On January 16, 2014 it was announced that Yahoo ended the employment of their COO and second in command, Henrique De Castro. Mr. De Castro was hired away from Google only 14 months earlier. His expertise in advertising was intended to be a major component in getting Yahoo back into a leadership position in this critical area. In his year at Yahoo he made approximately $100,000,000. Even for the sky-high pay in the Silicon Valley, that’s not chump change. When Mr. De Castro was hired in October 2012 it was generally touted as a great hire. In fact, Yahoo had been trying to hire him even before new CEO Marissa Mayer cam on board. This cost of his hiring was high, but he seemed to be the one guy they really wanted.
During the year he was at Yahoo, key results in the advertising space did not dramatically improve and some got worse.
Let’s imagine an alternate universe. What if, instead of hiring Mr. De Castro, Yahoo had hired 100 Advertising executives, each with potential compensation of $1,000,000 in their first year at work? Would these 100 senior players have been able to do anything more than the superstar singularity that Yahoo actually hired?
What if the 100 ad execs were told that at the end of the year 50 would get $1,750,000 each and 50 would get only their $150,000 salary? Would rewarding the 50 who contributed most to identified key performance measures have resulted in better results?
This is the big risk in the all or nothing game of compensation we are currently playing. We are betting so much on so little and hoping that the 1 will get us more than 100. We are so often challenged by the disparity between those at the top and those at the bottom. But how often do we consider highly paid professionals in comparison to the mega-compensation of some executives?
Perhaps we should start by looking at those at the very top and those who are oh so close to the top. Pit may be like a planetary system and the one bright superstar is truly far more powerful and essential than the 100 lesser stars. And maybe, just maybe, it’s like your office where 100 lights spread all over can be far more effective than one incredibly bright light sitting in one corner of the building. Compensation professionals cannot make this happen alone, but we can provide better analysis, information and guidance on how to approach this issue. What say you?