What Major League Baseball can teach us about the free agent talent pool

Posted by: Joel Capperella

After eight plus long months, the baseball season has come to an end. Let’s not discuss the disappointment I am still feeling over the early post season departure of my beloved Phillies. Rather, let’s look ahead to the commencement of 2011.

Surprisingly, the 2011 season doesn’t start in late February when pitchers and catchers report to spring training. It starts in exactly three days, when free agents are actually free to begin to negotiate with other teams.

I’ve always been keen to follow the developments of free agency, ever since the practice brought Pete Rose to my Phils. For those of you who might not remember, Pete helped the team over the hump to win a championship in 1980.

Fast forward 30 years, and you’ll see a significantly matured free agent marketplace. A marketplace that in three days time is likely to claim one of the Fightin’ Phils very own: Jayson Werth.

Jayson’s story is a good one. Early on, he traveled the league in obscurity. He got a new lease on his baseball life by the baseball exec that was responsible for bringing him into the league. And then, his consistent performance helped earn him and his teammates a World Series ring in 2008.

Now, as his contract with the Phillies is up, his outstanding performance earns him the right to choose where he plays and command a very lucrative salary. As a fan of the team, I have mixed feelings about whether or not Jayson is worth the $17 million per year over seven years. But one thing I do know — Jayson’s departure leaves a gaping hole in the outfield and the batting lineup as well.

Management has to plug this hole if they have any hope of returning to the post season. A task the demanding fandom of Philadelphia is eager to achieve after such a disappointing end to the 2010 season.

More important, from this blog’s perspective, are the lessons learned from Major League Baseball regarding the use of free agents in the more traditional disciplines in which the majority of ourselves work.

Some perspective
I mentioned a couple of weeks ago some research that we have been working on. We’ll be releasing the results as soon as we have the analysis complete, but the key takeaway is that the level of non-employee use has gone up during the recession and is likely to remain at that level even if we somehow find ourselves in a strong recovery.

The impact? Contracted labor will be more prevalent across the entire workforce. Therefore, we all now find ourselves in similar shoes to one Ruben Amaro, Jr., General manager of the Philadelphia Phillies. We have to make decisions on our free agents. For all of us not in professional sports, this comes down to calculating a cost to value that we are willing to accept.

What does this mean for all the players (pun fully intended) in such a task? Here are some suggestions.

Candidates
OK, maybe you aren’t in the market for a contract job that is going to pay you $17 million a year over seven years, but you certainly have control over the rate you are willing to accept. You have a responsibility to educate yourself on the factors that influence the rates that are typical of your skill set. Some of those factors include geography, years of experience, availability of your skills, and career objectives, to name a few.

Perhaps the most important factor for a free agent applicant, though, is to make an honest assessment of one’s ability. For Jayson Werth, he can pick and choose the stats that provide the best proof that he is one of the best right-hand hitting, “five tool” outfielders on the market. What’s it for you?

Staffing suppliers
While it is unlikely that your firm is a Scott Boras type of placement firm (Boras is one of the most ruthless sports agents and one of the most feared by professional sports teams), you have a responsibility to both your clients and your candidates. For clients, you must understand their business and their objectives. This not only allows you to serve them better, but it also provides the information that will help you determine the cost to quality threshold the client has for securing temporary talent.

You’ll find the reverse auctioneers who care about only one thing — beating back the rate that suppliers want to use. But you’ll also find firms that are more interested in a supplier partnership and that are willing to pay for a higher level of quality as long as the quality is delivered efficiently and cost effectively. (Consider the interview with Ed Hidalgo from Qualcomm, for instance.)

Hiring firms
Just as my good friend Ruben is ultimately in control over whether or not Jayson stays in Philadelphia, hiring firms ultimately hold all the cards. The evaluation that has to happen here ultimately must be focused on need. What are your most immediate talent needs across the entire organization? How does contract labor consumption fit into those demands? How is your organization managing the acquisition of this talent? What level of autonomy rests with business leadership? How plugged in is your supply chain? Are they eager to grab your dollars, or are they working to advance your goals?

Approaching your contingent needs in this way can make a significant difference. Just look at where the contingent workforce strategy of the San Francisco Giants wound up. Are you headed to the World Series next year? Are you plugging in a strong right-hand bat at a reasonable rate?