Easy exits for failed leaders can breed resentment, but not if the rank-and-file aren’t penalized for experiments that don’t work out
Failing upward is still the in thing.
2017 has been quite the year for Billy McFarland, the New Jersey native now persona non grata among 1% millennials after organizing the blowout that was the Fyre Festival. The 20-something got supermodels Bella Hadid and Emily Ratajkowski to promote a supposed luxury music festival in the Bahamas—in reality a crap show with soggy tents, bad food and no big acts that left trust fund babies stranded on an island. McFarland is now being sued in civil court and seeking a plea deal on wire fraud charges.
But that doesn’t seem to have stopped the United Nations from using the alleged fraudster, currently out on bail, as a fixer. According to Page Six, the supranational organization reached out to McFarland when it needed a bold-faced name to host its annual World Humanitarian Day celebrations after Chance the Rapper dropped out. The smooth talker, who a recent Vanity Fair exposé revealed has a talent for making friends with the rich and famous, reportedly hooked the U.N. up with soul singer Ryan Leslie.
The U.N. didn’t immediately return a request for comment.
McFarland is the latest—and perhaps youngest—example of someone “failing upward.” The phenomenon describes a bigtime failure who’s landed a lucrative payday despite their record and is a source of significant grief to corporate reformers. Among those who’ve failed upward: Marissa Mayer, the high flying Google tech exec who was supposed to revitalize Yahoo as the search pioneer’s CEO. Mayer burnt through a lot of moolah but is seen to have largely failed—Yahoo’s media assets are now under the Verizon umbrella. Nevertheless, she walked away with an exit package valued at almost $200 million.
Another regularly cited example is former HP CEO Mark Hurd, who left the tech company in disgrace. He was alleged to have sexually harassed a Playboy model (Hurd was later cleared) and submitted inaccurate expense reports in his quest to woo her. Hurd resigned in 2010 with a severance package of over $30 million, though HP was later unsuccessfully sued by shareholders unhappy with the payout.
These sweetheart deals exist even if they cause significant grousing among the less lucratively compensated rank-and-file. “There’s a belief that senior executives take on a lot of risk when they step into a leadership role,” says Roy Cohen, author of “The Wall Street Professional’s Survival Guide,” and the market pays out accordingly. “But there’s also a strong message sent of a double standard if a failed leader is paid a premium instead of being punished for performance lapses.”
Failing upwards probably isn’t going away anytime soon since it’s so deeply ingrained in American work culture. In 2015, chief execs made 335 times the average worker’s salary. But there are ways to make it more palatable to employees further down the food chain. “If the company culture supports risk taking and looks at failure as simply a step to success, it’s not a problem,” says Cohen. “But that value must be deeply embedded.”
And perhaps nowhere is more attuned to that fail quickly attitude than Mayer’s homeground of Silicon Valley. Take for instance, Facebook, which takes pride in its motto of “move fast and break things.” Tim Campos, the social network’s former chief information office has spoken in-depth and publicly about his failures, including implementing a logistics system that was only used 5% of the time. “The only strategy that is guaranteed to fail is to not take any risks,” his ex-boss Mark Zuckerberg has said.
Of course, Cohen adds, it helps that almost all of Facebook’s employees are uniformly well compensated.
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