Many sports fans in recent years have become familiar with advanced statistics – not just the old-fashioned stats like points scored, wins and losses, but more a complex analysis of the various factors that lead to success on the field. “Moneyball” tactics and Sabermetric analysis have revolutionized baseball, and there's no reason small businesses can't get in on the game.
Advanced statistics are important in sports because they give managers greater insight into the decisive factors that differentiate between a good player and a marginal player. Businesses can learn from the sports world's example by taking a fresh look at how they measure employee performance, and how they decide which employees to reward and promote.
Baseball and the business of undervalued talent
In the book "Moneyball" by Michael Lewis, the Oakland A's were a small-market, small-budget team that couldn't afford to sign expensive free agents and had to make every dollar count. Instead of relying on traditional yardsticks for measuring a good player, the Oakland A's general manager found a way to get smarter in evaluating players using statistical analysis. Certain players had hidden advantages that were often overlooked by baseball scouts and by other teams, and the A's achieved success by signing these undervalued players.
Small businesses could learn from the example of the Oakland A's by finding ways to get value from employees who have certain skills that are undervalued by the competition. Do you have any employees who might not fit the prototypical description of a "star performer," but have unique attributes that can help your team get better? Can you take a chance in hiring some lower-priced talent in the hopes that you can get better-than-expected results?
Redefining team performance
The concept of advanced statistical analysis has recently arrived in the National Hockey League as well. Hockey teams such as the Chicago Blackhawks are developing new ways of analyzing statistics to find advantages and evaluate players more accurately.
Rather than judging hockey players by goals scored, assists tallied, or their plus/minus rating, advanced stats are showing that there are many ways that hockey players make a difference in winning a game. Hockey teams are now tracking statistics showing which players were on the ice while the puck was in the offensive zone, and while the team was putting shots on goal. This way of evaluating players helps give better insights into which lineups are the most effective.
In the business world, a comparable challenge is to evaluating team performance instead of just individual performance. Do you know which people in your company are the best contributors to their team? Do you know which employees help those around them be better at their jobs?
The concept of “advanced stats” can inspire small business leaders to reevaluate some of their metrics and employee performance evaluations. Do you know which of your employees are truly the best performers? Are you sure? Can you look closer at your business to figure out which activities and metrics are truly driving results for your business, even if they might not be the usual suspects, like sales or profit per sale?
Small business managers need to keep asking themselves tough questions about how they evaluate performance. Do you really know which characteristics of your employees are most relevant to the success of your company, or are you using old-fashioned metrics? Make sure your business is doing a good job of tracking the contributions of everyone who makes a difference – not only your star performers, but everyone who helps bring about their success.
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