Monday, January 18, 2010

Sooo.....how's your VORP?

I'm a baseball fan, a relatively educated one. The kind of fan who appreciates Nyjer Morgan faking a bunt on one pitch so he can move the 3rd baseman two steps and slap single to left on the next pitch. But I'm no StatHead, that's an entirely different breed.

StatHeads have sliced and diced baseball statistics a million different ways to try and solve a myraid of arguments about players. All have failed, and annoyed many fans along the way.

But StatHeads do have some value. One of their more relevant innovations in recent years is VORP, or Value Over Replacement Player. VORP's goal is to quantify the difference between true "A Players" and everyone else. It's a great way to compare players and a concept that could be applied to hiring and talent management.

VORP is a complex equation based on a simple premise. How much more valuable is a player compared to what a readily available replacement could do in the same situation? Here is an example.

How much better is Albert Pujols than a readily available replacement? According to VORP measurements, over the course of a 162 game major league season, Mr. Pujols contributes 98.6 more runs to his teams offense than what a readily available replacement would. For non-baseball fans, that's a ton of runs.

More runs = more wins = more paying fans = more $$ for Mr. Pujols' employer. You get the idea. Mr. Pujols is significantly better than a readily available replacement and he makes significantly more in salary each year than the average Major League player. That's a good thing.

In HR/Talent Management, I feel like we tend to normalize people toward the middle. I've seen too many times when average employees get 5% raises while superstars get 6%. I've seen true "A" candidates, I mean legitimate One-In-A-Million finds, lost over a few grand because of existing compensation bands or a hiring manager's quick scan of Salary.com.

If the difference between your superstar employee's compensation is within 10% of their readily available replacement's - that's a problem. Figuring out how to calculate VORP for your organization could be part of the solution. It can help separate great employees from average ones, and reward each appropriately. And that is good for business.

Hiring and HR should be talking about VORP during every interview process, salary negotiation, and employee review. It will take a while, but with good data and persistence, VORP could catch on and make talent acquisition/retention much more efficient.