How human capital can help the sports industry win
Posted by Jamie Breshears and Pete Giorgio on October 22, 2018.
The final second ticks off the clock and the stadium roars with applause; the confetti streams down as a champion is crowned. This is the joy that players are playing for, the excitement fans are cheering for, and the success executives and owners are expecting. That said, what about the administration and staff that provide support away from the limelight? How are they being positioned to succeed in their roles and deliver these championship efforts day in and day out? Sports organizations, like other businesses, are facing critical human capital issues related to the future of work, the rise of the social enterprise, and the workforce’s increasing expectation for an irresistible employee experience. To excel in this disruptive environment and be well positioned to adapt in an ever-changing industry, sports organizations must reevaluate their priorities and adopt a holistic approach to managing human capital and driving performance.
2019 Global Human Capital Trends survey
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Deloitte writes that the 21st century workforce is here, and it demands an integrated human capital approach to rewrite rules, shift mind-sets, and adapt behaviors to lead organizations into the future.1 Putting employees in a position for success and assuring that they are engaged is absolutely crucial: according to Gallup estimates, actively disengaged employees cost the US $450 billion–$550 billion in lost productivity annually.2 Like other employers, the sports industry faces significant human capital challenges.
In today’s turbulent sports universe, everything can shift in the span of a few moments—from an individual’s batting percentage to a league’s collective bargaining agreement to the social and political environments that surround us daily. Weathering constant change means constantly realigning to accommodate these shifts in light of organizational goals. As a result, sports organizations are continually working to manage their employees’ expectations, hopes, and dreams; the inability to do so can lead to low retention of high-potential performers.
According to Deloitte’s 2018 Global Human Capital Trends report, today’s workers are looking for a new type of career—a 21st-century career that includes a series of developmental experiences, each offering the opportunity to acquire new skills, perspectives, and judgment.3 Workers in sports organizations are no different; and with the rising number of high-caliber organizations in the sports industry, organizations must create a simply irresistible organization that provides a flexible career path if they want to attract and retain top talent.
Of course, it isn’t so simple. While providing employees the ability to create their own development paths and drive their progress is alluring, it can only be the start. The sports world comes with plenty of issues that can avalanche into poor retention, such as consistently changing corporate structure and regulation, lack of recognition from the outside world for those in middle management positions, and competition from other teams who are willing to go the extra mile to keep their employees engaged.
Ultimately, organizations are beginning to understand the factors that sway their employees and are shifting away from traditional progression models, but they still have a long way to go— only 20 percent of surveyed organizations believe they develop people through experiential learning, and just 18 percent feel that they are giving employees the ability to actively develop themselves and chart new pathways for their careers.4 If the sports industry is going to continue to grow successfully with the next generation, teams must address their employees’ needs and wants before they are outgrown by them.
The business world and the sports world share a common value—winning is everything. Winning brings fans, fans bring revenue, revenue brings a healthy bottom line, and year-to-year profit helps the business realize success over time. The factors that lead to such success, however, aren’t valued as universally. Beginning with the commercialization of athletics, the sports industry has faced a daunting market challenge: how to balance the complex market drivers and changing economic landscape that require leaders to transform and leverage performance on the field and in the front office.
To the public, personnel management is invaluable to teams across all leagues, and having the right coaches and players in the locker room will make or break the team; however, effective personnel management goes much deeper than the locker room, and the front office must constantly refocus its lens on workforce and performance management processes to sustain motivation across the organization. Sports organizations can separate themselves from the pack by proactively engaging performance management questions that haunt employees daily: How is performance managed and measured? How can I climb the corporate ladder? What is expected of me? How am I performing against my potential?
Despite this need being recognized (76 percent of companies have reinvented performance management to be a more continuous, personal journey), most organizations are still struggling to progress in this area (91 percent of companies still follow the “utterly conventional practice” of conducting salary reviews annually or even less).5 To keep their organizations performing at par for the course, and to keep the market trending in the right direction, the C-suites of sports teams must actively manage risks and develop processes that focus on value and productivity. For nearly all sports organizations, this will mean a continued investment in new capabilities and extended operational capacity in the areas that will need to shift with market behavior.
To drive business results, sports industry leaders are being pushed to transform and leverage their culture on the field and in the front office due to growing societal pressures and complex market drivers. The sports industry is facing a variety of challenges, and just as there is no perfect formula for winning a championship, there is no cookie-cutter solution to overcoming these challenges. But with the right strategy and game plan, sports organizations can create a winning culture on and off the field, enabling them to overcome the obstacles they regularly face.
When viewers see a trophy lifted at the end of a championship game—be it the Vince Lombardi Trophy, the Stanley Cup, or the Larry O’Brien Championship Trophy—they usually focus on the players and the coach on stage. Nevertheless, sports organizations are composed of many team members that never see the field or the court, but rather work behind the scenes and in the front office. To create a winning culture on and off the field, sports industry leaders need to look at the broader picture. To drive their business forward, organization executives need to create a compelling culture to attract and retain employees and keep them motivated.
According to the 2015 Deloitte Human Capital Trends report, 87 percent of executives surveyed around the world believe culture is “important” and one of their top challenges, however only 12 percent of these executives believe their organizations are excellent at effectively driving the desired culture.6 At times, the pressure to win on the field creates a hyper-focus on in-game performance and can negatively impact employee morale and business performance. Furthermore, sports industry leaders need a compelling culture to attract and retain employees and keep them motivated to save the organization’s bottom line and keep the team moving in the right direction.
Many of us can recall the storyline of the book-turned-screenplay, Moneyball, based on baseball’s Oakland Athletics and their magical 2002 season. Billy Beane, former General Manager of the Athletics (1998–2016), used statistical analysis to assemble his team despite a tight budget and ultimately managed to reach the playoffs. Beane’s strategy displays the type of out-of-the-box thinking that can cause disruption in the market and redefine an industry. By hiring an inspired and creative-thinking workforce that is willing to push the envelope, organizations can find a variety of ways to innovate their business strategy and continue to grow.
Employing individuals who have a pulse on cutting-edge technology and a desire to make their organization better through innovation is a practice that can contribute to larger organizational success. If organizations want to thrive (or even survive) in the ever-changing landscape of the sports industry, they must employ people who are passionate about improving the status quo. By also creating effective and clear communication channels where employees can share potentially game-changing ideas with leadership, the sky is the limit.
Tying it all together—What do you do about it?
The sports industry has long been successful by delivering an exceptional product and providing a unique experience to all involved. To continue along this path, and even exceed the trajectory that has been set, it is paramount that your organization’s human capital is set up to succeed. Whether the challenge your organization is facing is talent retention, organizational performance, cultural change, or building an inspired workforce, it is time to step up and face your rival(s). The 21st-century workforce is here, and it demands an integrated human capital approach to rewrite rules, shift mind-sets, and adapt behaviors to lead sports organizations into the future. Assessing your organization’s human capital capabilities and implementing industry-leading solutions can help jump-start and guide your organization toward a successful future.
1 Dimple Agarwal, Josh Bersin, Gaurav Lahiri, Jeff Schwartz, Erica Volini, The rise of the social enterprise: 2018 Deloitte Global Human Capital Trends.
2 The Gallup 2017 Employee Engagement Report is Out: And the Results . . . Nothing has Changed, The Employee App, 2017.
3 Dimple Agarwal, Josh Bersin, Gaurav Lahiri, Jeff Schwartz, Erica Volini, The rise of the social enterprise: 2018 Deloitte Global Human Capital Trends.
4 Dimple Agarwal, Josh Bersin, Gaurav Lahiri, Jeff Schwartz, Erica Volini, “From careers to experiences, New pathways,” The rise of the social enterprise: 2018 Deloitte Global Human Capital Trends.
5 Dimple Agarwal, Josh Bersin, Gaurav Lahiri, Jeff Schwartz, Erica Volini, “New rewards: Personalized, agile, and holistic,” The rise of the social enterprise: 2018 Deloitte Global Human Capital Trends.
6 Mark Kaplan et. al., “Shape culture, Drive strategy,” Deloitte Global Human Capital Trends 2016: The new organization: Different by design.
For more information on the Deloitte Human Capital Sports Practice, please reach out to our leaders:
Jamie Breshears, is a senior manager in Deloitte Consulting LLP’s Human Capital practice, where he is a leader in the Human Capital Sports Consulting practice.
Pete Giorgio, is a principal with Deloitte Consulting LLP in the US Strategy service line Monitor Deloitte, where he leads Deloitte’s Sports Consulting practice.
For more insights about current sports industry trends, check out Deloitte’s 2018 Sports Industry Trends Report.
Read more: capitalhblog.deloitte.com