Yahoo's latest woes highlight performance management risks


Gregory Anderson, former editorial director of Yahoo, has lodged a claim for sex discrimination against the company, also alleging that the company failed to comply with state and federal notice requirements which apply to mass layoffs by representing them as performance-related dismissals.  Yahoo denies the allegations.  

The case highlights a difficult dilemma for businesses. Announcing redundancies can unnerve investors, shareholders and even customers, and in many countries triggers legal obligations.  Across Europe, for example, mass redundancies require consultation with employee representatives and in most European countries an employee who is made redundant is entitled to receive an additional severance payment. 

It may be tempting to characterise dismissals as being for under-performance or misconduct to seek to avoid those obligations.  But this is a risky strategy.  It may result in an obligation to make additional payments to affected employees if consultation obligations have not been complied with - and (for example, in the UK) can result in criminal prosecution for failure to notify the authorities of proposed redundancies.  It can also increase the risks of a discrimination or whistleblowing claim; if the reason given for dismissal is shown to be a sham, it is often much easier for the employee to argue that the true reason is discrimination on a proscribed ground.   In many cases, the risks heavily outweigh the benefits. 

Whether Anderson's allegations hold water remains to be seen.  His allegation that Yahoo, operating in an industry notorious for a lack of women, discriminated against men has certainly raised eyebrows. But the case is definitely one to watch.