Yahoo’s Marissa Mayer and the Glass Cliff

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Marissa Mayer is in trouble.

An excellent new New York Times Magazine cover story makes the case. Yahoo’s revenues are flat. Its raison d’être is a mystery. Its business plan is a hodgepodge. Its staff is queasy. Its shareholders are worried. And now, activist equity-holders are pushing for a merger with AOL, one that would presumably cost the company hundreds of jobs, potentially including Mayer’s.

The multimillionaire former Google executive had hoped to be the captain to right the ship, à la Steve Jobs at Apple. But instead she seems to be busy rearranging the deck chairs. It is a sad tale. And I fear that it will become an exemplar of a much bigger, much deeper trend in American corporate governance. 

That trend is of the “glass cliff,” a relative of the “glass ceiling” that holds back businesswomen, the “glass closet” that stifles the ambitions of gay executives, the brick walls facing many managers of color, and the “glass elevator” that helps so, so many white bros up to the top.

The term comes courtesy of two psychologists, Michelle K. Ryan of the University of Exeter and S. Alexander Haslam of the University of Queensland. In a pioneering study published a decade ago, they found that women were often promoted to board positions after a company had started faltering. Women weren’t picked to lead companies on an upswing, in other words. They were promoted to help manage turbulence and decline.

To show it, the researchers looked at the performance of firms before and after the appointment of a male or female board member. “During a period of overall stock-market decline those companies who appointed women to their boards were more likely to have experienced consistently bad performance in the preceding five months than those who appointed men,” they found. 

It seems borne out by an ample array of anecdotal evidence. There is Erin Callan, promoted to chief financial officer of Lehman Brothers at the end of 2007, long after the housing market started to collapse and just as the financial markets tipped into panic. There is Sallie Krawcheck, moved to a stressed unit of Citi in 2007 and a stressed unit of Bank of America in 2009. There is Mary Barra, brought in as chief executive officer at the still-shaky General Motors earlier this year.

And other studies conducted have backed the theory up. Susanne Bruckmüller and Nyla R. Branscombe, for instance, asked college students to read about an organic food company, sometimes headed by a woman, sometimes by a man, sometimes growing, sometimes failing. They then asked the students to choose between two equally qualified candidates to become chief executive, a man and a woman.

“When the company had been led by men and was doing well, 62 percent of the students who read that scenario chose the male candidate,” they found. “But when the male-led company was in crisis, 69 percent chose the female candidate.” (There was no such divide when a woman led the company in the first place.)

Why might companies gravitate toward female executives during times of turbulence and distress? The explanations tend to boil down to gender essentialism. Women are perceived to be more nurturing, and thus better at healing a broken business. It also might be easier for a corporate board to scapegoat a female executive than a male one, some researchers have theorized, given that women are expected to be worse managers in the first place. But perhaps that is just correlation and causation, as indicated by the glass-cliff theory itself.

And that correlation and causation problem is the central, driving tension in Nicholas Carlson’s piece. It enumerates Mayer’s missteps and idiosyncrasies and bad decisions. She names a little-respected, expensive sales executive. She balks at hiring Gwyneth Paltrow as a contributing editor because she had not graduated from college. She kills Yahoo Shine, despite its $45 million in annual revenue. She tries to go upscale, when Yahoo is decidedly middlebrow. She habitually shows up late to meetings.

But even given those errors, and worse ones, Yahoo’s failure is described as a fait accompli. “Yahoo’s decline from a $128 billion company to one worth virtually nothing is entirely natural,” Carlson writes. “Yahoo grew into a colossus by solving a problem that no longer exists. And while Yahoo’s products have undeniably improved, and its culture has become more innovative, it’s unlikely that Mayer can reverse an inevitability unless she creates the next iPod. All breakthrough companies, after all, will eventually plateau and then decline." 

And plateau and fail Yahoo might. Or it might merge with another sclerotic but still high-revenue business, AOL. And that might lead to the downfall of Marissa Mayer, deserved or not. (One gets the distinct impression reading the piece that the biggest mistake she made was in accepting the job in the first place.)

But the stakes are higher than her. The problem with the glass cliff is that it might cement the stereotype that women are worse managers and executives than men, all because they are asked to manage worse businesses then men.

“Women who assume leadership offices may be differentially exposed to criticism and in greater danger of being apportioned blame for negative outcomes that were set in train well before they assumed their new roles,” the original study’s authors conclude. “This is particularly problematic in light of evidence that directors who leave the boards of companies which have performed poorly are likely to suffer from a ‘tarnished reputation.’” That might be why the stock of a company drops after the announcement of a female chief executive, but not a male executive.

The bias is bad enough. It is the feedback loop — the fact that women are asked to lead failing businesses, then blamed for the failure of those businesses — that really stings.