SAME SITUATION BUT DIFFERENT RESULTS – AN EXAMPLE
Let’s start with a basketball analogy to stimulate your thinking. First compare two teams that play in the same league and in 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 total amount paid in 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
1. The two teams wear different shoes
2. One team has won three championships in a row while 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. You can choose to attribute the success differential between the two teams to the "shoes" they wear, or you can choose the second, more plausible explanation as to why the Clippers win fewer games than the Lakers. Which incidentally 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 winners from losers. The 12 people related critical success factors in sports are:
1. The team has a great manager
2. The manager sets high expectations
3. The team has identified and focuses on the positions that have the most impact on “winning”
4. They build a performance culture that measures and reports performance results constantly
5. They recruit the very best for those key positions (the quality of hire)
6. They retain the very best in key positions
7. They give significant rewards and pay differentials for the best performances
8. They differentiate and focus on performers
9. They release poor performers quickly
10. They build and maintain a competitive advantage
11. The manager demands all team members to perform on the leading edge
12. Right person/ right job
13. Have a playbook.
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 and while HR managers often talk about building a “performance” culture they are often reluctant to take the necessary steps and to make the tough decisions required to build one. The 12 most important lessons HR can learn from competitive sports (in descending order of importance) include:
1. You need great managers to win – Great players don't (after their playing days) automatically make great managers because the required skills are different. In contrast, HR quite routinely promotes the best workers into management positions. The sports industry learned a long time ago that the skills needed to make a great manager are significantly different than the skills needed to be a great player. So it’s not surprising that many of the best managers were mediocre players. HR needs to learn to promote people into management based on their people leadership and management skills and not on their work performance. In addition, just like in sports HR must learn to drop bad managers rapidly when their performance doesn't live up to the set standards.
2. 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 (As Vince Lombardi once said…Winning isn’t everything… it’s the only thing). Unfortunately, most HR departments are more than satisfied with meeting the “lower” goal of being in the top 10 or exceeding the average. You can't win championships in sports or business with people that are satisfied with "the average". HR must also develop a performance culture that sets high expectations and recognizes and rewards only success.
3. Identify and focus on the positions that have the most impact on “winning” – In football everyone knows that if you were limited to recruiting or retaining top performers in only a few key positions you would focus on your efforts on positions that have the most impact on winning –(quarterbacks, runners, pass rushers and receivers). And since no team can afford to have top performers in every position the prioritization of jobs by their potential business impact is crucial to maximize business success.
4. Distributed Metrics – Top performers love to keep score – Tracking and widely distributing performance statistics is a key driving force in sports. The best love to compete and compare themselves against others. In direct contrast, HR provides the worst statistics within the corporation. Until HR can measure, compare and distribute employee output and performance data your organization cannot perform at its optimal level.
5. Recruit the very best from around the world – Sports recruiters and managers have realized that the best athletes don't automatically go to “top schools” nor do they live exclusively in the U.S. If HR is to improve recruiting it must learn to recruit the best talent from the best corporations anywhere in the world.
6. Retain the very best – Sports and business managers often think of competitors as “farm teams”. They wait until you have trained and developed your talent before trying to recruit them away. If HR is to prevent this from happening, it first must learn to challenge, grow and excite its team members. HR retention efforts can both improve productivity and also increase your turnover rates in key positions.
7. Significant rewards and pay differentials for the top performers – In sports, top performers often get paid in excess of 10 times more than the average performer in the same position. In business, the reward differentials are much smaller (generally less than 50 percent). Instead of paying all individuals at the same "target" percentile, HR must have a dual plan to compensate top performers at a high pay percentile and bottom performers well below the over-all targeted pay percentile for the firm. HR must also strive to place a high percentage of all employees’ total pay “at risk.” The goal of HR is to pay top performers significantly more and treat them differently than the average worker.
Incidentally, in sports what an individual gets paid is widely known. This is because their pay is based on objective performance data and thus there is less fear of publicizing it.
Because pay goes up or down when team performance goes up or down the team is sending a clear message that individual and team performance is the primary basis for reward. In sharp contrast, HR departments are generally forced to keep most employees pay a “secret” in part because most of its pay practices are not based on actual performance.
HR must learn from sports to 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 but not past or potential results.
8. Differentiate and focus on performers – In sports, top performers and key players are treated significantly differently than average players. In contrast HR is generally striving for "equity" HR should rethink its approach and instead set a goal to differentiate how employees are treated, based on the difference in their performance. In a related area, instead of focusing it’s time and resources on the bottom performers, as HR normally does, it needs to focus on the employees that produce the most output and positively impact business results.
Winning teams focus on primetime players. Primetime players perform at their optimal best during "crunch" time. There are athletes that are good in practice and those that pull out all the stops during pressure situations. In sports, primetime players are sought out and highly prized. HR must learn the value of identifying and then recruiting and retaining employees that perform at their optimal best when the “money” is on the line.
9. Fire bottom performers – When teams win a championship the next year the normal turnover approaches 20 percent. This is because even when you're the best team, you still need to continually change your players if you expect your team to stay on top because players lose skills over time. In sports, players are expected to continually improve or they’re gone. Under most HR-developed performance management systems, when an employee fails he/she is not fired but instead they are either transferred or given a second chance. HR needs to learn from sports how to terminate the bottom performers and individuals with skills that are no longer needed. HR (and sports managers) owe it to the rest of the employees to keep winning.
10. Build and maintain a competitive advantage – In sports, the goal is to attract and retain better people so that you have a competitive advantage. It’s a constant “us vs them” competition. This competition forces managers to be aware of and counter the recruiting moves of their competitors at all times. Just as in sports, everything HR does must be done with the purpose of building a competitive advantage. HR must anticipate competitors’ moves and when a competitor makes an unexpected move, HR must counter their attack in order to keep HR programs and outputs superior to theirs. In addition, HR must also set performance goals that continually increase each quarter in order to stay ahead of those that “copy” our people practices.
11. 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 stay “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 their optimal best and to stay on the leading edge of knowledge. The penalty for complacency or falling behind should be termination.
12. 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
13. Have a playbook – Football teams all use a “playbook”. Its goal is to ensure that everyone knows what his or her role is (in relation to others) when each play is called. Every possible play and everyone’s role in it are covered in writing so players know what to study and practice in advance or any game. Unfortunately both in business and in HR most employees only know their limited portion of the job. If they were allowed to see the over-all integrated process they might better mesh with and cooperate with the other managers that are involved in any HR effort.
Unlike sports, HR seldom has a formal playbook or any scripted ways of handling problems for that matter. Most things in HR are done on an “ad hoc” basis in reaction to an event. A superior approach is to anticipate the competitor’s moves (plays) and be ready with an effective counter to each. In HR, just like in football, having a clearly communicated strategy is an essential start. The next step should be to share the HR tactical plan (or playbook) with each team member so they can better know what is expected of them. Playbooks provide direction to your employees and help to insure a consistent reaction.
If you study organizations in many different industries you will find the most difficult “industry” for organizations to continually stay on top in is sports competition. No other industry is as competitive. If you lose a barrage of criticism is heaped on you from radio, TV and newspapers. This pressure to win forces everyone to avoid errors at all costs. And although the pressure is equal for all, organizations like the Lakers in basketball and the Yankees in baseball show that some teams can continually win while other teams in the same geographic area continually loose. What causes one firm to continually excel? Great managers! Unfortunately when it comes to management, HR's track record can only be described as “embarrassing.” Few HR departments actively identify bad managers.” And even though we know that most companies have a significant number of bad managers, the number of weak managers that are terminated each year averages below 1%.
If HR is to learn from sports it must shed its “social work” image and it’s traditional approaches to people problems. 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 on a firm increases for it to produce quarterly results, so will the pressure on HR to learn how to be more competitive. There's a lot to be learned from competitive sports and those in HR that fail to acknowledge that fact are likely to be the next to be…"cut" from the team.