Progressives Don’t Understand Business – Megyn Kelly Contract Edition

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ThinkProgress is riling itself up all into a rage over the idea that Megyn Kelly might gain $30 million or so for being fired let go from her broadcasting contract. This is just symptomatic of the manner in which all those rich people get protected from the consequences of their own failures.

Well, no, dunderheads. It’s the way that people write contracts in business. And they write them this way for very good reason too. We can be explain this by reference to the Peter Principle. But then given that that’s about how business and organisations actually work in real life ThinkProgress won’t know that either.

The point is that everyone, as they keep gaining promotion, reaches their own level of incompetence. The trick to writing a good employment contract is to make sure that if you yourself are about to reach this level then you don’t want to suffer for having done so.

Weeks after the blackface debacle, for which Kelly ended up apologizing, Page Six is reporting (and the Wall Street Journal is confirming) that Kelly is finalizing her exit deal with NBC. For her poorly-viewed and failure-ridden single year of service, Kelly is reportedly getting $30 million — just to go away.

Nope, assume the number is correct she’ll be getting the $30 million for having turned up.

NBC poached Megyn Kelly from Fox with a three-year contract for $69 million, but her ratings are not consistent with what is expected from that level of network investment.

It’s that poaching which is the clue here.

Megyn Kelly and NBC News are said to be close to a $30 million settlement deal that will pay out the full value of the time remaining on her three-year contract.

The Peter Principle – we’re all promoted to our own level of incompetence. The corollary of this being that in time all jobs are done by those incompetent at them. This explains a lot about our world.

Think it through. You’re in an organisation. You’re good at what you do. Thus you are considered for promotion. You get the next job up the ladder, you’re good at that, you get considered again. This goes on until you get a job you can’t do, that you’re incompetent at. At which point you’re not considered for further promotion. But you’re also not slung down a step back to where you were still good. You end up festering there as an incompetent.

Obviously, this ain’t good. Not for you and not or anyone at all who either depends upon that organisation or has to work with you in it. Thus the more ruthlessly capitalist the industry the more you’re slung out on your ear when you have reached your level of being really very bad indeed at your job.

Two or three money failures is enough to kill any career as a movie star, three failed albums will kill a recording contract. That’s how we know that Hollywood and the music biz are thoroughly capitalist businesses. TV perhaps not quite so much in image but as we can see not meeting ratings expectations does lead to a defenestration.

So, what happens in contract negotiations? You want to tempt me away from my studio, label or channel/network? Sure, you’re going to have to pay me more than I’m getting. But you’ve also got to give me that cushion. What I would have made if I’d not taken that risk of leaving where I’m good to move up to where I might be incompetent. And that’s why pay offs in contracts that don’t work out.

Because the payoffs were written into the original contract so as to assuage if the step up didn’t work out. As Karl Marx pointed out, action creates its own reaction. That kill the failures attitude of a truly vicious industry has created that cushion of the leaving payment in the event of failure. And without such assuagement people wouldn’t take the risk of the move upwards in the first place.

The Peter Principle, the world just makes more sense when we assume it’s true. As here – Megyn Kelly’s getting $30 million because she’s not very good at this higher level job. And $30 million was the contract price of getting her to take the risk to find that out. Capitalism red in tooth and claw that is.

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