Introduction and Company History
An American multinational Internet-based organisation that provides a multitude of services and products on the web. The firm was established in 1994 and it has rapidly grown to be an Internet giant. The company accomplished this within six years of its inception.
At the beginning of the 21st Century, Yahoo reached its peak, and has since lost a considerable amount of market share after major search engines such as Google entered the computer scene.
With the advent of Google, Yahoo started facing stiff competition in its online mail and Internet search traffic, and profits began to decline. Since then, the world has seen an enormous growth in terms of Internet-based websites and services, but the profits at Yahoo hasn’t kept up with that growth due to increased competition. The advent of social networking websites also proved to be a burden to the company. Yahoo has expanded its business over the years in terms of number of online products and services, in attempt to spur on growth. The majority of the company’s revenue now originates from its online marketing and advertisement. In fact, marketing and advertisement makes up approximately 83% of the company’s revenue, (Kahane, 2012).
Since 2008, the company has faced consistent problems from international competition. Additionally, Yahoo has maintained an erratic leadership over its nearly two decades of operation. The rapid changing of one CEO after another has not proven fruitful for Yahoo. This can be said both in the terms of the confidence of the company’s employees and with the confidence of those who invest with the company. Overall, the shareholders have seen a steady decline in profits over the years, and many are doubtful that Yahoo will become the Internet giant it once was.
The downward trend Yahoo has experienced over the years has proven to be cyclical in nature but, overall, the trend has continued to be bearish for the company. It appeared that just as the company was recovering in one area, it would face another problem that continued to whither the company away. This resulted in increased losses over the years. Negative press surrounded the company, as it attempted to curb losses by laying employees off. Since 2008, several massive layoffs have taken place at Yahoo. It should be noted that the company is known in the industry as being among the highest paying firms. That money many of the employees were receiving was great for morale, but the layoffs had a damaging effect that has persisted throughout the firm. Yahoo’s ability to retain and employ people in the industry has been damaged due to that fact. Another fact that is paradoxical in nature is that, in spite of stiff competition in the Internet market, the potential for success is massive. Take, for example, the success of companies such as Facebook, Google, Twitter, and hundreds of other small Internet based start-ups originating every day that have turned into these titans. Not all is bad for Yahoo and great for other companies; in fact, the company has made several profitable investments and acquisitions over the years. These acquisitions comprised of successful Internet companies that have spurred on profits.
Yahoo was founded by college graduates similar to the founders of Google and Facebook. The firm has a reputation for hiring very talented individuals; it offers good work culture and great opportunities for its employees. Yahoo’s range of salary for is employees is also competitive in nature. However, the company has floundered in competition, has faced an acquisition bid from Microsoft, has retrenched thousands of jobs, and has seen erratic change in its leadership over the last five years. Yahoo’s other senior leaders have also shown the tendency to leave the company, possibility due to the fact that these talented individuals were recruited by other firms, and because these top employees can see that Yahoo doesn’t have a bright future. This paper analyses the company on the front of transformational and servant led leadership, while determining its current standing. The paper uses the scenario planning approach of Kahane to decide the way in which the company can satisfy its needs.
Questions and comments that need to be addressed to make the company high performing in transformational servant led sense
The transformational and servant leadership concepts are relatively similar in their implementation methods. They stand for the ability of the manager or the leader to motivate and develop their employees, listen to their ideas. This helps cultivate the sense of responsibility among employees. Additionally, the manager is able to lead a much more effective team and make the company profitable so that it is able to utilise the inherent talent of its employees (Stone, et.al. 2004). Any company with large number of talented employees is wasting the employees’ capabilities if it is not using that talent. These companies should also value the feedback to succeed internally and externally. The following is a list of questions that need to be answered by the company in order for it to be successful in transformational servant led sense:
What is the role played by an employee at each level in contributing to the feedback and the success of the functional and the business unit he is working on?
Because Yahoo is an Internet-based company, an average employee works on a particular product or tool and does not have any managerial experience. This means the employee will also be able to relay the success factors that contribute to the success of the tool and the ways in which it can be made better (Smith, et.al. 2004).
What should be the amount of responsibility given to a technical employee or the amount of responsibility assumed by the employee?
The question can be explained by the ability of the employee to accept the ownership of the product they are working on. It can also be rephrased as the ability of the employee to think creatively on the product they are working on.
What is the level of interaction between a senior level employee and an employee immediately junior to him?
This question is necessary, as it allows for the analysis of how the employees are interacting between different levels and the kinds of interaction taking place between them. This will also allow for the analysis of the culture being propagated in the company. It is the responsibility of a transformational leader to be able to develop leadership at all levels in the organisation. It is further needed of any servant leader to be able to listen to the needs and problems of the employees that are junior to him and to be able to consider their recommendations and thought process objectively (Graham, 1991).
The ability of manager to listen to the employees he is responsible for, gain their respective feedback on a day-to-day basis, take account of it, and be able to take steps so that the feedback received is made use of in the best companies. This could help further the Yahoo’s position if executed properly. In fact, cognitive skills of the leader are one of the major questions that are needed to be answered so that the various stages of work can be efficiently overcome with positive and profitable outputs? This includes the ability of the leader to instinctually understand their employees. This helps them understand the employees problems and frustrations, and will allow the manager to take care of the problems and create an effective atmosphere so that the utmost efficiency can be achieved (Russell, 2001).
Another important factor in having a successful company is the ability of the manager to be able to act for the need of their employees, motivate them and create an environment where they are able to relate to the work. An emphasis needs to be put on the ability of the manager to make the work important for the employees, understand their emotions, respective interactions, and to be able to take steps to achieve this is important (Leithwood, et.al. 1999).
But the manager at a successful company will also teach the employees at different levels how to interact with each other so that a lower level employee is also able to enact the principles of transformation and servant-led leadership. This can be construed as the ability of the manager to create a chain of managerial development and attitudes that lead to the development of outlook, which further helps develop a transformational leadership environment. This is an inductive process and it becomes easy to implement over time, as more and more employees adjust to this kind of leadership and adapt their habits according to it (Sendjaya & Sarros, 2002).
The ability of the business unit leaders to take the feedbacks of the managers and implement their advice is of utmost importance, as is the ability of the business unit leaders to create a step by step process so as to create an integrative process. The ability of the heads to take steps to build confidence in their employees in the actions and abilities of the senior leadership and management of the company needs to be placed as a top priority, and workshops and executive coaching can help in these areas. This includes the ability to take steps both internally and externally, which will determine the employee response toward the managers. This is the ability which measures the work performance of the employees at all levels and the confidence of the employees in the activities of the company which helps the company to retain talent (Humphreys, 2005).
The ability of the senior leaders to maintain consistency at their end, and in correlation with the employees should also be addressed by Yahoo in order for the company to become highly profitable again. The employees of the organization should be aware of the various conditions of the company. This will allow the employees to be active participants in the firm’s success. The ability of the manager to convey new technological and management requirements in such a way so that the employees are able to adjust and adapt to new requirements and new way of working in a comfortable manner can help build the type of skillset and determination to succeed that could pull Yahoo out of the trenches and back into the spotlight. The implementation of the strategic change at the employee level is one of the most important steps Yahoo to achieve inorganic or organic growth. The strategy is developed at a higher level and will be a failure if it is not utilised at the employee level. Transformational leadership ensures that the employee is able to adjust to the new needs of the company (Spears, 1996).
The ability of the business leaders and the company board to reach to decision that will be helpful for the company in long run and their ability to communicate it to the employees and the ability of the management to make the transformation process stable in nature needs to be utilized by Yahoo for it to improve net profit. The transformation should be such that it is able to deliver its desired results. Yahoo also needs to focus on the ability of the management to communicate the functional level performance and feedback to the business level, and the performance at business level to corporate level. This requires one-on-one coaching and will help the company be an integrated unit that will allow it to utilise the talent and strengths at all levels of its staff (Bass, et.al. 2005). Furthermore, there needs to be an emphasis at the company on the ability of the top level management. For example, the corporate level needs to implement the decisions in an effective way at the business level and the ability of a business unit to implement it at the functional level.
Organisation’s current performance
Yahoo’s current standing in transformational and servant leadership sense can be determined by following existing conditions in the company: The employees that are still with the company have reported that they are satisfied with their positions, but there are some that are leaving the firm to pursue other jobs, or they are jumping ship, as they see no future at Yahoo. The managers do not interfere with the way the work is done unless it is related to the quality and timing of the work. This shows the support of the managers given to the employees. On the other hand, the employees are given work more or less irrespective of their needs and performance. The work is done in a directive manner, where the manager assigns the work to the employees without much feedback about how the tasks can be improved. This shows the lack of performance of the company in the sense of servant leadership.
Yahoo has in last five years undergone rapid change in its corporate leadership, in an attempt to realize maximum profits. This can be attributed to the failure of the board and the corporate leadership that was employed by the company during its demise. The change shows that there was a lack of understanding of the needs of the company and of the steps that should be taken in order to make a particular change. The leadership of the company is not able to sustain itself at this point, and only time will tell if the recent changes are impactful. The company over the years has made large number of acquisitions, also in an attempt to restructure itself from its down years. The acquisitions made were of profitable and famous companies in the market. But in spite of these acquisitions, the company continues to face losses and an erratic leadership. This shows the inability of the company to transform the acquisition into a profitable integrative unit. The loss shows the inability of the company to transform a strategic step into a profitable merger.
It should also be noted that the company in last five years has retrenched thousands of employees. Because Yahoo is an Internet product based company that needs to be on the leading edge of technology, it hires graduates, masters, and PhDs for its various services. Its employees are alumni of the best universities and colleges all over the world, or they are highly experienced professionals. The company is known for its high paying job, and this attracts people to the company. While attracting some of the brightest minds that are educated in the most modern ways of doing business makes sense for the company, it also shows the inability of the company to effectively transform it from one phase to another. This is why it needs to strike a balance with the experienced workers and those who are fresh out of school. The company shows a huge failure in terms of its ability to transform its strategic agenda and current market development by making use of the talents of its employees so that the company as well as the employees can benefit from it.
The transfer of decision from corporate level to business unit levels and from business level to functional level is highly inefficient. Moreover, the interaction between the employees and the managers in terms of leadership development and feedback process, which can help the company take the advice and make use of the existing talent within the company, is lacking in nature.
The various levels of employees are more or less focused on the instructions given by their manager, like with most jobs. However, the interaction between the manager and the employee is limited in nature and related to the specific tasks assigned to the employee, which means there is little room for feedback. The above conditions existing in the company make it a place that needs to make various changes at all levels in order to be an effective company in terms of the transformational servant led sense. The company needs to focus on its ability to make decisions that are important for the company in the long run. The leadership of the company should be such that the employees should have confidence in the abilities of the Yahoo’s corporate leaders. Moreover, the transformation process from one layer to another should be more effective. Yahoo should be able to integrate the new acquisitions and employees in a better way. The employees should have confidence over the ability of the company to recover from any crisis and should be clear of their role in helping the company overcome a crisis. This will avoid having talented employees develop at Yahoo, and then leave to take a position at a company that they might perceive as being more stable.