 2011). Bartz’s attitude could certainly be described as negative, and certainly yielded negative effects, but her attitude alone does not qualify as toxic leadership. Bartz also had a large impact on the flow of communication within the company. Four months after Bartz’s hiring, one employee, who remained anonymous for fear of retribution from Bartz, stated that “everything is on a need to know basis” and that the once “informal flow of communication” had ceased (Oreskovic, 2009). At the time, the source described that “anxiety within the ranks has been exacerbated by what some say is a growing sense of secrecy”(Oreskovic, 2009). Despite this, Bartz still received support, especially monetarily, being voted the “Most Overpaid CEO” by Glass-Lewis by “receiving enormous amounts of compensation for running companies with less than brilliant performance”(McEntegart, 2010). It is here that the definition of toxic leadership enters the discussion. Paul Mulvey and Art Padilla discuss how leadership consists of the leader, followers, and the checks and balances within the environment (as discussed in Schings, 2009). They then expanded this to define the Toxic Triangle, stating that if two or more of the areas are affected negatively, then the leadership situation can be defined as toxic (as discussed in Schings, 2009). Bartz as a leader was profane, threatening, and manipulated the workplace to suit her needs. The additional component was that the checks and balances of the environment, that should have helped to correct or curb Bartz’s behavior, were absent. She received an enormous salary and investor support. These two factors combined, the supportive environment and her threatening behavior, characterize this leadership situation as toxic. Further Reading: • • http://www.siop.org/Media/News/boss.aspx http://uk.reuters.com/article/2009/05/05/yahoo-idUKLNE54400I20090505 Marissa Mayer and Change Management The basic definition of change management is relatively self-explanatory. It’s simply a change in management of an organization and whatever organizational changes the new management brings. Following the firing of Bartz in 2011 and several short-lived replacement CEOs, Marissa Mayer was hired as the new CEO of Yahoo! Inc. in 2012. This new change in management brought forth a large amount of positive change, particularly in the realm of employee and management relations. Mayer exhibited a fundamental difference in philosophy from her predecessors when she explained it should be her job to “’Get obstacles out of the way’—and then let employees run ‘as far and fast as they can’” (Sellers, 2013). Operating on this principle Mayer immediately encouraged a more positive and openly co-dependent relationship between management and employees. One of Mayer’s major changes was a program known as PB&J, “which is designed to rid Yahoo of poisonous processes, useless bureaucracy and jams” (Sellers, 2013). Through PB&J: Mayer and her new management team created an online tool to collect employee complaints and employee votes on whether the problems are worth trying to fix. Any complaint— such as underpowered laptops or onerous rules at the company gym—that generates at least 50 votes gets management attention–and the onus on the rank and file to fix the problem. Employees get evaluated on how they do that (Sellers, 2013). The new program allowed Mayer to incorporate the employees into the decision process of what changes and what doesn’t change within the company. Opening the lines of communication in this way allows the company to be improved while also empowering employees, giving them purpose with positive company results - important components to a successful change in management (Smith, 2006). The changes had the welcome side effect of making the company more appealing, because in 2013 Yahoo “received resumes from 17,000 job applicants”, which was “up from 2,000” the previous year (Sellers, 2013). Further Reading: • • Is Marissa screwing up now – 3 years into her reign? http://fortune.com/2013/10/22/how-yahoo-ceo-mayer-fixed-1000-problems/ Learning Objectives & Discussion Questions This case study sought to provide a real world example of toxic leadership followed by successful change management. The first emphasis was on Bartz’s aggressive attitude towards her employees and the level of secrecy within the company that led to growing anxiety. The absence of environmental checks and balances to correct Bartz’s behavior led to toxic leadership. The leadership of Marissa Mayer exemplified how to make large changes to the company to fix the communication problems and strengthen the relationship between the CEO and the employees. These changes illustrate several aspects of change management, specifically communication, and address the human needs of the company as well. 1. Were most of the CEO’s of Yahoo (pre-Mayer) doomed to failure by the cultural issues that the company already had? Or should they have been able to turn things around easily? a. Potential follow-up: Do you think the board should have hired someone else? Or are they free of blame? 2. Would you place any of the blame for the years of struggle at Yahoo on the followers (the employees and possibly the board members)? Why or why not? 3. Would you say that Carol Bartz was unskilled at leadership (she was hired based on past success)? What was it specifically about her leadership that was problematic at Yahoo? a. Should Carol Bartz have focused on improving her ability as a leader? What could she have improved to be considered successful at Yahoo? 4. Could checks and balances have prevented the situation at Yahoo from becoming toxic? If so, what checks and balances specifically could have decreased the effects of toxic leadership on the situation? 5. Were most of the CEO’s of Yahoo (pre-Mayer) doomed to failure by the cultural issues that the company already had? 6. What is the most important element of Marissa Mayer’s leadership that is reversing toxicity at Yahoo? a. Is it important to have an environment that cultivates communication between every level of the company? Why or why not? 7. Do you think Yahoo’s troubles are over, at least in terms of leadership and culture, or not? What makes you think that? References Catalano, C., & O’Reilly, C. (2004). Yahoo!--A new HR Challenge (A) (Case Study No. HR25A-PDF-ENG). Boston, MA: Harvard Business School Publishing. Retrieved from https://hbr.org/product/yahoo-a-new-hrchallenge-a/HR25A-PDF-ENG Heppell, T. (2011). Toxic leadership: Applying the lipman-blumen model to political leadership. Representation, 47(3), 241–249. doi:10.1080/00344893.2011.596422 Jackson, E. (2012, September 10). Yahoo’s culture problem? It’s already fixed. Retrieved from http://www.forbes.com/sites/ericjackson/2012/09/10/yahoos-culture-problem-its-already-fixed/ Kamer, F. (2011, September 8). “Fuck,” Carol Bartz: A brief history of Yahoo’s ousted CEO and bad words. Retrieved from http://observer.com/2011/09/fuck-carol-bartz-a-brief-history-of-yahoos-ousted-ceoand-bad-words/ Lake, K. (2014, January 9). Army finally admits “toxic leadership” to blame for massive veteran suicide epidemic. Retrieved from http://freepatriot.org/2014/01/09/army-finally-admits-toxic-leadershipblame-massive-veteran-suicide-epidemic/ McEntegart, J. (2010, October 12). Yahoo!’s Carol Bartz named “most overpaid” CEO. Retrieved from http://www.tomsguide.com/us/Carol-Bartz-Glass-Lewis-Most-Overpaid-Executives,news-8289.html Oreskovic, A. (2009, May 5). Hope and fear mark Yahoo at crossroads. Retrieved from http://uk.reuters.com/article/2009/05/05/yahoo-idUKLNE54400I20090505 Padilla, A. (2013). Leadership: Leaders, followers, and environments. Hoboken, NJ: John Wiley & Sons. Padilla, A., Hogan, R., & Kaiser, R. B. (2007). The toxic triangle: Destructive leaders, susceptible followers, and conducive environments. The Leadership Quarterly, 18(3), 176–194. doi:10.1016/j.leaqua.2007.03.001 Schings, S. (2009). Bad boss? Retrieved from http://www.siop.org/Media/News/boss.aspx Sellers, P. (2013, October 22). How Yahoo CEO Mayer fixed 1,000 problems. Retrieved from http://fortune.com/2013/10/22/how-yahoo-ceo-mayer-fixed-1000-problems/ Smith, I. (2006). Achieving successful organisational change – do’s and don’ts of change management. Library Management, 27(4/5), 300–306. doi:10.1108/01435120610668232 Vascellaro, J. E. (2008, November 18). Yang to step down as Yahoo CEO. Wall Street Journal. Retrieved from http://www.wsj.com/news/articles/SB122697024336935679?mg=reno64wsj&url=http%3A%2F%2Fonline.wsj.com%2 Schings, S. (n.d.). Bad Boss?. Society for Industrial and Organizational Psychology . Retrieved July 26, 2014, from http://www.siop.org/Media/News/boss.aspx