1. How was the HR value chain of the Oakland Athletics?

And how was the HR value

HR value chain is a tool that shows how HR adds value to the organizational outcomes, financial/
Accounting outcomes and market-based outcomes. When Oakland’s lead-off batter and outfielder Johnny
Damon, and other two players signed with the Boston Red Sox, it left two holes for the A’s that are his
offensive bat and defensive glove. Oakland was competing against bigger budget teams and it was hard
for him to hire players due to his small market team. When Billy, the GM of Oakland hired assistant Peter,
he knew what was needed to hire players. He says to Billy that people who runs ball club they think in
terms of buying player but the goal should not be that, instead it should be to buy wins and in order to
buy wins one needs to buy runs. He then continues saying that Boston Red Sox sees him as a star worth
$7.5 million a year as he has got great glove, decent leadoff hitter but in his perspective, Damon is an
imperfect understanding of where runs come from and is not worth $7.5 million. Peter says with positivity
that getting Damon off Oakland’s payroll opens up all kinds of interesting possibilities. Later on, he started
by calculating the value of each player within a game to hire new players which Billy then approves. Using
derivative valuation and probability, the A’s were able to dissect players’ skills to understand their true
contribution to the team. They overlooked all the bias reasons and perceived flaws of the players such as
age, appearance, personality to hire players. For example, Chad Bradford’s defect was he throws funny,
Jeremy has got drug problems, David was a little aged and Scott was released by half of the baseball
organization because of his non-repairable nerve damage in his elbow for which he couldn’t throw and
field. However, these players were team oriented and said in the interview before entering a match that
“it takes a team to win not an individual” (Players outcome increased). Later on, with these new recruiting
players they successfully won 20 consecutive games in the history of American league Baseball
(organizational outcomes such as productivity increased due to players outcome). Each players OBP (on-
base percentage) was higher than those Damon, Giambi and other players who was bought by different
Baseball organization at higher price. But these new recruiting players were worth $2-$3 million a year
(Financial outcomes such as expenses decreased, revenues and profitability increased for consecutive
wins and cheap players). After consecutive wins, Oakland’s players such as Pene and Jeremy was traded in
Detroit and Phillis and other players were also traded at a high market price (market-based outcomes
increased).
In contrast, the competitors such Boston Red Sox and Yankees had a competitive advantage as they were
bigger budget teams. However, each players OBP was less than Oakland’s players (players outcome
decreased). They started to lose against Oakland (organizational outcomes such as productivity
decreased, and quality decreased also due to less OBP). Players were hired at $7-$8 million a year
(financial outcomes such as expenses increased, revenue and productivity decreased due to loosing the
games). The players were of less value in the market to trade (market-based outcomes of the players
decreased).
 2. What were the “HR metrics” that Oakland athletics decided to measure? Do you think
that they can be used elsewhere? *

Oakland Athletics general manager, Billy Beane in the movie “Moneyball,” was forced to rethink how he
scouts and hires baseball players because his small-market team cannot afford to outspend much
wealthier teams such as the New York Yankees and Boston Red Sox on free agent signings. Instead, Billy
and his assistant Peter who was a player analyst applied measurement techniques collected from the
financial realm to unearth baseball players that other teams have undervalued.
Billy and Peter looked beyond traditional statistics to find the “value” of player such as batting average
and home runs for position players and games won, earned run average and strikeouts for pitchers to
seek out players that were generally undervalued. They examined what the team’s concrete, numerical
goals were, and what specific player abilities were needed to reach these goals, while still staying within
the budgetary limitations set by the team’s owners. Billy and his statistician instead considered alternative
metrics, such as on-base percentage and average number of pitches required to complete an at-bat, and
discovered that such metrics had a higher correlation with games won by a team. However, applying
these new metrics as part of an ongoing staffing plan, Billy’s team Oakland Athletics qualified for
American League and won 20 consecutive games. Billy’s approach illustrates that the use of staffing
metrics can translate into significant success for an organization. The key is selecting the appropriate
metrics and analytical techniques.
Just like the way Billy and Peter used the HR metrics in baseball for Oakland Athletics, I believe HR metrics
can be used elsewhere. HR metrics provide information needed to help managers to better manage
employees while achieving business efficiency. Workplace challenges such as performance evaluations are
vulnerable to subjective bias and discrimination, leading to inequitable outcomes and employee
dissatisfaction within the organization. Therefore, rather than promoting people based on personal
intuition and opinion from manager, HR metrics can be used to measure employees. HCM software
vendors such as Oracle and SAP offers enterprise solutions to keep track of employees has consistently
met sales forecasts, those who suggested productivity changes and those who perform better than
average. Apart from measuring performance cloud-based systems can also be used to utilise talent and
succession-planning data, to help predict and provide suggestions for talent pipelining, as well as connect
employees with mentors to facilitate talent development. Predictive analytics can not only lead to the
source of the breakdown, but also provide forward-looking insights that illustrate how an issue or an
employee may evolve. However, on the other hand, while these metrics are a game changing tool, that
should not mean we should completely discount the human intuition. HR is a “people business” at the
end of the day and there is a need to reconcile the numbers with our human opinion in order to
empathize and react promptly to unprecedented situations.
 3. From 5 factors of investment orientation, share your assessment of the actions of
Oakland athletics.

Five factors of investment orientation in assessment of the actions of Oakland athletics

-Management values: Management values its people is a critical factor in its willingness to invest in them.
Billy, the GM of Oakland athletics along with Peter adapted a statistical method to invest on the players.
Peters shared perspective with Billy was that, players were overlooked for a variety of biased reasons and
perceived flaws such as age, appearance, personality. He showed a realistic way to identify good players
through mathematics rather than perceptions. Even though the players were overlooked for some defects
by other baseball organization but Billy considered investing on them by giving training so that they can
play 1st base. The defective players Scott, David, Jeremy, Chad were hired and trained later to replace
Giambi who was one of the best player whom he lost to bigger teams. Based on high OBP rate of these
players, Billy believed that these players will bring success if he invests in them by given appropriate
training.

-Attitude towards risk: The most fundamental lesson in financial management is that a trade-off exists
between risk and return. Higher-risk investments are generally expected to have a greater potential
return; lower-risk, safer investments are generally expected to have a more modest return. Billy trading
some of his best players was very risky indeed but potentially his returns were high. The high returns were
his success in winning 20 games in a row in the history of American league baseball. Billy Beane would
also dig into the numbers to find players he liked. He’d then put them on a wish list and pick them up
when the market discounted the player’s value because something was amiss.

-Nature of skills needed by employees: Billy’s defective players were overlooked by all the baseball teams.
Therefore, the skills that the players had was not marketable and so it was not riskier for Billy to train and
invest in them. However, once they started to win the games back in row, Billy was offered by Boston Red
Sox to be the GM of the company which he later rejected. Due to the rejection Boston started to follow
what Billy did to hire the players which was than riskier for the Oakland team as now the skills of his
players were marketable.

-Utilitarianism: Organizations that take a utilitarian, or “bottom line,” perspective evaluate investments by
using cost benefit analysis. There is a systematic way to measure employee performance, outcomes or
training programs. There is a systematic way to evaluate everything. Oakland athletics was measured
based on the OBP (on base percentage). Using statistics to measure the value of each players was a
successful adaptation by Billy and Peter.

-Availability of outsourcing: The main investment for Oakland Athletics is its investment on the players as
investing in them can have high return. Billy also hired Peter who was the player analyst of Cleaveland
Indians. Investing on right people was Billy’s main motive which was a total success for Oakland team too.
Therefore, there was no kind of outsourcing done by Billy as it was a baseball team to manage as a result
the investment in his teams have increased.