Yahoo CEO Scandal: Ethics Should Be More Important Than a College Degree

Rob Enderle

As I write this, the story is breaking that Yahoo's latest CEO, Scott Thompson, falsified his education and that there is a push to get him to step down. Apparently, the board member chairing both the Search Committee and the Nominating and Corporate Governance Committee is also alleged to have falsified her education record, suggesting an endemic problem with the Yahoo leadership.


Now realize that neither of these people likely got their jobs because of their education but as a result of actual job performance and you don't have a skills problem, you have an ethics problem. Unfortunately, you also have a disclosure problem because this alleged false information was delivered to current and potential Yahoo investors.


Once someone lies about their background, it is hard to clean up that record even when their job history becomes more important than their education.


Let's explore this on two fronts: Yahoo's problem and the relative importance of education.


Yahoo's Problem


Yahoo just completed a lengthy search for a CEO after unceremoniously and poorly firing Carol Bartz. In fact, Yahoo now has a history of CEO problems and it is a company in dire need of stability at the top. This puts the board between a rock and a hard place because while the typical rule is to terminate a CEO who falsifies his or her background, Yahoo likely won't be able to survive more turmoil. In addition, given how hard it was to get Thompson, getting another, even partially qualified CEO quickly may be virtually impossible.


Yet, leaving Thompson in place isn't a viable option either because that puts someone who is known to have behaved unethically at the head of a public company. Boards typically won't take that kind of risk because, should there be another problem, the board could be seen as negligent and that would make them potentially personally liable for that problem.


In short, this isn't going to be an easy choice and the fact that another member of the board, the one who leads the committee responsible for finding Thompson's replacement, has the same alleged ethical problem just compounds it. The company can't very well have one stay and ask the other to leave; it likely will have to be both or neither.


Education Problem


Let's take a step back and ask whether at Thompson's level education is even important. Neither Bill Gates nor Steve Jobs even had degrees and you could argue they did just fine. In fact, both men have lectured at college graduations that valued who these men were over the education they had in school. A degree is a measure of what someone may have learned but a far better measure of what someone can accomplish.


I look at young firms - like Google - that put an extraordinary amount of attention on degrees and have serious governance problems. At the core of these problems is this focus on education over experience. Google's position is 180 degrees from this letter from an even younger company's CEO, who basically says, screw degrees, we want people with passion and skills.


Companies like Apple and Microsoft were started by people who thought like this and the early history of the Silicon Valley was filled with stories of firms that were started by people who valued tested skills over degrees. Given how much cheating (reaching nearly 100 percent now) is going on, I doubt you can really trust degrees anymore anyway and clearly if you hire on vetted job experience, you're more likely to get someone who can actually perform as advertised.


Wrapping Up: Key Lesson - Ethics More Important than Education


If you really step back from this and take a holistic view, what we are increasingly getting from schools are ethically challenged people who have had to cheat to get their degrees, and, in this Yahoo case, a system that appears to reward people who cheat on the degrees they did get. That is institutionalized, unethical behavior and it may be time to rethink your hiring practice to favor metrics that, regardless of degree, focuses you on trustworthy people.


Most of the big problems I've had to deal with in large companies are the direct result of someone behaving unethically. You look at HP's big problems, Google's and now Yahoo's and at the core is often some executive who was ethically challenged. Maybe if we tried harder to weed these people out at the start we'd all be in far more successful companies. I'll tell you one thing, we'd all likely be working in far less drama-filled worlds. Don't get me wrong, I like dramatic reality shows and situation comedies as much as the next person. I just don't want to live in one.

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Add Comment      Leave a comment on this blog post
May 4, 2012 10:48 AM a. asdf a. asdf  says:

The reason Google places so much value on education is that Google was built on algorithm innovation, not on an innovation in a business model or product. It's a math company and you can see that from the Google interview questions that surfaced some time ago.

"Using only a four-minute hourglass and a seven-minute hourglass, measure exactly nine minutes-without the process taking longer than nine minutes"

Apple is and Microsoft (was) companies based on business model and product innovation.


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