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New Yahoo CEO Marissa Mayer reportedly introducing tougher employee rules

New Yahoo CEO Marissa Mayer is reportedly taking a hatchet to existing compensation and time off arrangements, including the implementation of a new performance evaluation regime that could see a fifth of the company's roughly 12,000 employees get pay cuts or pink slips.

Yahoo has already ended a "longtime practice" of closing shop in the week between Christmas and New Year's, according to All Things D's Kara Swisher, who cited "several sources close to the situation" in a roundup of Mayer's purported cost-saving and efficiency-raising efforts.

The elimination of a paid holiday week for all but essential staff has "been a long time coming at Yahoo" and will serve the purpose of "compelling staff to burn off a week of vacation in the current quarter and not carrying over those costs into the New Year," Swisher wrote, as well as keeping the company's services up and running more efficiently during the last week of the year.

Another Mayer initiative that would take more time to play out is the new employee grading plan "based on a variety of benchmarks and evaluations" that's reportedly being rolled out by Yahoo's HR department.

Yahoo's new CEO, named to the position in July after spending her entire career at Google, had already hinted at the new evaluation process in meetings and memos in recent months, according to All Things D.

"Moving forward, we will have both annual goals and quarterly goals that we will all commit to, track, and grade ourselves based on...We will then cascade the goals down through the company at the department, team, and individual level," Mayer wrote in an October memo, for example.

The new process will reportedly identify Yahoo's "bottom 20 per cent" in terms of performance, at which point the company "will begin to cut back on compensation" for the bottom fifth of employees and even begin "moving them out of Yahoo entirely."

Swisher indicated that Mayer's attempt at a meritocratic approach to another spate of Yahoo layoffs was an attempt to make a clear break from the "often haphazard nature" of past downsizing rounds which "hurt morale badly."

Mayer also appears to be importing some of the culture from her old company to her new one - Google has long used a complex performance evaluation system for identifying valuable employees and those who aren't up to snuff, Swisher noted.

Meanwhile, Yahoo's Silicon Valley neighbour AMD is also preparing for more staff cuts in January. AMD announced last month that it would be laying off 15 per cent of its workforce by the end of 2012.