LeBron the $200 Million Hire Came From a High-Impact Hiring Strategy

Mar 14, 2011

There are two fundamental types of hiring strategies: high volume and high impact. Most corporate directors of recruiting think that the most common, high-volume recruiting, has the highest overall impact because, after all, it is used to fill a large number of openings.

However, senior executives in sports, entertainment, the military, and executive search know that the highest impact comes from hiring or retaining a handful of high-value individuals known as game-changers.

I am the curator emeritus of the “Hiring Hall of Fame.” I informally track firms that make individual hires with an extremely high-dollar impact. Former inductees include Tony Fadell, the man who spearheaded the iPod team at Apple, Steve Jobs, rehired by Apple, and of course Michael Jordan who was recruited by Kevin Loughery. This year’s inductee is the Miami Heat, which produced an amazing $200+ million business impact in less than one year with a single hire (some guy named LeBron James). After hiring LeBron, the franchise value of the Heat went up 17% ($190M) and the Cleveland Cavaliers’, his former team, value went down 26%). The Heat are now in first place in their division, while the Cavaliers went from best record in the league to worst in the league in less than a year. In addition, the Heat have dramatically increased TV viewership, as well as ticket and merchandise sales as a result of this recruiting feat.

The Cavaliers also earn special recognition for allowing employee turnover that resulted in an all-time record 26 straight game losing streak. With a salary of only $14.5M, LeBron’s first-year ROI exceeds 14:1, an ROI that would make even Gordon Gecko or Jerry Maguire jealous.

Notable High-Impact Winners and Losers

Some in HR are not comfortable with sports analogies, even though famous CEOs like Jack Welch love them, but that’s okay because the value of recruiting or losing a key employee in business is actually much higher than in sports. HP’s loss of Mark Hurd (to Oracle) resulted in a valuation drop of nearly $11B (yes that’s billion). I am predicting an even greater billion-dollar loss Steve Jobs is forced to step down from Apple. Then there is Sully Sullenberger, the captain of a US Airways flight that safely landed in the Hudson River, saving his company billions in losses by avoiding a catastrophe.

What Is the Revenue Impact of a Top Recruit In Business?

Numerous firms including GE, Netflix, Yahoo, and Google have calculated the performance differential provided by recruiting or retaining a game-changer. Bradford Smart, the author of Top Grading, has calculated the value of a single great hire at the professional level as being 28 times their salary. Google has calculated the value of the top technologist at 300 times that of an average recruit, making the value of a single game-changer hire well over $300 million. Game changers create such tremendous value because of their ability not just to innovate but to successfully bring innovations to market. In addition, they often bring with them best practices and knowledge of top firms that allow organizations to develop a competitive advantage.

Do You Know the High-Impact Positions at Your Firm?

Can you name the single position within your organization that has the highest impact on revenue? Most recruiting leaders need to guess or confess that they just don’t know. More likely than not, the highest-impact positions in your organization are not staffed by someone highly recognizable; instead, they are the virtually invisible heroes who demonstrate an immediate and significant impact on performance.

High-impact recruiting strategies focus on prioritizing resources around the requisitions for positions that have the highest impact on factors like revenue, product development timelines, innovation success, or customer acquisition/retention. The goal is to identify high-impact positions and stop at nothing to fill vacancies in them with individuals that could literally change the competitive position of the firm.

True experts in high-impact recruiting proactively identify high-impact targets over time and leverage professionals within the firm that share their profession to develop long-term trust relationship with them. When the time is right, i.e. when one of your targets unexpectedly becomes available, you must have a “no requisition required” process to bring them immediately on board

The Top 20 High Business-Impact Positions

A significant percentage of CEOs who I have met are strong advocates of “raising and lowering of the ship.” They try to take business actions that raise their ship (help the company) while simultaneously lowering the competitor’s ship (hurting the competitor). It’s a philosophy that marries well with high-impact hiring, because as LeBron’s case demonstrates targeting individuals who hold key positions within competitors can result in significant economic change.

It’s often assumed that the highest-impact positions are those that make up the C suite, but that is rarely the case. While every business needs to conduct its own research, I have found that the following nonexecutive positions are most likely to produce the highest direct business impact in the average organization (listed in descending order of impact).

  1. Sales manager (target the top at each of your primary competitors)
  2. Sales professionals (target the top at each of your primary competitors)
  3. Product development manager (target those from the most innovative firms)
  4. Variable (any top-performer from a competitor in a role that has the highest business impact at your firm)
  5. Product innovator and “idea person” at any competitor
  6. The GM of your competitors’ most profitable business unit
  7. Customer service managers from firms with high customer-service ratings
  8. Market research managers at competitors that excel at market research
  9. Brand managers at firms that have recently built or improved their brand
  10. Director of advertising at competitors that excel at advertising
  11. Supply chain manager from the most efficient competitors
  12. Logistics managers, especially the best from transportation companies that lose money when their fleet is stationary
  13. Chief technologist at industry leading firms
  14. Leading social media expert in your industry
  15. Top safety/maintenance managers (especially in heavy manufacturing/chemical production industries)
  16. The leading foreign tax specialist, especially in global organizations
  17. Partner relationship manager from firms that excel at building and maintaining relationships with key suppliers, vendors, and partners

Some HR positions are also high-impact:

  1. Recruiter (target those who are proactive and that have successfully poached your high-impact employees)
  2. Succession planning leader (target those who have the best track record in the industry for successfully slotting and developing leaders)
  3. Chief compensation analyst or leader of leadership development from major competitors (they can identify top performers and key leaders)

Note: any revenue-generating position that generates a high amount of revenue needs to be added to this list.

How To Guarantee Mediocre Results In Recruiting … Fail to Prioritize

Most firms focus on high-volume hiring using a socialist or “peanut butter” approach, where every job and every hire is treated as if they are equal. The simple truth is that just like in sports, every position does not have an equal impact on results. For example, in the last Super Bowl, it was clear that the winning team’s quarterback, Aaron Rodgers, had the highest impact on winning the game (which is why the quarterback is the most frequent selection as most valuable player). If your process takes requisitions in the order they are received or if you treat all business units equal, you are hurting your organization possibly in degrees unfathomable.

Final Thoughts

The recruiting action with the highest ROI is hiring away your best competitor’s top performing sales manager; within months your sales will increase while those of your competitor will slide. For those interested in “aligning recruiting goals with corporate goals,” this strategy goes a step beyond alignment, it directly impacts them. Every organization has a goal, written or not, that relates to increasing revenue, and those that do it well are heroes. A recruiting hero brought LeBron, Kobe, Michael Jordan, Carmelo Anthony, Tom Brady, and Aaron Rodgers to their respective organizations, just like a team of recruiting heroes assembled the engineers, product managers, marketing managers and other key players who brought the first iPod and subsequent inventions to market for Apple. If you can’t reorient your entire function, at the very least you should devote a specialized team empowered by a completely different process to focus on high impact hiring.

It’s hard to disagree with the fact that hiring LeBron did not merely change the outlook of two teams; it literally changed the future of the entire league. Producing a similar accomplishment at your firm is something that any recruiting leader would be proud of.

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