The High Stakes Game of Keeping Top Talent
One week ago, no one knew where LeBron James was going. Yet it was a commonsense belief James would stay with the Miami Heat. The reason? Money. The Heat could offer James more than any other NBA team could, thanks to NBA rules giving franchises a slight fiscal edge in retaining their own talent.
Yet the Cleveland Cavaliers lured James to Cleveland, despite these rules. James signed a 2-year, $41.2 million deal with the Cavaliers. That amount is actually less than what James would've made had he never opted out of his original deal with Miami, which had two years and $41.7 million left on it.
Comparing basketball recruiting to real-life recruiting can be ridiculous for obvious reasons. But in this particular high-profile case, there are broad parallels between what the Cavaliers did, and what you can do to win your own talent wars. Here are three of them:
1. Take care of your own stars, before you try to woo high-priced outsiders. Before they signed James, the Cavaliers made sure to lock up their best incumbent player, Kyrie Irving, with a long-term deal (5 years, $90 million). This sent a clear message to James that he wouldn't be joining an empty roster.
2. Give yourself financial flexibility, in order to pay top talent. Two days before they signed James, the Cavaliers traded or released several backup players. In dumping the salaries of these players, the Cavaliers gained the fiscal maneuverability to offer James a lucrative deal.
The lesson here is simple: When it comes to recruiting, try to stay one step ahead of your real-time needs.
Too often, growing companies err on the side of hasty hiring. During periods of breakneck growth, the urgency to get new bodies in the building--to handle unforeseen escalations in demand--trumps the ability to cultivate a nimble recruiting budget.
The Cavaliers deserve credit for quickly executing their pre-James transactions. They could have sat on their hands and waited for a firm commitment from James before shedding those salaries. Instead they took a calculated risk. They demonstrated a devotion to his recruitment.
3. Keep adding high-potential talent, irrespective of position and need. What does every organization need? Talented people. Yet most organizations hem their own hiring by sticking to rigid job descriptions or advanced requirements.
Over the past several seasons, the Cavaliers have been smart about adding raw talent, period. If they liked a player, they drafted him, even if they already had a gifted youngster at the same position. In some cases, these young players struggled adjusting to the NBA. The Cavaliers stayed patient.
As a result, they were a team on the upswing--even before James decided to join them. In the end, their youthful core turned into a recruiting tool for James. His two best teammates in Miami were both over the age of 30. By contrast, Cleveland's best players are all under 25.
You might be thinking that adding talent irrespective of need--or ahead of need--is financially risky. But if you can't take a lesson from the Cavaliers, take one from McKinsey, the ballyhooed consulting group.
In 2008, when new jobs were scarce, McKinsey got 2,800 acceptances for 2,000 open positions. Instead of making a final cut to get down to 2,000, McKinsey upheld the job offers to all 2,800 newbies. "Even though it obviously hurt their compensation for a while, the partners accepted the costs so McKinsey would be ready for growth when the economy recovered," writes Charles D. Ellis, founder of the consultancy Greenwich Associates, in his most recent book, What It Takes: Seven Secrets of Success from the World's Greatest Professional Firms.
And that's the main idea: To use your recruiting efforts as a way to bet on your own growth.
The worse-case scenario is having too much talent in the building. Which is a problem all companies--both regular businesses and basketball teams--would love to have.