"So long, we hardly knew 'ya, but here's 60 million clams to ease your pain." It's not likely that's what Yahoo CEO Marissa Mayer told her first big hire, her hand-picked second in command Henrique de Castro as she was kicking him to the curb. And it's not likely a bad hire will cost your company millions and millions of dollars. But perhaps there are a few lessons to be learned here at Yahoo, Mayer's and de Castro's expense.
The decision, after just a year and a half on the job for de Castro, was first revealed via a rather unlikely source; a U.S. Securities and Exchange Commission official filing. Also according to that report, de Castro will receive around $64.6 million in total severance as was specified in his contract when he first came on-board. But the UK's Daily Mail put the figure closer to $109 when salary, bonus, stocks and other compensation is all totaled.
Mayer’s internal memo, leaked by technology news site Recode, sheds a little light on her decision.
“The beginning of a new year always provides time for reflection,” began the memo. “During my own reflection, I made the difficult decision that our COO, Henrique de Castro, should leave the company. I appreciate Henrique’s contributions and wish him the best in his future endeavors.”
After heading up ad platforms and services for Google, Mayer lured him to Yahoo in October of 2012 to lead the firm’s global sales, operations, media and business development.
However, during his time at Yahoo, de Castro failed to increase advertising revenues for both the website and mobile apps, ultimately reportedly leading to his sacking.
Do your due diligence.
Here are a few takeaways from what I have learned about the situation:
Do your due diligence. Mayer obviously worked together with de Castro at their former employer Google, but how much did she really know about what he was actually responsible for? Company insiders say he took credit for building a business that may not have actually been his doing. That he was the lucky beneficiary of good timing, good acquisitions and good people around him. Others say he was difficult to work with, a bad fit, and literally "the worst hire ever" because he was ill equipped to do what Yahoo needed him most to do. So Mayer could have done a much better job of asking around for references about what this guy did, and how he did it.
Be careful about who you advocate for. Yahoo insiders say de Castro was hired with great fanfare and was talked up at great length and volume by Mayer. When you personally advocate for someone, and make their hiring so prominent, it makes it all the more difficult if that person doesn't perform and has to go away.
Getting rid of the problem employee doesn't get rid of the problem. Think about the predicament Mayer finds herself in now. She doesn't have a COO, and will have to spend time, energy, bandwidth and more money to find one. She doesn't have anyone to lead the firm's global sales, operations, media and business development, the growth engine(s) of the company at a time revenue is declining and the stock price is taking a hit. Meanwhile, research firm eMarketer said in December, Yahoo’s share of the digital advertisement revenue in the U.S. declined to 5.8% in 2013 from 6.8% the previous year. The company’s share is forecast to shrink further to 5.0% by 2015.
Have a comprehensive communications plan in place before you pull the trigger.
Have a plan before you proceed. Communication - and transparency - is almost always a good thing, and Mayer should have had a comprehensive communications plan in place before she pulled the trigger on the firing. Letting word trickle out via a government filing, and then having a confidential internal memo leaked is decidedly not the way to handle such a prominent personnel change. She has to know the way she addressed the situation would shade the way her team and other employees view her as a leader. You may not be able to give people many specifics around the actual decision, but you can make a public pronouncement to assure your team - and stockholders in Yahoo's case - that you will move forward with a positive mindset and continue working hard to serve your customers, blah, blah, blah.
Debrief with yourself. Was it you? Or was it them? This is a good time to take a hard look at your management style. Did you define expectations clearly? What was the real source of the problem? What can you learn from the experience? Sometimes a bad hire is just that, and no amount of patience, or training, or communication, or goals or anything else is going to fix it. But you can at least try to assure yourself you are doing everything in your power to make good hires, and then to help people succeed once they are on the job.
There is a lot at stake when you hire - and fire - someone. Do both with as much research and wisdom and deliberateness as possible.