The value of keeping the team intact: NBA edition

Drowned out by the overwhelming amount of fan and media attention that accompanied the recent decision by basketball's LeBron James to leave his team of the last four seasons, Miami, and return to his original club in Cleveland, another team in the NBA has quietly completed the execution of a different kind of talent strategy in advance of the 2014-2015 NBA season.

The talent strategy? The retention of key players and team leadership. The team? The NBA Champion San Antonio Spurs who recently defeated James and Miami 4 games to 1 in the NBA Finals, thus setting off a chain of events of player movement (starting with the league's best player, James), that is still not completely settled almost two months from the end of the season.

The Spurs' retention strategy concluded with the re-signing to a multi-year contract extension of the team's longtime coach Gregg Popovich. From the ESPN.com piece announcing Coach Pop's contract extension:

Gregg Popovich has agreed to a multiyear contract extension to continue coaching the reigning NBA champion San Antonio Spurs.

Popovich, 65, has coached San Antonio to five NBA titles since becoming the team's coach in 1996-97. 

The Spurs won their first championship since 2007 last month when they defeated the Miami Heat in five games in the NBA Finals.

With Tim Duncan, Boris Diaw and the rest of San Antonio's key players all set to return next season, it was no surprise that Popovich has signed on for a few more years.

The long time coach, Popovich. The 'Big Three' star players, Tim Duncan, Tony Parker, Manu Ginobili. All of the important reserve/role players that helped the team vanquish the Heat in a five game series that was for the most part, incredibly one-sided. Everyone that played a key part and made needed contributions to the Spurs' great season and eventual NBA title are returning to the team next season.

In modern professional sports, the ability to retain so much of the key talent from a championship team is almost unheard of. Individual players, emboldened by their status as 'championship winners', often seek (rightly), to leverage that status into more lucrative contracts with competing teams. Some reserve players get uncomfortable returning to a team where they are likely to remain reserves for another season, thus potentially detracting from their longer term market value. And in sports, just like in any other business, sometimes people get tired of working with each other after a few years, and seek to use the success as a launch pad to something and somewhere else.

Retention as a strategy is sometimes, perhaps even regularly overlooked in sports and in many other types of organizations as well. Some people like to say retention is an outcome, and not really a strategy in of itself. It could be, but either way that does not diminish its importance and role in long-term organizational success.

ALL the NBA chatter this off-season has been about where LeBron was going to play next season, what his decision meant for the other stars on Miami, and how these moves impacted the eventual recruiting strategies of the other teams in the league. And while all this talk about player movement, potential trades, and how certain players might fit in with their new teams is fun and interesting for fans, it completely obscures what the most successful organization of the past 15 years has been doing.

The Spurs led the NBA in victories, won their 5th NBA title in the Popovich/Duncan era by defeating James and Miami in convincing fashion, and then re-signed Popovich and all the important players from that team and NO ONE is talking about them.

It is because retention is boring. Recruiting is fun and exciting though, so we like to talk about that instead. But retention, stability, and sticking to a winning formula probably gives the Spurs, (and your organization too), a better shot at long term success than chasing elusive talent and not doing enough to convince your home grown talent to stick around.

PODCAST - #HRHappyHour 188 - Live from the NBA Summer League

HR Happy Hour 188 - Live from the NBA Summer League - Featuring The 8 Man Rotation

Recorded Live from Las Vegas, Saturday July 19, 2014

Host: Steve Boese

Guests: Kris Dunn, Lance Haun, Matt 'The Professor' Stollak

This week on a very special HR Happy Hour Show, the guys from The 8 Man Rotation series of Ebooks on Sports and HR made their annual midsummer pilgrimage to Las Vegas to take in a few days of the Samsung NBA Summer League competition, catch a little music courtesy of Soundgarden and Nine Inch Nails, and record a fun HR Happy Hour podcast over a few cheeseburgers.

Steve and the boys talked basketball (of course), but also hit upon many of the angles that apply to non-sports contexts as well, and can be relevant to HR, talent management, and building teams of any kind. The NBA Summer League is one of the great, real-life experiments in talent management and development - you have players trying to learn and acclimate, coaches and on-court officials also trying to prove themselves, and you see played out how team executives talent management strategies manifest in how they try to build their teams.

You can listen to the show on the show page here, or using the widget player below:

Check Out Business Podcasts at Blog Talk Radio with Steve Boese Trish McFarlane on BlogTalkRadio

Additionally, you can subscribe to the HR Happy Hour Show on iTunes, or for Android device users, from a free app called Stitcher Radio. In both cases just search for 'HR Happy Hour' and add the show to your podcast subscription list. 

This was a really fun show, (apologies for the background music and the occasional interruption of the waiters), and many thanks to the guys for participating.

Back to more 'normal' HR content in the next show, we promise!

See you next year at NBA Summer League...

NBA Summer League Part 1 - The Relative Value of Talent

I'm just back from a great 8 Man Rotation trip to Las Vegas to take in a few days of the NBA's annual Summer League and tournament that features 24 teams of rookies, less experienced veterans, and guys trying either to hang on to their NBA dreams just a bit longer, or ones trying to crack that elite 450 or so of players that get to call themselves NBA ballers. It was a super fun trip with the boys, and I will have more on some of the really interesting things we saw, heard, and talked about during the trip, as well as a amusing in a watching a car accident kind of way, HR Happy Hour Show and Podcast I recorded with the 8 Man crew while having cheeseburgers and beers.

In the run up to Summer League, much of the talk around NBA circles was centered around free agent player signings and player movement in general. Most notably, the league's best player LeBron James made the biggest news when he signed to return to his original NBA team, the Cleveland Cavaliers, which set off a chain of events including his former teammate Chris Bosh re-signing with the Miami Heat for a massive, 5 years and $118M. This Bosh contract led to tons of internet chatter about whether or not in the wake of losing James, that Miami was indeed overpaying to keep Bosh, their next most important player from the last four years, to maintain some semblance of competitiveness in the near term.

The problem with most of the 'Miami overpaid for Bosh' takes, (and there are plenty of them), is that they usually fail to address the context in which the Bosh contract was given, and the set of circumstances that make Miami's decision to pay Bosh near the maximum amount allowed by the NBA's collective bargaining agreement with the Player's Association. This contextual factors, also apply quite often to the day-to-day decisions that HR/Talent pros have to make every day when tackling compensation issues - either offers to candidates, counter-offers, (probably a bad idea to even try them, but still), and the nuts and bolts of annual compensation package decisions for existing employees. In both cases, these are the kinds of questions that HR pros and NBA GMs need to think about, plus I will hit you with some of the rationale behind the Bosh decision from which (hopefully) you'll see some parallels to your comp-related challenges.

What's the 'right' salary?

What, in the classic 'perfect information' kind of economy that academics like to talk about, would be the 'correct' salary' for Bosh? This is close to the market rate, but not exactly the same, as the 'market' for any NBA player, as well as for that Ruby on Rails developer you can't find, is never truly perfect.

What would the market value (and actually pay) for his/her role, skills, and ability to contribute to an organization?

This is the classic, 'What did the last 3-5 players similar as we can find to Bosh actually get paid in their last contracts?' question. These numbers create an interesting set of data points that may or may not be relevant to your team. If that last team that signed a 17 and 10 guy like Bosh to an insane contract, does that mean necessarily that you should? Or maybe another team got a relative bargain for a different player (like a Tim Duncan), who at this point in his career is more concerned about winning titles than maximizing his personal earnings, and thus accepted a 'discount' on his deal. Don't think that applies to you? I bet you have lots of employees that turn down 10-20% bumps in salary from competing firms because their 'transaction costs' (moving, pulling kids out of school, learning a new corporate political game, etc.), seems too steep. These employees are probably already giving you the home team discount like we hear about in the NBA. Bottom line, the 'market' doesn't represent you, or anyone other specific firm for that matter. It is just more data. 

What kind of compensation would this person be likely to get from a specific competitor that might be interested in their services?

This piece of 'market' data is much more interesting (and valuable). In the NBA GMs often have to factor in what might happen if a given player like Bosh were to end up on a specific rival team, and how that move might impact competitive balance (and chances to win). Overpaying to keep a player away from a specific rival can happen, and might be one of the few times in the NBA, (and possibly your business too), that tossing money at a problem makes sense from a business standpoint. This takes more insight and effort than simply looking at the 'market' rate, and knowing the compensation and business strategies of your rivals.

What is this person worth to his/her current company or team?

This is the flip side of the last question - what specific skills, capabilities and knowledge of company-specific operations, products, culture, politics, etc. does the person have that are uniquely relevant to your organization, and need to be factored in to the discussion. With James leaving the Heat, Bosh now assumes the role of the team's #1 star, and the Heat elected to offer him a contract reflective of what #1 stars in the NBA are making. He also knows the city, the coaching staff, the other players on the club, etc. There aren't any 'transaction costs' with retaining Bosh, and there is some value in that. There has been a fair amount of research that suggests that in many fields that employee performance degrades when switching organizations. The amount and importance of local, situational understanding of people, process, and culture can provide employees a performance boost that is immediately lost when they jimp to a new organization.

Simply put, Bosh was probably 'worth' more to the Heat than to many other teams in the league, and while seeming to overpay him, the Heat might have made the smart move for their own team.

With Bosh, and with compensation decisions for just about every other important contributor, context matters. 

Germany, Spurs: Welcome to the Machine

The German men's national team won the World Cup with a 1-0 victory over Argentina yesterday, completing a march to the title that at times seemed almost incredible and surreal, (their 7-1 demolition of host nation Brazil in the semifinal), and absolutely workmanlike (the title match, their group stage tussles with Ghana and the USA).

But no matter how any individual game for the Germans developed, in the end they were always able to find the right combination of talent, strategy and tactics, and individual moments of inspiration and excellence needed to raise the most prized trophy in all of world sports. For US fans, continuing to warm up to the highest levels of a sport that almost (it seems) every American child has played at least some in the last 20 years, watching the German team in this World Cup had to be at least somewhat reminiscent of the recent San Antonio Spurs NBA Championship.

While there were certainly some differences between the two team's achievements, the similarities, at least to me were pretty clear, and might (apologies in advance to anyone already sickened by 'What can we learn about career management/leadership/workplaces from LeBron James returning to Cleveland' posts), I as a member of the 8 Man Rotation feel obliged to call out a few keys to both of these victories, and to take a stab at what broader application might be found therein.

Talent and system are not the same as culture, (and are more important) - Tim Sackett had a great take at Fistful of Talent last week about 'system' hiring and it is well worth a read. Both the Spurs and Germany 'play the right way', i.e., organize their players and approach the game in a particular way in that each player understands their role, and how it contributes to the overall goals of the team. While each team has recognizable and extremely successful individual players, (Duncan and Parker on the Spurs, Muller and Klose for Germany), none of the games and the strategy ever seemed to be about these individuals. From beginning to end each team approached and played the games as a team. Not once in the NBA Finals or in the World Cup late stages did I recall hearing any commentator say something like 'The Spurs (or Germany), will only go as far as player XYZ takes them.' It was always a team effort, not one that relied on one or two talents. In fact, many of the players on the Spurs for sure, probably only succeed because they are in the Spurs system, and they have found the right fit for their talent.

In the long run, discipline and belief trumps emotion - In the pre-game of the World Cup semifinal the home team Brazil had cranked up the emotional meter to 11 - they had 70,000 fans behind them, they 'felt' like it was their destiny to win on their home soil, and even held up the jersey of their injured and unable to play star Neymar in the pre-game line-up. It would have been easy for Germany to succumb to that emotional and psychological pressure, and give up and early goal or two. Instead, the German side stuck to their plan, withstood the first 10 minutes or so of Brazil's efforts, and then set on a goal scoring flurry not seem ever before in a World Cup semifinal. Similarly, in the final game of the NBA Finals, the two-time defending champion Miami Heat jumped out to an early lead against the Spurs, only to find the Spurs back to just about even by halftime, as the Spurs system and discipline proved more that Miami could match. When you have a system, and the right talent that has bough in to the system, then the lesson is to stick with it, don't panic when your opponent seems to have the upper hand, and double down on what you know will be successful in the long game.

Most of us are really bad at evaluating talent - The Spurs had the NBA's best regular season record. The German side are full of top-level players from the world's most famous clubs. Yet neither was favored to win their respective championships prior to the final series or game. The Heat, with best player in the world LeBron James, and Brazil with their history of success (and home nation status), were expected to lift the trophies that ended up being held by the Spurs and Germany. We kept looking for excuses why the Spurs or Germany could not win (the Spurs were too old, Germany had not won the World Cup in 20+ years, and never outside of Europe), that we let ourselves be fooled. Even the leaders of these great teams might not understand talent completely. The World Cup winning goal was set up and scored by two players that were not even in the starting team of 11. I think this is is often the same thing that occurs in day-to-day talent assessment and evalution. We are trained to look for the reasons why someone won't or can't succeed, instead of focusing on the things that they are talented and strong at, and thinking about ways to leverage the skills they have. 

Bottom line - Spurs = Germany = a great way to think about how systems and strategy lead you to find the right talent you need to succeed.

Look for more sports takes later in the week, (I know you can't wait), from the NBA Summer League in Las Vegas.

Have a great week!

The Obligatory World Cup Post - #8ManRotation

My annual contract with the 8 Man Rotation Group, LLC (not a real thing, but we do have an annual FREE Ebook on Sports and HR - you can get the latest version here), obliges me to post at least once about the World Cup and what similarities, parallels, or HR and workplace takeaways you might be able to glean from the tournament (which I really do enjoy), so here goes...

Talent almost always trumps all - Despite some interesting and surprising 'upsets' in the early round matches, (the USA getting out of the 'Group of Death', the legendary Spanish side failing to play to expectations), by the later stages of the event, the best/most talented teams had risen to the occasion. In the first knockout round the 8 teams that had been on top of their opening round groups, all defeated the second place in their group teams that they were matched against. And then in the quarter-final round, the four teams that advanced (Brazil, Germany, Argentina, and the Netherlands), were among the pre-tournament top four favored sides. Winning at the World Cup, and in most every business as well, remains mostly about having a group of talented people working together towards the same goal. And since every team wants to win the World Cup, the tie-breaker is talent. Not fighting spirit, not fan support, not a 'unique' culture - it's talent.

The more people needed to create the finished product, the less individual stars matter - Soccer is played by 11 people per side, thus making any single individual's ability to impact and influence the outcome of the match relatively less than say basketball, where a single star player is often the difference between winning teams and losing ones. Sure, each of the top 4 teams have their share of 'star' players, but in a 90 minute match these players can often go for very long stretches of play without even touching the ball, much less making game-altering plays. Soccer is often about discipline, strategy, organization as much as about singular talent. So while talent (usually) trumps all, it is really kind of a collective talent level that I'm talking about. Many of the top sides have seen their star players go down to injury, yet their overall talent level and team organization has allowed them to continue to thrive. The HR lesson here? Once about 10-15 people are involved in any project or initiative, you might be better off passing on the 'star' talent in favor of raising the overall talent level of the group. 

Performance is relative (and a function of expectations) - Just like how for most publicly traded companies their quarterly performance in terms of absolute revenue or earnings means much less than how those figures compared to Wall Street's 'expectations' of what those results would be, a team's performance in the World Cup usually is assessed against some kind of nebulous collective expectation of what that performance would be. Case in point -the USA team played four matches in the World Cup. They won one, drew one, and lost two. The win was against probably the worst opponent of the four. The draw happened when the USA allowed a shocking goal in the 95th minute of play (essentially the last kick of the game). But yet after the USA was eliminated from the tournament, the general consensus was that the USA had a successful tournament and is on the right track for the future. But objectively, a record of 1-2-1 in four games is pretty terrible. But against expectations, it was a success. We see this effect at work all the time - someone's just sort of average performance is viewed as wonderful if they have a track record of being incompetent. Someone else's good performance is not appreciated if they had somehow done a little better in the past. We'd probably be better off trying to forget the recent past, let go of 'expectations' and try to evaluate people and performance for what they are.

Anyway, there it is, my 8 Man Rotation 2014 World Cup post is in the books!

Happy Tuesday.