Yes her mandated Quarterly Performance Review system in which managers were forced to put a % of employees in under performing buckets single handedly damaged the moral more than anything in the companies history.
... except other managers, of course! ;-)
I'm an ex-Yahoo, and I feel that Yahoo has too many layers of management. Marissa would be well served by reducing the ratio of managers to engineers to something like 1:10 (currently I've heard it's close to 1:3, but that's just rumor and speculation).
http://en.wikipedia.org/wiki/Vitality_curve#Companies_utiliz...