Failing Up: How to Succeed by Screwing Up

We all know the type, whether it's your boss, neighbor or sister-in-law.

That person who screws up at work but somehow keeps landing a great new job or a promotion.

Those lucky devils epitomize the concept of failing upward -- when incompetence is inexplicably rewarded.

The phenomenon is most common in the business world, where the typical scenario plays out like this: A high-paid CEO does a poor job running a company, takes an enormous severance, and lands on his feet with a better job at a bigger corporation.

Recently, there have been several high-profile examples, from Home Depot's Robert Nardelli to NBC's Jeff Zucker.

Last month, Home Depot handed Nardelli a $210 million severance package after the company's stock slid nearly 8 percent during his six-year reign. And the company didn't look too far to find his replacement: It tapped Nardelli's chief strategist, Frank Blake, at a salary that could total $8.9 million.

And this week, NBC's Zucker, who ran the TV network while it sank from No. 1 to No. 4 in the ratings, was promoted to chief executive of the NBC Universal media conglomerate.

While Zucker has been lauded for his success securing the dominance of the "Today" show, he's come under fire from shareholders who feel that the network's ratings slide helped bring down corporate parent General Electric Co.'s stock.

"They're spinning it as a meteoric rise, but they gloss over going from No. 1 to No. 4 and I calculated the stock has gone down 11 percent since [Zucker's boss Jeffrey] Immelt took over," said Peter Cohan, a venture capitalist who's owned stock in GE for decades and blames Immelt for promoting Zucker.

"I mean [GE's previous chairman] Jack Welch has come out and said that he would have fired Zucker. That's how he did things: If somebody wasn't doing their job, he'd get rid of them," Cohan said.

Others who've profited from this trend include PalmOne CEO Todd Bradley and former American Airlines chairman and CEO Don Carty.

Bradley pocketed more than $2.4 million in 2005, when he left PalmOne, which took a second-quarter charge of $3.2 million as a result of its largesse. Soon enough, Bradley was hired by Hewlett Packard to run its PC and handheld business.

Carty was hired last month as Dell's vice chair and CFO despite his embarrassing resignation as the chairman of American Airlines in 2003, after he came under fire for overspending and failing to tell workers about planned executive bonuses and pension protections on the same day that the unions voted on $1.8 billion in job, pay and benefit cuts

It's enough to make shareholders scream and observers scratch their heads.

"You wonder: Why would you hire somebody who failed at a previous job?'" said Joe Weintraub, a professor of management at Babson College. "If they haven't performed well in one function, what makes you think they'll do better now?"

The reasons range from the nature of corporate culture, which tends to reward its own, to the American belief in second chances and focus on short-term success.

"It happens much more frequently than anyone cares to acknowledge," said Ken Siegel, president of The Impact Group, an organizational consulting group. "Typically, people promote people they like. It's a derivative of promoting yourself. It has nothing to do with how well you perform."

That scenario is most common when it comes to choosing who gets the corner office.

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