Management Lessons from the National Hockey League
Efficient use of human capital resources improves long-term performance
Posted Apr 21, 2019
The collective knowledge, skills, and abilities possessed by members of an organization is a resource called human capital. Importantly, human capital is a key driver of firm-level outcomes, such as sales, profits, and market share. To this end, organizations often strive to acquire additional human capital, either by “making” (via training) or “buying” (via recruitment and hiring) employee knowledge, skills, and abilities. However, a recently published study indicates that it’s not just the amount of human capital an organization has at its disposal that ultimately determines success, but also how the organization puts their human capital to use.
My colleagues Aaron Schmidt, Michael Natali, and I studied the success of National Hockey League (NHL) teams across five seasons. We found that long-term performance was largely driven by a team’s tendency to save their best players for situations in which these players would have the most impact. Specifically, teams that were more likely to put their top-paid players on the ice when the team was losing and keep these players on the bench when the team was ahead had higher season-level performance, compared to teams that did not adjust the playing time of top players in this manner.
Essentially, this comes down to allocating resources by need. Players’ energy is limited and valuable. NHL teams that use this resource strategically are more successful in the long run, relative to other teams.
However, it is important to note that by reserving top players for when they are most needed, NHL teams often subjected themselves to decreased performance in the short-term. Nonetheless, a willingness to take a short-term reduction in performance performed contributed to higher performance across the season as a whole.
This study has implications beyond the NHL, particularly for the way organizations manage their personnel. Just as NHL players get fatigued after a shift on the ice, workers in traditional occupations also get fatigued by their job demands, such as meeting tight deadlines and dealing with difficult customers. This study may be informative for managers, dispatchers, and anyone else responsible for assigning others to complete work tasks. It is probably not a great idea to assign your best performer to every problem. Instead, saving their energy for when it’s most needed is likely to pay off in the long run.
The full manuscript can be downloaded here.
Beck, J. W., Schmidt, A. M., & Natali, M. W. (2019). Efficient proximal resource allocation strategies predict distal team performance: Evidence from the National Hockey League. Journal of Applied Psychology. Advance online publication. http://dx.doi.org/10.1037/apl0000407