THE BLOG

The New CEO at Yahoo is Urgent to Stop the Brain Drain

01/09/2009 05:12 am ET | Updated May 25, 2011

In technology people move between companies all the time and it's understood that a certain amount of turnover is normal. But the turnover within Yahoo over the last year has been dramatic and it's the canary in the coalmine of how bad things are getting. Combine this with the long overdue search for a new CEO and the news of layoffs tomorrow and you have a perfect storm for Yahoo middle management.

Over the last year 130 managers (directors, VPs, EVPs etc.) can be detected on the web as leaving Yahoo. They've been leaving for large companies like Microsoft, Google and CBS, but they have also been leaving for up and comers like My Space and startups like the hiring of a new CEO at Bunchball. And the problem is that relative to Yahoo's competition that's a huge number. In contrast 82 can be detected as leaving Microsoft and yet that's 82 out of 91,000 - Yahoo's employee count is only 14,000 (before the rumored 1,000 layoffs). You can see a chart here of Yahoo's turnover and how it compares to the other major tech firms in their space and a list of the last month's visible departures here.

Yahoo has been losing management and the technical team and it impacts the value of the company. The choice of CEO is the critical decision that affects the employee's future, and we've seen the effect of poor leadership at Yahoo for a while. Yes, companies have to be smart about their key executives in sales, finance etc. But the lifeblood of a tech company is in the products and great products are birthed and nurtured by technical managers and great engineers. So seeing a VP engineering go to My Space and the director of search engineering go to Current TV - and there and many of these in the last 9-12 months - tells the story of what's happening inside the company.

Recruiters in Silicon Valley say that Yahoo is easy pickings and the drain is only going to fundamentally change when the board brings in a strong CEO that talented people want to work for. The hiring and firing of a CEO is the most important thing any board does, and it's a sad fact that boards often move too late - as in the Yahoo case. Saving Yahoo means saving the critical employees: the engineers and technical leadership. Saving Yahoo means building momentum and revenue back up from the many excellent properties Yahoo has. And then saving Yahoo means rebuilding the value of the company to investors. But it all starts with the CEO. I hope the board recognizes they are at a fork in the road of two possible futures for Yahoo - up or out - and are being thorough and responsible as they should be but also demanding greatness.