Tag: Professional Athlete Contracts

I’m reading a great book right now titled The Why Axis, which explores the concepts of causality versus correlation, the role of nurture in modern society, and generally how incentives can (and should) be used or revisited to garner the maximum effect.  Anyway, it has started making me look at things like incentives in a different way.  I think the lessons, theories, and conversations they expose are extremely useful for us to consider even in our own lives on the micro level.

Truth be told, I have always been extremely fascinated by incentive structures (both positive and negative incentives).  I think the ability to drive performance, productivity, and throughput through variable means  (financial or otherwise) is something that is extremely fascinating and something that many industries are honestly doing a really poor job with currently.  Take my own contract for instance – I largely do not have any major incentives tied to my performance so there is not a major fire beneath me to go wildly above and beyond the call of duty.  The only “carrot” so to speak is the opportunity to advance my career/position quicker (but, at many companies, the body of work completed or performance against target is far from a guarantee of quicker advancement).  Otherwise, the variable compensation tied to my role is largely in line with most professional services firms and won’t sway my overall income more than 5-10% in a given year.  I have long held, though, that the professional services industry has a tremendous opportunity to model itself more closely to the contracts of professional athletes from an incentives and compensation package structure perspective.  Think about it – how great would that be?

If my contract were more similar to a professional athlete, it would open up so many doors.  Namely, I would be able to:

  • Participate in a “corporate combine” which would allow me to display my skills and work to prospective suitors
  • Attend “draft day” events which would allow for “teams” (i.e. companies) and “prospects” (i.e. college graduates, those who are in-between contracts, etc) to mingle and celebrate leading up to the “draft” where teams fill out roster spots for open needs
  • Negotiate a guaranteed salary figure that I know I would receive independent of performance (except for gross negligence of conducting myself in a manner expected by my company/contract – similar to when athletes can nullify contracts by getting into motorcycle accidents which prevent them from being in the lineup)
  • Have a larger variable component of my salary that is provided as an incentive for hitting certain performance targets or kickers listed in my contract (i.e. spot bonuses or incentives when I exceed a given target, metric, or goal)
  • Select an agent that would help negotiate my contracts and define performance incentives that drive my own productivity (presuming they are proper motivation for me – money or otherwise)
  • Enter contract years (i.e. the years where my contract is set to expire) with a renewed passion because I know my next contract is on the line
  • Propose or take part in trades or package deals in order to align myself and my performance with colleagues/teams/companies I work well with (or to simply navigate myself to a different part of my company or another company altogether)
  • Implement a “No Trade” clause which would allow me to have a right of refusal on my company trading me to another location/company that was not preferable
  • Obtain endorsements or sponsors (third party) that would back myself, my team, or my company (i.e. Lenovo chooses to pick up my team for our next three-year deal and provide us with latest laptops in exchange for our brand ambassadorship)
  • Allow for companies to participate in a waiver process where “dropped” resources could be claimed off the wire and given short term deals
I will let you know if The Why Axis leaves me with any groundbreaking discoveries in the Incentives space.  I thought it appropriate to share one of my own compensation/incentive schemes with you in the short term though as food for thought.  What’s holding us back from modeling salaries and contracts in Corporate America more like athletes’?  I do believe that it is way too risky for most people, but there are always those players that take a substantially less amount of money to ensure that they are guaranteed and locked up for a long time.  I really think it is something that could work and start to create a renewed sense of competition for the modern age.
 
Til Next Time,
Michael

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