The baseball playoffs are in full swing. As of this writing, the Cardinals are facing the Dodgers and the Red Sox are going up against the Detroit Tigers. At this time of the year it is mandatory for the other 26 teams to take stock of what they have done right and where they have fallen short.
In light of this annual ritual I was listening to a sports radio host talk about the Yankees and the salary of their second baseman, Robinson Cano. Now, to be sure, Robinson Cano is one of the best players in the league but the host questioned whether at $15 million dollars per season, he was really worth it. The main reason for even asking the question is that the Yankees did not qualify for the playoffs this year. Now, of course this isn’t the fault of Mr. Cano, and the Yankees don’t lack for money but it is a question worth asking.
Winning baseball vs. profit baseball
The way I see it there are two competing goals at stake. One is putting together a winning team and the other is putting butts in the seats in order to make a profit. Of course, some organizations have done a great job of both. Most however, have no such luck. Big-market teams, like super wealthy companies tend to be flush with money but do not always produce winners. Smaller-market teams, like small budget firms have it especially tough. Each is forced to be much more price-conscious, and the business of signing free agents literally has become an exact science. What about the corporate version of acquiring talent? Well, that process is far from a science.
Take a look at the chart below. It represents a snippet of the performance of several major leaguers in 2013. Basically, what I did was compare the statistical performance of some high-priced players against the performance of a few players from the more budget minded Oakland Athletics:
Batting Avg. Hits HR RBI Defensive Ability Salary
Robinson Cano .314 190 27 107 Decent $15M
Josh Hamilton .250 144 21 79 Excellent $17M
Albert Pujols .258 101 17 64 Excellent $16M
Josh Donaldson .301 174 24 93 Excellent $492.5K
Coco Crisp .261 134 22 66 Excellent $7M
Brandon Moss .256 114 30 87 Decent $1.6M
Wins Losses ERA WHIP Salary
Johan Santana 6 9 4.85 1.33 $25.5M
Cliff Lee 14 8 2.87 1.01 $25M
Barry Zito 5 11 5.74 1.70 $20M
Bartolo Colon 18 6 2.65 1.17 $3M
A.J. Griffin 14 10 3.83 1.13 $492.5K
Jarrod Parker 12 8 3.97 1.22 $495K
WHIP=Walks + Hits per innings pitched. A WHIP near 1.00 or lower over the course of a season will often rank a pitcher among the best in the game.
The main reason I even present this information is to make the point that some teams have become quite adept at getting a bigger bang for their performance buck. And that gets back to my question about winning teams vs. profitable teams. What are the real goals of the organization? Are there any lessons that corporate managers can glean in terms of hiring new employees? Perhaps the requirements and skills that most organizations have come to value are not the ones that make an employee a real winner. How can we come up with new ways to evaluate talent in the workplace?
General Managers are tasked with making real contract decisions that have serious implications for their organizations and fan bases. They make a regular practice of identifying and assessing player talent, obtaining said talent, and forming long-term strategies for their respective teams. A good draft can set their team up for the next several years.
Now think about the corporate world. Think about the criteria that managers use when deciding upon a potential hire. Is that criteria a true test of who will likely become a top performer? When you hire a new employee what skills do you highly value? What skills are you willing to pay a premium for? How much are you willing to pay for a particular skill? That is what the book, Moneyball and the study of Sabermetrics is all about. The big difference between professional sports and the corporate world is that there are no lifetime performance statistics on each worker readily available to all corporate hiring manangers. Can you imagine that?
Corporate hiring managers have a similar mission to general managers of sports teams. They (along with their co-workers) have to decide who to hire and many times who to fire. They also have to create a work environment and overall package that is attractive enough to retain their best talent. As a result both general managers and hiring managers have been forced to take on the role of speculator to their job descriptions. Somehow they must accurately assess the financial value of each player (worker) relative to their skills and what they could potentially bring to their new team (organization). A bad hire, like a bad contract can damage your team (company) for years to come.
Buyer's remorse, anyone?