Major League HR Problems / All Star Solutions

At the end of this month is the Social Recruiting Strategies Conference (SRSC), and I will be presenting on the use of Recruiting Analytics to what has historically been a “leaning in” audience. I always have a great time at SRSC, meeting great leaders, and seeing old friends. They also let me say whatever I want, which is awesome.

My topic is similar to what I presented last quarter at BATSA, going over the basic foundation of building an analytics platform for recruiting. My team is helping me prepare a series of posts that will support that presentation, as its pretty dense, so stay tuned/search our blog for more supporting articles on that topic. BATSA folks, also pay attention as we have made some changes to when we chatted with you.

As I prepare for that presentation, or any presentation for that matter, I tend to look at what is happening in popular culture so I can make references throughout. That little trick tends to keep the material real and digestible, and also shows that the presentation is current. Brexit seemed on the money right away, but then I was planning on heading to the Ballpark at Arlington for the evening while I was in Dallas, and it reminded me to talk about baseball. We are just coming into the All Star Game. Well – inevitably I killed that baseball idea for the presentation, but serving up a blog about baseball and recruiting analytics seemed logical.

Moneyball and Recruiting
Using analytics in recruiting is done to improve performance. We want to be better, faster, cheaper, have higher quality, and have stronger experiences for all those involved. That is really it. There are hundreds of measures and thousands of metrics that we execute for one account on a daily basis. Maybe that sounds crazy, but it is not – as recruiting is the fastest moving, highest transaction, most repetitive, and most predictable part of HR. Just like baseball, we track everything.

I appreciate the variety that recruiting offers given that there are so many ways to reach out to candidates. There are also so many questions that we can ask them, and so many different types of people that can conduct interviews for any number of employers. However, the legal system, as well as local custom, pretty much dictates the general process and what’s expected of an employer in order to create a good experience. The result is a pretty boring game to watch for some and a very exciting game to watch for others. Just like baseball.

Some people are really engaged. Obviously this includes the players, but also certain observers (fanatics). They watch every pitch, every at-bat, and every inning – and they’re clearly interested in the outcome of all those little transactions, and in turn how those equate to a win for their team. People who are not as excited about the game (non players or casual observers) tend to see a lot of non-activity until somebody makes a hit or if there’s some excitement about how a player reaches base. The same can be said for a big strikeout or defensive play. This group tends to appreciate the home run more than anything else.

This dichotomy between the player / fanatic and the friendly watcher lives in recruiting too.  Your average observer to the recruiting process does not really care about source of hire, time to fill, search engine optimization, brand impact, or whatever. They want to see quality candidates in a timely fashion and make sure there are good choices. Success is dictated by big activity that makes them feel good and appreciate the game.

Recruiting analytics isn’t about analyzing recruiting, it’s about understanding how recruiting impacts business outcomes. Just like most people don’t care about how many pitches a pitcher threw in a baseball game, they don’t care about how many applicants applied for the role. What they care about is “did we win” and “did that hire make a difference”. They want to make sure that they’re winning consistently and year-over-year. If recruiting can help them achieve that winning, great.

BUTTS IN SEATS IS THE BUSINESS OF BASEBALL AND RECRUITING
In baseball, as in business, not all of what we see publicly is what happens in the operation. Most major league baseball teams have over 125 players active on their teams, more than just the 25 that sit in the dugout during each game in the majors, and certainly more than the 9 that run onto the field at the start of 162 games. Across the entire organization there are managers, coaches, leaders, and players all working with the goal of sustaining the franchise as a winning franchise, so thousands of fans spend their discretionary income to attend games and purchase merchandise. Winning championships is not the purpose of professional baseball. If winning championships was the business of baseball, 29 teams fail every year.

The business of baseball is to sell seats to 82+ games each season in the home field, at usually 20,000 people or more per game. Those people buy food, hats, and beer – and the franchise makes money. The franchise also makes money by getting people watch at home or in a bar for 3 hours, seeing game play and advertising. The franchise needs to draw sponsors to power the games on TV and the internet, at a pace of 162 games a year. The franchise relies on a complicated set of media distributors to do so. But all of the advertising dollars, the hot dogs, and ticket sales, and so on all slump with a poor winning record – or worse….an inconsistent record season to season.

We are halfway through the baseball season here in the US, and the team results would make any executive sweat. If business is about growth, earnings per share, revenue, EBITA, and (and all are important in baseball) than the operation metric within baseball that is looked at the most is how many are games are won vs games lost, or the “win percentage”. Again, everybody wants to know if they are winning. Currently, we have an entire league of inconsistent winners, which makes forecasting the remainder of the season and next season hard for these franchises. They are having difficulty planning moves, budgeting, and planning what they are going to do next.

Right now, more than half of Major League baseball teams have a win/loss record greater than 55% or less than 45%. These numbers are important. Franchises cannot sustain a win/loss record in excess of 55% or lower than 45% year over year, and not have an impact on revenue or operations. Here is why:

  • If you are WINNING BIG (like the Baltimore Orioles, Cleveland Indians, Texas Rangers, Washington Nationals, Chicago Cubs, San Francisco Giants, and LA Dodgers), the concern is will they keep it up? Will they maintain the sell-out crowds and high attendance? If they start to lose, will the season suffer? If they don’t do as well NEXT season, will they sustain a downturn of 10, 20, 30% in revenue for ticket sales from last season? If they don’t re-sign star players at the end of the season at a premium, will they lose fan base or the unexpected wins they produced this season? How much will THAT premium in talent go beyond forecasted salary expense?
  • If they are LOSING BIG (Atlanta Braves, Milwaukee Brewers, Cincinnati Reds, Arizona Diamondbacks, San Diego Padres) are they going to lose key players to trades? Are they going to be able to draw a good season of attendance and sponsors next year as they did this year? Are they going to be able to afford to keep their contracted players? Will they need to trade them away to produce cash?
  • If they are STABLE (45% to 55% win percentage) – you don’t worry so much about these things. Its business as usual. Teams like the Philadelphia Phillies, Miami Marlins, and New York Mets (all part of the same division) are really already planning their moves with a strong dependable forecast for next year based on this year. They are stable, because their win / loss percentage is relatively normal. It’s possible with a stronger win percentage next year they beat their 2017 season forecast. As they get better, they start to experience the same issues that the WINNING BIG teams are having now. Of course a team with a winning season that makes it to the playoffs has a better perception from its fans than the team who does not make it. When a team is seen favorable and stable (and playoff bound), typically whatever was done last year was proven out, and faith in management to progress as they see fit for next season is normal.

All of these conditions are real for the teams, and all impact their ability to put the “butts in seats”. The actual players actually are impacted if the fans are not there, in volume, and in a consistent and stable way.

THE PARALLELS BETWEEN BASEBALL AND RECRUITING
Now lets not get TOO crazy here. I tend to read all kinds of stuff about baseball and business, and how they parallel so easily. Baseball has the same of rules, position types, and conditions in every setting. 90 feet to first, 3 outs, 9 innings, 25 players on a roster and so on. Recruiting? Not so much. Brands have different impacts, we resource teams differently, and the conditions and tools at one company has are usually very different from another. In baseball they have the same ball, bats, helmets etc…can’t say that about recruiting.

With that disclaimer out there, consider this the following when thinking about how you are winning / losing in recruiting. You can determine your win percentage by looking to recruiter, hiring manager and or satisfaction results, coupled with your costs against budget. NOTE THE ACTUAL PARALLEL LANGUAGE WITH ABOVE.

  • If you are WINNING BIG (everybody is rating you highly and your costs are on course / under budget), the concern is will you keep it up? Will you maintain these results if the volume changes? If service suffers for a bit, will it turn into a losing proposition for the year? If you don’t do as well NEXT year, will your processes and resources sustain a downturn of 10, 20, 30% in credibility or potentially operating capital? If you don’t provide increases or bonuses to your star recruiters, will you lose credibility with hiring managers or the results that those recruiting stars produced? How much will THAT premium in talent costs you beyond forecasted salary expense?
  • If you are LOSING BIG (poor ratings across the board and/or over budget) – are you going to lose key recruiters involuntarily? Are you going to be able to draw support from the business on new initiatives and get the budget you need next year? Are you going to be able to afford to keep your current team? Will you need to release team members, technology or vendor relationships to produce savings on a restricted budget?
  • If you are STABLE (decent ratings with room to improve, and you are on budget) – you don’t worry so much about these things. Its business as usual. You are likely already planning your moves with a strong dependable forecast for next year based on this year. You are stable, because your win / loss percentage is relatively normal. It’s possible with a stronger win percentage next year you beat your 2017 forecast, which is a nice surprise, but you realize that you start to fall into some of the same issues that WINNING BIG conditions have. Of course a recruiting organization seen as favorable by the entire organization is perceived better. When favorable and stable, typically whatever has been done was proven out, and faith in management to progress as they see fit is approved.

Take a long think about where you are. Think about how your team is being perceived and how it is actually performing. Are you WINNING BIG (over performing) , LOSING BIG (underperforming) or WITHIN TARGETS (stable)? How do you know? I suggest you look to your experience and cost to budget first to get a quick understanding. Once you understand which one you are, you now need to make sure you move up, down, or keep it going….

AG

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