As a faithful Kansas City Royals fan, I’ve closely followed general manager Dayton Moore’s efforts over the past several years to assemble a winning team with a limited budget. Watching “the process,” as some call it, I’ve come to realize that in many ways general managers are baseball’s version of human-resources managers.
Professional baseball is not just a game; it’s big business. And the general manager (GM) is the central figure in putting together coaches and players to create a successful team.
The GM is hired by and reports to the owners. Working together with ownership, the GM is responsible for all personnel decisions, such as which coaches and players to hire and fire. Gleaning information from scouts and coaches, the GM decides which players to draft, trade for, pursue in free agency, or re-sign. The GM then must negotiate salaries and contract terms. Once players are signed, the GM is ultimately in charge of overseeing their development. And, on the back side, the GM decides when to cut or trade under-performing or overpriced players. All of this, of course, must be done within salary constraints (unless you work for the Yankees). That sounds a lot like what most high-level HR managers do, doesn’t it?
Netflix is a company that embraces the concept of managing its personnel like big-league ballplayers. Netflix tells employees, “We’re a team, not a family.” But not just any team. “We’re like a pro sports team, not a kid’s recreational team.” Accordingly, team leaders are charged to hire, develop, and cut personnel smartly—like a good baseball GM.
Netflix tries to hire well; but when it falls short, it cuts losses quickly. “Good enough” is not acceptable. “Adequate performance gets a generous severance package,” the company boasts. Managers utilize a “keeper test,” regularly asking themselves: “Which of my people, if they told me they were leaving for a similar job at a peer company, would I fight hard to keep?” The ones who don’t make the list are promptly severed, to open a slot to try to find a star.
The bestselling book Moneyball is about Oakland Athletics GM Billy Beane (who was played by Brad Pitt in movie version). Beane was convinced that baseball experts were using the wrong criteria to evaluate players. So by using unconventional methods to better assess player productivity, he was able to assemble a championship baseball team cheaply by signing talent undervalued by the market.
Netflix likewise takes a different approach to evaluating employees. It does not measure employees by their effort or loyalty. What matters is great work. If an employee performs at a high level, despite minimal effort, that person is rewarded. But a loyal employee who works hard and gives great effort, but is not a top-level performer, is shown the door. As Yoda put it, “Do or do not . . . there is no try.”
Netflix also makes clear that it will not tolerate “brilliant jerks”—the cost to effective teamwork is simply too high. The same phenomenon occurs in pro sports, too. Switching from baseball to football, Jeff George was once a promising young quarterback possessing one of the strangest and most-accurate arms of anyone to ever play the game. But his career was largely a bust. Why? His attitude alienated coaches and teammates such that he could not effectively lead a team.
There is a lot to be admired about Netflix’s aggressive approach to personnel. But one potential problem is that hard workers who don’t produce immediately are not given enough time to develop. Going back to our baseball analogy, pitcher Bruce Chen bounced around between 10 teams in less than 10 years with little success before the Royals signed him to a minor league contract in 2009. He has since developed into the ace of the staff.
Another criticism of the Netflix approach is that it assumes you can sign a superstar to fill every position. As baseball fans—particularly Royals fans—know, there often is not enough top-quality talent to be had, and competitors are always trying to outbid you for that talent. So sometimes an organization necessarily has to make due with mostly rookies, castoffs, and journeymen.
The challenge, for GMs and HR managers alike, is to create the right environment, find the right chemistry of managers and players, and fully develop the talent you have to field a competitive team when you can't fill every position with an all-star. That's the stuff of a big-league HR manager.