We watch them on TV and at the stadium, read about them in the papers and on the web, follow them on social media—we can’t ever seem to get enough of sports stars. Most business people have a ravenous fascination with top-level athletes, and for good reason. Elite sports is a powerful metaphor for business.
In both worlds, they face similar challenges: Fierce competition, perseverance to chase goals, winning by sometimes very small margins, establishing long and short-term strategies, collaboration, dealing with success and setbacks, and only those who can continually improve performance take home the gold. In major league sports, the compensation of those top performers can be extraordinarily generous. Consider Brazilian soccer star Neymar. The sports world is still in hysteria over soccer club Paris Saint-Germain (PSG) paying a record-breaking U$263 million transfer fee to acquire the 25-year-old player. Neymar’s $350 million in salary and bonuses to play for PSG for five years plus the U$263 million paid to Barcelona to release him from his contract bring his total compensation package to a staggering U$600 million.
Of course, most professional athletes will never get anywhere near Neymar’s compensation package and the salary gap between top stars and the rest of the team is sometimes enormous. In sports, there’s no shortage of statistical data available to measure a player’s performance and, therefore, it’s easier to justify compensation differentials. But in the traditional corporate workplace, statistical measures of performance are harder to come by (except, perhaps, in sales departments or investment firms). Assessment of potential and talent can be used but they are somewhat subjective, which can make a rewards system fraught and harder to defend. Nevertheless, to attract the best talent you have to pay top dollar.
Research shows that 80 percent of a business’s profits are produced by 20 percent of its workers—simply put, by these high-achieving star players. The top performers pull the organisation through and can be seen as mission critical. The challenge is that the remaining 80 percent probably consider themselves to be in that group. Hence, the way a company rewards top talent can affect the entire workforce.
For fear of appearing unfair to their employees, most companies that have formal programmes to reward key talent don’t broadcast their existence even to the management base. Knowledge of such rewards can be demoralising or infuriating for those not seen as “the chosen,” even if they are valuable and valued employees.
Another reason for not disclosing such programs, even to those benefiting from them, is to keep expectations in check and tamp down a sense of entitlement. Thus, in many organisations even top talent may not know they are part of a formal rewards program. But if the goal of the compensation program is to recognise strong performance, incentivise potential and make top talent feel special, employees should be made aware that they are getting extra benefits, more frequent raises, more opportunities to work with C-level executives, and more conversations with HR and senior management about career goals.
Despite the risk that a secret rewards program could become public knowledge and cause widespread disaffection, the need to attract and retain high-value employees in a competitive market where staff turnover is costly makes it a risk companies have to take. By formalising the top performers program and keeping it consistent and rigorous can help mitigate some of the risks. Organisations also need to be aware of how such programs can exacerbate concerns about pay and opportunity equality in the workplace, especially regarding gender and ethnicity.
The number one factor for success of such program is being able to define what key talent means and the value that it brings for the company. In Neymar’s case, the club’s president, Nasser Al-Khelaifi, said that simply signing Neymar, who scored a goal in his PSG playing debut, added $500 million to the franchise’s value immediately. Over time, Neymar’s addition to the team will double its worth to $3 billion. If all that comes to pass, Neymar’s total compensation package will seem like a bargain. But for PSG, the value proposition in signing Neymar isn’t in how many goals he scores or how many games the club wins. Rather, it is in his ability to enhance the club’s brand and power on a local and global level by virtue of his performance on the pitch. The same is true of corporate leaders: their ability to enhance the organisation’s brand and market power to grow the business is what differentiates them from the rest. They will also reward their organisations by attracting other stars to the team-everyone wants to be associated with winners.
Neymar’s signing runs parallel to the corporate world in another respect: soccer is an inherently free market. It’s the same thing in the business world, where there are no restrictions on base salary, stock options and other incentives needed to hire the right leader.
But keeping your star performers is not only about the top dollars. Neymar and most professional athletes say they aren’t motivated by money but passion. As with any reward program, you also need to show the love in non-financial areas such as quality time spent in discussions about career development and meaningful future roles and build a culture where people feel they are contributing to something that’s bigger than themselves.