We had been waiting for this for the last couple of days and the focus wasn’t much on what the earnings are going to turn out but more on what number of employees are going to be axed. Well Jerry Yang waited for the meeting to get over and sent an email to everyone at Yahoo that the company will be firing 10% of employees.
According to reports, Yahoo would now be saving around $400 million annually. But is this a proper solution? I personally think that the core problem lies in managing the firm efficiently, had the management being flowing at ease in one direction, the lay offs would have been much less.
What it appears to me is that the key position holders have saved themselves up by firing the 10% (I wish them luck). It’s surprising that the very people who had been in the company for quite long get a boot, when executives have done the greatest damage. I think Yahoo must start focusing on grabbing the best piece on the plate.
Here’s the mail sent by Jerry to Yahoo employees (via):
From: Jerry Yang
Date: Tue, 21 Oct 2008 14:20:21 -0700
i feel it’s important for me to reach out to you after our earnings announcement, and before our all hands meeting tomorrow.
we as a company have been through a tremendously challenging year; and managing the increasingly turbulent global advertising climate has been an important focus for the last three months.
throughout the first three quarters of 2008, we have been balancing between investing in our top priorities, and managing our cost structure. beginning in september, with the help of Bain & Co., we initiated a series of steps to determine how we can become more efficient and productive as an organization.
we heard from you through the YEES survey, and through your suggestions on backyard, and we’ve identified many areas that we all feel we can improve upon. our productivity efforts, based in part on what we heard from you, will involve initiatives such as streamlining our organizational structure through reducing layers and increasing spans of control, and eliminating redundancies. longer term structural efficiencies include consolidating facilities, improving procurement, and standardizing our global technology platforms.
today as part of our q3 earnings release, we said that our goal is to reduce our current annualized cost run rate of roughly $3.9 billion by more than $400 million before the end of 2008. we are targeting non-headcount expenses wherever possible, such as facilities and outside services. however, because compensation expenses are the single largest part of our costs, we anticipate a reduction of at least 10% of our global workforce by year-end.
affected employees will be notified of layoffs in the next several weeks. we understand that hearing this news now creates uncertainty, but we are moving ahead in a way that balances speed with a clear focus on accomplishing what is necessary to set the organization up for long term success. going forward it will continue to be important for us to make the right decisions to keep our business efficient and strong.
having layoffs is very difficult, particularly in light of all we’ve experienced this year. but we don’t take these decisions lightly, and are committed to treating affected employees fairly, offering severance and outplacement services.
the steps we are taking are not easy for us as a company, but as we become more fit as an organization, decision-making will be faster and it will be easier for us all to get more done and stay focused on our strategy. these changes will also prepare us to better deal with the macroeconomic downturn. as with previous downturns, yahoo! continues to be a place where consumers turn for information and communications, and is an integral part of their internet day. as the global economy improves in the future, i certainly believe that we will be stronger and benefit from the actions we are taking now.
as always, i thank you for all you do as yahoos.