Monday, February 06, 2006

Moorad is Less Add?: D'Backs
Headman Reuses Craft Knowledge  

Managers who have craft knowledge they acquired in other fields or disciplines can be at a King Gidorah-type advantage -- multi-headed for better perspective, but weighing 30,000 tons (that's even more than one of those steroid-saturated NFL linemen) anyway so back off buddy. 

Every discipline is a way of filtering/removing input. As humans, we're flooded with sensory possibilities. As explained by Garrett Hardin, each discipline/craft is a way of filtering out most input so the practitioner can focus on the specific remnants. That filtering is a useful technique, but for people who come equipped with only a single discipline/filter, a solution toolkit tends to be limited to the central, discussed problems of that discipline, and their management portfolio tends to consist of tested protocols and little else. "By the book," as it were, though not either by baseball's "The Book" (a very flexible tool) or Tango Tiger, et.al.'s freshly released The Book: Playing the Percentages in Baseball, a set of statistical studies on baseball strategies and their historical success.

So bringing in a different filter is likely to let fresh types of observations into the pile a manager considers. Arizona Diamondbacks' General Partner Jeff Moorad worked as a player agent for 21 years before crossing to the other side of the negotiating table and bringing his insights into players' business motivations and agents' contract techniques to his team's toolbox. I've written in some detail about the advantages of a team having an experienced & successful player agent working their side of the equation in this two-year old entry about Dennis Gilbert. But there was an interesting paragraph in Joel Sherman's three-dot wrap 'o leftovers at the end of his column yesterday about Moorad and a specific situation he is now facing from the owner side of the table.

A few teams, the Yankees included, work to avoid giving award or performance bonuses as part of contracts. However, the most interesting case is the ironclad rule of the Diamondbacks. GM Josh Byrnes said, "If anything it helps with budgeting, and sometimes performance bonuses divert from what we should be focusing on, which is team goals." What makes this most interesting is that the edict was installed by team owner Jeff Moorad, who for years was one of the most powerful player agents in the game. In other words, Moorad worked hard in his previous career to make sure that current Diamondback and former client Luis Gonzalez, for example, has a $50,000 bonus for making the All-Star team on top of an $11.5 million salary this year.

Moorad, as an agent, worked to acquire performance bonuses for his clients, and there are three categories of issues that inhabit performance bonus clauses. These are: Pelf, Personality, and Promoting Group Objectives.

Pelf, the money aspect is the easiest to resolve. On one side of the table, as an agent, you don't really want them if you can get the same amount without them. Each performance clause can be a negotiation in itself. It's more work. The team's motivation is the same as the agent's. But both sides end up going into the compound negotiation because it's a way to resolve big differences in base price, and because players who hire agent have come to expect them. An agent who refused to make them part of her or his arsenal would lose some potential clients.

Personality is a less tractable issue. Because some players have performance bonuses, others want them for parity. Some who want them may even want them if the agent could have gotten the price all in salary -- because he may not understand the business aspects as well as a experienced agent (and, having a different profession, the likelihood is as high as Daghara exuding toxic barium that the pro athlete doesn't understand it as well as his professional counsel does). For some players, performance clauses, in negotiation and then during the season, will be a constant distraction, for others an occasional distraction, though for some, no distraction at all. It's just a given in people management, Second Base in the MBB Model, that you have to give different incentives to different people both because they value them differently in their own personal currencies, and because their behaviors will bend to meet those incentives in different ways, and that gets us directly to the last of the three issue categories.

Promoting group objectives is a very tricky issue set because sometimes in the immediate negotiation you can win a logical victory that sets the player up to strive for achievements that end up distracting her from achievements the team as a whole needs from her more. It's even possible (not as likely as it gets talked about but clearly possible) that an individual target could get in the way of advancing the team's objective. I can give you no concrete examples in performance clauses (I told you it's less present than the talk about it), but I'll throw out one example where a personal goal can interfere with a team objective. In 1994, Chuck Knoblauch was in hot pursuit of Earl Webb's all-time single-season Doubles record. Some pundits opined that in cases where he might be able to notch a triple, he might stop at second instead of trying for third, a position his team needed him to be in to increase their chances of tying or winning a game. That season ended prematurely because of a labor action, so it was not ultimately tested, and since Knoblauch ultimately flamed out from pushing himself too hard, it's not a sure thing it would have been a problem. 

Baseball is smarter about performance clauses than other organizations. Beyond baseball, poorly-designed individual incentives that undermine group goals are more common. The most common is organizations with sales groups selling multiple products being rewarded for sales volume, not the net margin collected from the sales each makes. As most of you already know, sales compensation aimed at gross or unit sales gives incentive to the sales agent to cut selling prices or sell the easiest-to-sell items, not necessarily the ones that provide the employer the best profit stream or strategic positioning. And there's a classic military objective case during the Vietnam War where management created a metric of dead enemy, measured in "body count". This gave field officers incentive both to fatten their "body count" (from a pro-war view; from an anti-war view) with non-combatant civilians and to lie about the enemy casualties; a system built like that will reward the minority who are willing to game the system over the majority who are straight-shooters and play by the Army manuals.

Incentive clause and performance clauses if poorly designed can hinder as well as help. It depends on the context, the individual player and the ability of the incentive you're building into the individual's performance objectives to equally advance the team's objectives.

So is Moorad (and the other performance-incentive avoiding owners) approach right? 

Maybe and maybe not. This might be a case of getting Lessad for Moorad. Because sometimes when a person imports a filter from anotehr discipline or experience, they bring a set of prejudices along with it. A lazy practitioner could want to get rid of performance clauses not because they fail to give incentives to pursue the right objectives, but simply because they use up time and effort in the negotiating process.  IF, and this is a big if, you can build performance objectives that are intelligent in that they equally advance the team's objectives, it's worth a lot of agent and team time to hammer them out. Remember, in baseball as in manyh contemporary endeavors, the talent is the product. Getting the most out the talent is the foundation of good management.

If Jeff Moorad simply hated the time it took to earn the resulting chump change that would have been his take from negotiated performance targets and is now unconsciously or consciously imposing his tastes on a process, that would be bad management. If the Snakes can figure out a way to keep performance targets in their toolkit but only give the correct targets and with only the correct players, they can gain additional torque.

After all, if Toho Studios hadn't put a "Reduce Tokyo to Rubble" bonus in King Ghidorah's contract, they never could have made that sensitive paean to the human condition, "Destroy All Monsters".

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