Same situation but different results – An example
Let’s start with a basketball analogy. First compare two teams that play in the same league and the same city, the L.A. Lakers and the L.A. Clippers.
If you compare the two teams you will find that both are exactly the same in that they:
- Have the same number of players
- Recruit both players and managers from the exact same sources
- Pay the same in total salaries (the amount paid in total team compensation is essentially equal due to salary cap provisions)
- Play under the same league rules
- Play in the same building
Now let's look at the distinct differences between the two teams
- They wear different shoes
- One team has won two championships in a row and the other has never even come close to winning a championship
You have two choices to explain the glaring differences between the two teams performance. One, you can attribute the success differential between the two teams to the "the shoes" they wear. The second more plausible explanation as to why the Clippers win fewer games than Michael Jordan has championship rings has to do with how they manage their “people assets.”
Critical Success Factors (CSF’s) in competitive teams – The keys to sports and business success
Whether it is in sports or business competition, it’s how you manage your “people assets” that differentiates the winners from losers. The 12 people related critical success factors in sports are:
- Have great managers
- Identify and focus on the positions that have the most impact on “winning”
- Build a performance culture that measures and reports performance results constantly
- Recruit the very best for those key positions (the quality of hire)
- Retain the very best in your key positions
- Give significant rewards and pay differentials
- Differentiate and focus on performers
- Release poor performers quickly
- Right person/ right job
- Build and maintain a competitive advantage
- Set high expectations
- Demand everyone sty on the leading edge
Lessons from Sports
In this section I will highlight each of the 12 “lessons HR can learn” from the world of competitive sports. Sports managers are highly competitive in everything they do. HR often talks about building a performance culture and becoming competitive but all too often they are reluctant to take the necessary steps and make the tough decisions required to build one. If you really know sports you know that there are a great many things that HR can learn from sports management. The 12 most important lessons (in descending order of importance) include:
You need great managers to win – Great players don't make great managers and vice versa. HR quite often promotes the best workers to become managers. Sports learned long time ago that skills that make a great manager are significantly different than the skills needed to be a great player. Many of the best managers were mediocre players. HR needs to learn to promote based on people and management skills and to drop bad managers rapidly when their performance doesn't meet standards.
Identify and focus on the positions that have the most impact on “winning” – In football everyone knows that if you can only recruit or retain top performers in a few key positions you would focus on positions that are have the most impact on winning… quarterbacks, runners, pass rushers and receivers. Since no team can afford to have top performers in every position, prioritization of jobs by potential business impact is crucial to business success.
Metrics distributed – Top performers love to keep score. Tracking and widely distributing performance statistics is the key driving force in sports. The best love to compete and compare themselves against others. Indirect contrast, HR keeps the worst statistics within the corporation. Until output and performance comparisons are distributed widely you cannot have a performance organization.
Recruit the very best from around the world – Sports recruiters and managers have realized that the best athletes don't live exclusively in the U.S. If HR is to improve it must learn to recruit the best talent from the best corporations anywhere in the world.
Retain the very best – Sports and business managers realize that other firms are constantly trying to recruit away your top talent. If HR is to improve it must learn to challenge, grow and excite its team members in order both to improve productivity and retention rates in our key positions.
Significant rewards and pay differentials – In sports top performers often get paid 10 times or more the average performer in the same position. In business, the difference is much smaller (generally less than 50 percent). Instead of paying all individuals at the same "target" percentile, HR must learn to pay top performers at a high percentile and bottom performers well below the targeted pay percentile and to make a high percentage of their total pay “at risk.” HR needs to pay top performers significantly more and treat them differently than the average worker.
In addition, in sports what an individual gets paid is widely known because the pay is based on performance. This sends a clear message that performance is rewarded. In sharp contrast, HR is forced to keep most pay a “secret” in part because it has no performance justification for most of its pay practices.
HR must treat all performance as fleeting. HR often believes in recognizing past performance but in sports managers realize that performance during one year might not continue into the next. HR must learn to emulate sports and reward current only today’s results.
Differentiate and focus on performers – In sports, top performers and key players are treated significantly different than the average player. Instead of striving for "equity" HR needs to learn to differentiate based on performance. Instead of focusing it’s time and resources on the bottom performers, as HR normally does, it needs to focus on the ones that produce the most output.
Winning teams focus on Primetime players. Great players perform during "crunch" time. In sports there are players that are good in practice and those that perform in pressure situations. In sports, primetime players are sought out and highly prized. HR must learn the value of recruiting and retaining employees that perform well when the money is on the line. Incidentally, all too often these prime time players become frustrated and leave because their job or manager provides them with little challenge or opportunity to show off their abilities.
Fire bottom performers – When teams win a championship the next year the normal turnover approaches 20 percent. Even when you're the best you need to continually "change players" if you expect to stay on top. In sports you are expected to continually move up and to improve or you’re gone. Under most HR developed performance management systems, when you fail you are either transferred or are given a second chance. HR needs to learn how to terminate the bottom performers and individuals with skills that are no longer needed. They owe it to the rest of the employees to keep winning.
Right person/ right job – Michael Jordan was mediocre in baseball but returned to excellence when he transferred back into basketball. We know that in both sports and in business a top performer in one position can easily fail in another position. Consequently, when redeploying people it's important to continually monitor their performance and when necessary, proactively move people into positions that better match their skill set.
Build and maintain a competitive advantage – In sports the people related things that you do must be done with the purpose of attracting and retaining better people than the competitor. You must counter the moves of your competitor. What you do in HR can't be done in isolation either. Everything must be done with the purpose of building a competitive advantage. HR must anticipate competitor’s moves and when the competitor makes an unexpected move, HR must do something to counter them in order to keep our HR program and output superior. In addition HR must set performance goals that continually increase each quarter in order to stay ahead of those that “copy” us.
Set high expectations – The best teams in sports are laser focused on becoming and staying number one. They develop a “performance culture” that makes winning everything (Winning isn’t everything… it’s the only thing). Unfortunately most HR departments are more than satisfied with being in the top 10 or exceeding the average. You can't win championships in sports or business with whiners, malcontents and people that are satisfied with "the average". HR must also develop a performance culture that communicates high expectations and recognizes and rewards only success.
Demand everyone stay on the leading edge – In professional sports there is little need for formal training and performance improvement because top performers generally need little technical training. They are self-learners and they constantly keep “on the leading edge” of knowledge and skill because of personal pride and their desire to stay on top. In contrast, HR designs most training for the average or below average performer while providing no evidence that bottom performers ever become top performers. HR should learn to make it an individual responsibility for each employee to maintain their skills at the highest level and to stay on the leading edge of knowledge. The penalty for complacency or falling behind should be termination.
If you study organizations in many different industries you will find the hardest “industry” to continually stay at the top is sports. No other industry is as competitive. Winning in sports is everything. Organizations like the Lakers in basketball, the 49ers in football and the Yankees in baseball show that teams can continually win while other teams in the same geographic area continually loose.
With a quick glance it is easy to see that great teams in sports win consistently if they focus their time and resources on the “basics”. Which means great recruiting and retention of the very best people in a few key positions as well as having a cadre of great managers. Unfortunately when it comes to management, HR's track record can generally be described as “embarrassing”. Few HR departments have a "bad management identification program," even though we know that most companies have a significant number of bad managers.
It's time for HR to shed its “social work” image and traditional approaches. HR must seize the opportunity to “think outside the box” and to begin to learn from competitive sports about the value of a performance culture. As the pressure increases on a firm to produce quarterly results, so will the pressure on HR to “borrow” the best practices from related fields where competition is king. There's a lot to be learned from sports and those in HR that fail to acknowledge that fact are likely to be the next to be…"cut" from the team.