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How Companies Can Draft and Develop Franchise Players

April 17, 2014, 9:05 AM
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February to May is talent season for NFL teams. Once the Super Bowl is over, the focus turns to replenishing and upgrading the roster, filling gaps and compensating for weaknesses with new and better players who can improve and sharpen a franchise’s competitive advantage and edge.

The process begins in Indianapolis, at the NFL scouting combine, where all the top college players who have a chance to be successful pros are assessed and analyzed. Then there’s the free-agency period, when teams can add proven pros that have played out their contracts. And, finally, in May, the NFL draft takes place, and each franchise gets to select college players who can make a difference at the next level of the game.

The NFL’s approach to talent evaluation is very similar to that of many Fortune 100 companies. In the end, it’s all about finding, developing and retaining the best players – whether you’re a GE or Intel, or the New England Patriots or Seattle Seahawks. In all fairness, though, nobody in the NFL calls a 6’5,” 250-pound outside linebacker who runs a 4.6-second 40-yard dash part of the human-capital mix.

Mid-market companies want – and need – the business equivalent of this high-performance athletic specimen, however. And the real question is how do they “sign” this kind of franchise player?

To be honest, it’s extremely hard.

As any mid-market owner, manager or executive knows, there just isn’t enough time, the resources are insufficient, and the structured HR management process isn’t always in place to recruit and nurture the very best talent – the kind of game-changing employees who can help carry a small- or medium-sized business on their shoulders at crunch time.

Other things sometimes get in the way – such as the salaries that a smaller business can afford.

Or, occasionally in a family business, you’ll see a bit of nepotism; and no superstar wants to work for a marginally competent boss just because he or she is family.

A good example of this is the case of a 105-year-old company with revenues of $50 million and significant financial issues. Instead of having the best CFO it could find, the company’s CFO was the daughter of the COO. She was a newly minted CPA with limited financial experience – not exactly the best person to put in the necessary financial controls and be an independent management voice. In fact, in the ensuing receivership and liquidation, the company’s insurance settled a lawsuit against the officers based on breach of fiduciary responsibility for $2.75 million.

Despite all this, there are ways for mid-market companies to build a talent-loaded Super Bowl roster.

Here are several recommended steps for success:

1.     Hire the best people for each key position – The way to attract the best people is to be in a position to give them what they want. One advantage of a smaller company is that it has more flexibility than a larger company. Does your candidate want to work from home? Or want a little more time off in lieu of a bigger salary? Or want the opportunity to be in on the big decisions? In the recruiting process, highlight your flexibility; and, in the interviewing process, find out what the candidate isn’t getting from his or her current position and structure the deal around that.

2.     Look at the backups in the larger companies – Just like in the NFL, large companies have starters, backups, and even third-string players. Often the backup guys are waiting for a retirement, expansion role, or, in some cases, they’re just caught on the wrong side of big-company politics. In one prominent Silicon Valley company, for example, a number of the people who found themselves on the wrong side of the political battle went on to start very successful companies. Look for these people in your industry, and make them key starters on your roster.

3.     Make them equity players – One of the things that many key players want, and that they get from larger organizations, is an ownership position. We all know the stories of executives, and even low-level employees, who have become wealthy from stock options. While your mid-market company may not reach these stratospheric levels, there’s considerable benefit to having a key player whose financial interest is aligned with yours. That said, you may want your kids to inherit your company. No problem! Many smaller and mid-sized companies have created “phantom stock,” whose value rises and falls with the success of the company. If you sell the company, or that key individual leaves after a number of years, the phantom stock is bought by the company at its current value as determined by independent valuation.

4.     Base your management policies on performance, not family – No really talented and experienced employee is going to work for an unqualified boss. Yes, maybe the money or flexibility will keep them in the job for a while. But, sooner or later, especially if they’re the kind of key player you want to build your company around, they’re going to move on. Winners want to work for winners in the NFL – or in business. So, while you hope that your family members are the winners that you want them to be, make sure they demonstrate the performance and management skills they need before placing them in charge. And just think about how much they’ll learn by working for one of those proven winners you’ve hired for a while.

5.     Look to those on the back side of their careers – For those of you who are 49’er fans, you may remember when the team traded Joe Montana to Kansas City to make room for the younger Steve Young. Montana then proceeded to take the Chiefs to two consecutive playoff seasons. Or consider Peyton Manning – the Colts thought he was too injured, and maybe too old, to win; but he took the Broncos to the Super Bowl. This happens in business, too, when the older manager is encouraged to take early retirement to make way for the younger superstar. Or in a larger company, which forces a key player to walk out the door because of a mandatory retirement age. Know the competitors in your industry, and talk to people at industry events. For the cost of a few drinks or dinner, you may be able to recruit an experienced older player that you couldn’t have afforded a few years earlier. Since they’ve seen and done it all, think how valuable they can be to the development of your second and third string – especially if they’re your family.

Every industry is different, but there’s no substitute for fielding an “A” team if you want to be successful as a mid-market company. You may not be the biggest company, or have the largest number of resources, but you can be a formidable Super Bowl competitor. All it takes is some creativity in recruiting, and a little out-of-the-box thinking as you build your team.

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Al Davis is a Principal at Revitalization Partners, an international specialty management services firm that provides hands-on interim executive management and advisory services to client companies.
 

How Companies Can Draft and...

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