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Yahoo’s CEO Problem Offers Opportunity to Improve Recruiting Process for All Parties

by May 7, 2012, 6:07 am ET

Last Week Dan Loeb of Third Point Capital sent a letter to the board of directors of Yahoo asserting that Yahoo CEO Scott Thompson actually did not have a degree in degree in computer science as his executive biography indicated. Yahoo replied that this was an “inadvertent error.” Mr. Loeb wrote a response to the board demanding his removal for cause by noon on Monday.

Stories are being written by Kara Swisher, Michael Arrington, and many others about the incident. Most articles discuss the integrity of Thompson or the board of directors itself. Some might ask the legitimate question of whether an executive of a technology company even needs a computer science degree. Answer: They don’t. After all, IBM CEO Lou Gerstner did an amazing job turning around in the 1990s after initially turning down the job because he didn’t consider himself a technology guy. It makes the actions of Thompson all the more puzzling.

Ultimately this begs the following question, “How in the world did a Fortune 500 company recruit and hire a CEO with inaccurate statements in his biography?” This might indicate symptoms of a more broad and disturbing problem, such as lack of proper recruiting budget investment, formal process, and execution of proper human capital processes. To view this as a Yahoo problem and move on would be missing a rare opportunity to drive positive change.The past 20 years brought massive recruiting changes: movement from paper resumes actually read and discussed by people who understood the skills and the corporate culture issues, to electronic resume scoring, reduction of budgets, and the decimation of many recruiting departments.

If Ray Kurzweil’s assertion of artificial intelligence not matching the human brain until at least 2029 proves correct, why are so many companies using unproven technologies that use artificial intelligence business rules layered on top of resume databases as a primary tool in employee selection? This has opportunity costs not only for our companies, but individuals making career changes due to macroeconomic events and communities as well.

In a world where the leadership skills of tomorrow are changing constantly, why would anyone use outdated job specifications for this resume scoring, even if it did work well? Why aren’t we investing the proper resources in recruiting conversations to perform thorough one-hour interviews with candidates that discover their passions, emerging strengths … and then revising the spec around the strongest candidate which was once a normal practice?

Why isn’t LinkedIn, and to be fair all providers of recruiting platforms, investing the money to not only verify all degrees in their system profiles, and use that weighting instead of overweighting current job title? Would this not help create trust and accuracy? It would also identify clearly bogus profiles for removal. Why aren’t they segmenting it to weight a full degree over a one-week certificate differently in their algorithms?

One’s upbringing in their family, schooling, and work experiences over their lifetime affect their abilities in a material fashion. I can remember a time when one looked at the quality of a degree on the bottom of a resume first and then read the rest. Let us use this incident to request that companies restore funding to conduct proper, dignified, personal and complete two-way conversations and interviews with candidates.

We live in time of great structural change. Many people have had unplanned career change due to macroeconomic disruption that is often no fault of their own. We should redevelop a process that can identify our best and brightest, put them in a position to succeed, and be certain they are actually who they say they are. Make no mistake these processes must be flexible as people are acquiring new skills via naturally curious lifelong learning. We should seek and reward that. Perhaps if we did, Thompson’s biography would have never contained the words computer science.

Let us use this incident as the call to action it can be. Let’s fully restore or reallocate the proper budgets for a personal, dignified, and thorough exploration of candidates’ backgrounds and conversations about what they can uniquely bring to the role. Executive teams need confidence that chosen candidates have the proper acumen to produce the required business impact.

How about treating recruiters with respect in the form of not only pay, but stronger input into the process and granting them the time they need?

What else should we be learning from this incident? What are your ideas to restore the world-class and personal recruiting techniques to ensure such an incident is not repeated?

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

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  • Jordan Clark

    My response to “Why isn’t LinkedIn investing money to verify degrees,” is cost. The reality is that this case with Yahoo CEO Scott Thompson not having accurate information on their bio/resume is not an irregularity, like you said, but a common place. The average person knows that HR/Recruiting firms do not have the money or the time to do a thorough background check, and money is the bottom line.

    Asking LinkedIn or other Job Boards/Social media websites to verify that every piece of information a candidate posts to be accurate is like asking every dating website to make sure that every user’s information is accurate. The fact that has been proven over millenia from bank fraud to tax evasion is that if there is a will there is a way, and people can and will find ways to cheat the system, so investing money in verifying every piece of information to be accurate, especially with a garuntee would be impossible. Can some check points be put in place to make the information a little more accurate? Sure, but you could never garuntee the accuracy, because people would figure out a way around it.

    Do I agree that Degree’s should be weighted more heavily? Yes and no, degree’s do have their place, but given the vast majority of college graduates with useless degrees as apposed to those without, and those with STEM degree’s or job related degrees makes it a two part system that is still undefinable. Having a degree doesn’t garuntee you anything anymore, as many of the unemployed college students will tell you, having the qualifications necessary to performe in an industry or line of work is far more valuable and many companies look for experience over college credits (unless it is STEM related). Judging a book by its cover and choosing degrees over job title would be no more effective, especially with the STEM degrees on the decline, qualifications are still the go to resource for any HR or 3PR and should be.

    Point is your right, more money needs to be invested in the companies recruiting and background check, not the systems they use, if you really want to ensure the candidate is who they say they are ask for a clearance, that means the government has verified everything short of degree, if your still skeptical or getting poor candidates spend more time and money doing thorough background checks, and not just calling 2 references and saying “yep sounds right to me!”

    Just my two cents thanks for reading!

    - Jordan

  • Keith Halperin

    How much does it cost to verify someone’s degree? This was just sloppy. Could it be because:
    “Oh, Scott’s one of US. We know him from the old days. Of course he’s telling the complete truth.”
    You want this not to happen again (for at least awhile)?
    Very publicly fire and sue for million$ the search firm partner(s) responsible for signing off on this, just like we’ve done with all the “banksters”. Oh I forgot, WE DIDN’T DO THAT AT ALL. Never mind…

    -kh

  • Jordan Clark

    @Keith: Your right on the money, once you get to that Executive level people start worrying about “stepping on toes” and just take things at face value, too worried about stirring the pot by verifying information, who are the low people to think to question the high ones? Hence the “banksters” getting away with it for so long before anyone caught on, and now why no one will do anything about it!

  • Keith Halperin

    Thanks, Jordan. And while millions are still un/der employed and millions more have lost/are losing their homes, these folks are trying to buy even more of our government through their lobbyists and super-PACs. “USA: The Best Government That Money Can Buy.”

    -kh

  • Jordan Clark

    @Keith: Or keep from paying their way in taxes, think Warren Buffet rained on their parade, at least he brought it to public attention, not that anyone will do anything about it.

  • Martin Snyder

    It’s cost/benefit really. This guy actually had a decent degree (accounting) and just upgraded himself with what amounted to a buzzword when he was a junior schmep somewhere. Nobody cared, because even then, the credential had little bearing on the job he was doing- and nobody really cared about the guy doing the job.

    So down the years, he grows into somebody who matters and the lie, once told, has to stick around. The lie may or may not have receded from his mind, as old lies sometimes do. The moral questions to ask relate to the lie having meaning to his performance today, other than the fact of the lie.

    In the context of the life of the lie, were other people’s rights infringed on? Did others really rely on the lie to make decisions? Was there some justification for the lie in terms of proportionality, or the lie as communicating an essence of some other truth?

    To need the fainting couch to suddenly discover that CEO’s lie (like everyone else) is a simple political pose in this situation.

    The real issue is: what kind of liar is the man? If he is the OK normal kind, who can mostly be trusted, he should keep his job. If he is the kind of fool who lies often and easily, he should go. The public facts don’t say much either way….

    If you play the Gotcha game too tightly, you end up with malformed idiots at the top of every powerful faction.

  • Keith Halperin

    @ Martin:”You end up with malformed idiots at the top of every powerful faction.” So, THAT’S why things are the way they are.

    :)

    Keith

  • Jordan Clark

    @Martin: If you read the article I think Mr. Loeb made a very valid point saying “To assert that years of inaccurate SEC filings, website biographies and, most likely, D&O questionnaires and curriculum vitae (including, presumably, the CV provided to Yahoo! when Mr. Thompson reached out for the job) were “inadvertent” is, in our view, the height of arrogance. Mr. Thompson and the Board should make no mistake: this is a big deal. CEO’s have been terminated for less at other companies.”

    Point being you do have to hold every person to the “Gotcha game” otherwise you are implying that such behavior can and will be tolerated, and the fact that this is not something new, but has been perpetuated over years of innacuracies makes it quite clear that Mr. Thompson’s actions were not a mistake, but calculated with the intention of impressing those who viewed his resume into believing he had a job related qualification that would set him apart from his competition.

    Additionally we see that people like this tend to have a history of “missinformation” as with CEO’s such as Jeffrey Skilling of Enron who show a history of decieptful, negligent, and sometimes malicious behavior and often times those companies take the same view that you do and say “can’t catch em all” and allow the behavior to continue with nothing more then a review or chastisement. Very rarely do you see an executive level scandal that involves a first time offender, more often then not it is the case of they did something got away with it, did it again got away with it again, and it continued with a snowballing effect that resulted in significant losses, fraud, and abuse within a company.

    Your the CEO, point being your held to a higher standard, and as Edmund Burke once put it “Evil only triumphs when good men do nothing.”

  • Jordan Clark

    @Martin: Additionally according to the article “According to the Yahoo! Form 10-K/A, filed with the Securities and Exchange Commission on April 27, 2012, newly-hired Chief Executive Officer, Scott Thompson, “holds a Bachelor’s degree in accounting and computer science” from Stonehill College. This assertion was repeated in the Company’s draft proxy statement, also filed with the SEC on April 27, 2012, as well as on the Company’s website.”

    Thats not a keyword, that is a clear implication that you recieved a BS in Computer Science as well as Accounting, in no part within his biography or his filing with the SEC does he denote “specializtion” or “minor.” It’s fraud and because he’s CEO he’s trying to smudge the lines and act as if it was a “misnomer” or an erronious “error” where infact it was blatent falsification of public records as well as company documentation and violates Yahoo’s company ethics policies as well.

  • Martin Snyder

    I’m not endorsing lying; I am for thoughtful enforcement of meaningful rules.

    In this case, it looks like selective enforcement. I dont believe for a moment anyone depended on his area of focus of an undergrad degree when selecting him for the CEO role.

    Now as a business person, pissing off the wrong people seems pretty unwise, and that’s a good reason to ditch a CEO.

  • Jordan Clark

    Yea I don’t know if he went out of his way to do that, seemed Loeb was just looking for a reason to ditch the current board of supervisors and the CEO for Yahoo and found plenty of dirt to do it.

    Unfortunately for Mr. Thompson he’s not as clean as he would like, however given that he just accepted the position in January of 2012 he knew what he was doing, its very rare (not impossible) but rare for a CEO of a major internet/software company not to hold a degree in the technology sector and I have a feeling that probably actually did play a significant part in their approval process, especially since Jerry Yang the founder had an electrical engineering degree, Carol Bartz had her doctorate in computer science, the only one that didnt’ was the interim CEO Tim Morse, and again he was an interim, so its pretty apparent that Scott Thompson knew he needed the degree to sell himself.

  • Jordan Clark

    Gratned Bartz’ Doctorates were Honorary, but aside from CFO Tim Morse being named CEO in the interim between Bartz removal and Thompson’s appointment not one CEO of Yahoo hasn’t held a computer science/engineering degree, so I would say that his degree weighed very heavily, and probably was one of the defining reasons he was even considered for the position.

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