What do the Oakland A’s, New England Patriots and New Castle United share? They’ve each applied Moneyball techniques to their respective sports. In the book Moneyball, Michael Lewis describes how, over a five-year period, the Oakland A’s used analytics to win more regular-season games than all but one major league baseball team while spending fewer payroll dollars per win than other teams. Oakland’s data-driven approach has spread to other sports, helping teams identify predictive skills and hire talent to produce wins. In today’s labor market, many employers base their hiring decisions on characteristics that bring relatively little value to their organizations while ignoring more valid selection criteria. We’ll explore how to select employees based on more valuable and predictive characteristics to bring sustained Return on Talent Investment (RTI).
HR’s Use of the Moneyball Concept
In its simplest form, the Moneyball concept is this: quantitative statistical analysis can more precisely predict a player’s future performance than previous evaluation models. In the US, both baseball and football are using analytics to guide personnel recruitment and performance. With the lowest payroll in the American League and 94 wins, the A’s had the highest return on their talent investment for 2012. In the NFL, the New England Patriots paid the lowest cost per victory of all teams in the playoffs last season. Analytics continue to produce results in sports.
The Moneyball book and ensuing movie have spawned analytics that are now applied beyond sports and into the business world. A sport, by nature, is a zero sum arena with clear winners and losers. In business, there is not a zero sum arena. Winners and losers are measured by productivity, market share and ultimately by shareholder value.