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Post Leadership
Posted at 12:54 PM ET, 05/14/2012

Why Yahoo CEO Scott Thompson had to resign

Yahoo CEO Scott Thompson resigned this weekend.
It was probably inevitable.

The news Sunday that Scott Thompson would be resigning as CEO of Yahoo is unlikely to stun anyone who has followed the “Resumegate” that has embroiled the Internet company in recent days. (The reports in the Wall Street Journal Monday that Thompson received a diagnosis of thyroid cancer, however, is surprising and sad, to say the least.) It was hard to see how he would stay in his job — from the moment activist investor Daniel Loeb revealed, and Yahoo confirmed, that Thompson did not have the computer science degree that previous bios had stated, up until the time executive search firm Heidrick & Struggles issued a stinging response to the reported claim  by Thompson that a junior recruiter had added it to his resume.

Some people were saying the brouhaha was much ado about nothing. As one innovation consultant put it, a CEO’s undergraduate studies are “of no significance whatsoever in deciding whether he can do the job,” calling the erroneous degree a “minor technicality.” Others have even asked “who cares?”

But they’re all missing the point. Even if a college degree has little bearing on a CEO’s abilities, Thompson was in a position of leadership in which his actions would be watched by thousands of employees. Claiming a degree that doesn’t exist (or, if someone else put it in there, not taking the time to correct it in public documents) is a pretty basic no-no in the workplace. A Yahoo spokesperson said the company would not comment beyond its news release, and Thompson himself was not reachable for comment.

But it’s not the size of the alleged error that matters, it’s the impact it could have on others. If Thompson had remained CEO, it could have created a double standard that would upset many employees. Not to mention, most Silicon Valley engineers are accustomed to getting job offers more often than most of us get credit card solicitations. These companies value flat hierarchies, casual cultures and systems that reward true talent, not lofty titles. Letting something like this slide might be acceptable in some places — but probably not in a struggling Internet company with an in-demand workforce who could pick up and leave as soon as workplace morale starts to go down.

That’s not the only reason Thompson’s departure seemed likely. Had the board let him stay, employees might have been left wondering who they could and couldn’t trust. And the media and Daniel Loeb, the activist investor, would have continued to press for answers, keeping alive a distraction to a company that doesn’t need it. (Along with announcing a new interim CEO, Yahoo said Sunday that Loeb will get three seats on the company’s board and that it is settling the pending proxy contest with his hedge fund.)

In the end, it doesn’t really matter how great Thompson’s experience in his former jobs might have been, or who may have first cast doubt on his resume, or how disruptive his departure could be at a company that has had six CEOs (four designated and two interim) in five years. When credibility  is called into question, everything else comes second.

More from On Leadership:

Yahoo CEO’s problematic resume

The art of the Zuckerberg hoodie

If Harvard Business School were a religion, it could be Mormonism

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By  |  12:54 PM ET, 05/14/2012

Tags:  yahoo, scott johnson, leadership

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