Watching people sit around a table on the phone during the NBA draft is hardly riveting TV. But for those of us who build teams in the business world, the NBA draft and other sports drafts offer valuable lessons.
I’ve always been an NBA draft geek, mainly because I played basketball growing up and dreamed of one day being a lottery pick. I played four years at Harvard, and was team captain my senior year, but it is safe to say I was never going to be a pro.
But since college, as the founder of a law firm built from the ground up and currently as a recruiter, entrepreneur, and venture investor, I have found that watching how teams go about the draft can be highly instructive. I’ll be watching the NBA draft on Thursday at the Barclays Center in Brooklyn to see which teams are able to add the talent that will build their rosters in the right way and take them to the next level.
Here are four takeaways from the NBA draft that I use to evaluate talent:
1. Drill the Culture
Some basketball coaches – we won’t mention any names – have been known to make players physically ill running drills. Not many of those coaches, however, have been known to have equally rigorous conversations with players and staff about the team’s culture, values, and purpose.
The best NBA coaches, and by extension franchises (the San Antonio Spurs, Los Angeles Lakers, and Boston Celtics come to mind) drill potential draft choices not only on physical ability, but also on mental maturity and emotional intelligence. Increasingly, they are doing this with data and analytics that measure psychological growth as accurately as vertical leap. This enables team executives to assess the potential draftee’s “fit” with its culture and gauge their ability to meet expectations on and off the court. By having these conversations before the draft, teams can avoid blowing a pick on a potentially disruptive player.
Too few recruiters and hiring managers drill potential candidates on the culture of their organizations at the start of the hiring process. Yet, according to a study by executive search firm Korn Ferry, 72 percent of executives say that culture is extremely important for organizational performance. Not discussing culture early and often with a potential hire is like an NBA team waiting until after drafting a player to give them a work out.
2. Think Right Piece, Not Missing Piece
What’s the difference between the right piece and the missing piece? Look no further than this year’s NBA Champion Golden State Warriors.
In 2016, after setting an NBA regular season record for wins and taking a 3-1 series lead, the Warriors ended up losing the championship to LeBron James and the Cleveland Cavaliers in seven games. This year, the Warriors didn’t set any regular season records, but they did take back the title from the Cavs in five games. No small amount of credit for their win goes to Kevin Durant.
Durant wasn’t the missing piece – the Warriors won 73 games a year earlier without him. He was the right piece, the one player needed to make them champions again. As gifted as Durant is with the basketball, his greater contribution may have been opening up avenues for the Warriors’ other players, from clearer looks for Steph Curry’s threes to more room for Draymond Green to grab boards. Durant’s fit, versatility, and unselfishness were as important to the team’s success as his talent.
Other NBA scouts, and all those building business organizations, could take a lesson from the Warriors. Building a successful team is not just about filling a role, it is also about the ability to recognize rare skills that allow current and newly recruited talent to maximize their own contributions.
3. Debate Selection
Since active basketball team rosters are smaller than those in other sports – 12 players versus 53 in football, 25 in baseball, and 20 in hockey – drafting the right player is even more crucial. Vigorous debate among the owner, general manager, and coaching staff is not only common, but also essential to making the right selection. After all, millions of dollars – and the team’s success – are at stake with every selection.
Workflow in many organizations typically moves in sequence from one department to the next – for instance from legal to marketing to sales. But to keep pace with digital advances, the current trend in the corporate world is toward smaller focused teams with talent from different departments working on a project in unison. These smaller corporate teams, not unlike basketball teams, must effectively communicate in a fast-paced environment and continually adjust in real time. And team members count. While a wrong hire may not cost a large organization as much as a busted lottery pick, every hire counts for them too. There are many negative consequences of hiring the wrong person, including undermining employee morale and cohesiveness, lost productivity, and the cost of trying to rehabilitate and then replacing the wrong hire, as well as repairing the lingering damage with customers and your own team. Your success as a manager, and the success of your organization, depends on the people you hire.
Potential candidates, just like potential draft picks, should be exposed to a range of employees who can debate their impressions with the hiring authority. In addition to human resources and the hiring authority, managers in adjacent departments, both senior and junior team members, and others should also meet potential candidates. Only one person can ultimately be responsible for the hire, but others must be encouraged to provide valuable feedback that gives a more complete picture of candidates and how they might fit with the organization’s culture and needs.
4. Make the Business Case
As part of the NBA’s new collective bargaining agreement, Steph Curry is eligible for a new contract that could be worth upwards of $200 million. With the Warriors’ two NBA championships in the last three years, sold out home games, national media attention, and millions in merchandising revenue, a strong business case can be made to justify Curry’s upcoming payday.
But what’s the business case justifying a new draft pick’s compensation? Annual salary projections for first round picks in this year’s NBA draft range from $1.16 million to $5.86 million for the top overall pick. The return-on-investment may be realized fivefold – or not at all.
Even the most aggressive and cash-rich organizations can’t risk overpaying their recruits and free agents. Not many NBA teams can afford to sign the best free agent, because of salary cap and payroll restrictions. Similarly, in the business world, few organizations can offer salaries for top engineering talent to match those at Apple, Amazon, Facebook, and Google.
That is why it’s important for teams to evaluate candidates from all angles and be sure that their pick is right, and worth the money they’ll be paying. No one gets them all right, but the teams that get most of them right are the ones that rise to the top.
There are many different methodologies out there, but I try to keep it simple by focusing on three things. First, outline what you expect new hires to accomplish to justify the minimum compensation for their roles. Second, identify how new hires can move beyond those minimum expectations, and figure out how to compensate them when they do. And third, create a plan for new hires that will help them become high achievers, accomplishing a lot more than the minimum expectations.
Even with advances in data and analytics, evaluating talent is as much art as it is science. The intangibles that potential recruits, in both sports and business, bring to bear will always be difficult to measure. Building championship teams – in sports and business – is a process that begins with great hiring. And the internal preparation that goes into how teams draft and hire can shoot them to the top or leave them in the basement.
Scott Gilly, Founder and CEO of Pivot Management Partners and DirectDep LLC, was captain of the Harvard basketball team during the 1989-90 season.