Beyond Moneyball to social capital inside and out: The value of differentiated workforce experience ties to performance

• Author: Rick Cotton,Lan Wang
• DOI: http://doi.org/10.1002/hrm.21856
• Date: 01 May 2018
• Published date: 01 May 2018

SPECIAL ISSUE ARTICLE

Beyond Moneyball to social capital inside and out: The value

of differentiated workforce experience ties to performance

Lan Wang

1

| Rick Cotton

2

1

Boston University, Boston, MA, USA

2

University of Victoria, Victoria, British

Columbia, Canada

Correspondence

Lan Wang, Boston University, Questrom

School of Business, 595 Commonwealth

Avenue, Boston, MA 02215.

Email: lanwang@bu.edu

The differential impact of social capital among employees in strategic and support roles has

received far less attention than that of human capital in talent management literature. Building

on network closure theory and differentiated workforce theory, we examine the effect of stra-

tegic and support teams’experience ties on team performance while controlling for human cap-

ital using current Moneyball-inspired metrics for workforce quality. Using an 111-year

longitudinal data set of 15,837 Major League Baseball players from all 30 teams and 3,475,778

experience ties, we find that after accounting for the effect of team quality, managerial stability

and reputation, and era effects, organizational experience ties and subsequent team perfor-

mance have an inverted U-shaped relationship for strategic roles and a U-shaped relationship

for support roles. Competitor experience ties have an inverted U-shaped relationship on per-

formance for strategic roles, yet the hypothesized U-shaped relationship showed differences

for different competency areas among support roles. This study highlights the value of social

capital to team performance and the importance of differentiating human resource manage-

ment (HRM) practices for strategic and support roles in 20 different competency areas. It also

showcases how workforce analytics with big data can be applied to HRM and have value added

impact on workforce and firm strategy execution.

KEYWORDS

core competencies, human capital, social networks, strategic HR, teams

1|INTRODUCTION

Use of workforce analytics is increasingly seen as critical to demon-

strating HR’s capability and “value added”impact (Aldrich, Dietz,

Clark, & Hamilton, 2015; Chartered Institute for Personnel and Devel-

opment [CIPD], 2013; Toulson& Dewe, 2004). In particular, HR’sabil-

ity to provide strategically relevant analytics to organizational leaders

increasingly trumps the importance of providing data on HR functional

measures (Aldrich et al., 2015; Lawler, Levenson, & Boudreau, 2004;

Ulrich, Younger, Brockbank, & Ulrich, 2013). Critical to demonstrating

this value-added effect is recognizing the potential impact of work-

force analytics using “big data”(e.g., data that generates “smartness”

to the extent to which it is able to provide the material to conduct

fine-grained analysis that successfully explains and predicts behavior

and outcomes; George, Haas, & Pentland, 2014), utilizing techniques

to define a workforce strategy aligned with the corporate strategy

(Becker, Huselid, & Beatty, 2009) and effectively leveraging methodo-

logical techniques andmeasurement approaches to enable strategically

relevant analytics (Douthit & Mondore, 2014). Unfortunately, as

pointed out recently (Angrave, Charlwood, Kirkpatrick, Lawrence, &

Stuart, 2016; Centre for Advances Human Resources [CAHRS], 2014),

solid examples of HR applying workforce analytics in a strategically rel-

evant manner are relatively rare (for exceptions see Rasmussen &

Ulrich, 2015; Sparrow, Hird,& Cooper, 2015).

Critiques of the lack of successful workforce analytics implemen-

tations point specifically to the need to use more longitudinal multi-

variate studies (Angrave et al., 2016; Guest, 2011) and the

opportunity for academics researching HR to partner with practi-

tioners to influence workforce analytics in a positive and insightful

manner (Pawson & Tilley, 1997; Rasmussen & Ulrich, 2015; Savage &

Burrows, 2007). Additionally, implementation of analytics capabilities

is costly and HR leaders are becoming increasingly aware of the chal-

lenges in defending making the same investments in employees who

have widely differing impacts on strategy execution (Becker et al.,

2009). These realities are making a focus on optimizing the perfor-

mance of key talent segments having a disproportionate effect on

DOI: 10.1002/hrm.21856

Hum Resour Manage. 2018;57:761–780. wileyonlinelibrary.com/journal/hrm © 2017 Wiley Periodicals, Inc. 761

strategy execution a more feasible approach (Cascio & Boudreau,

2011; Huselid, Beatty, & Becker, 2005).

In summary, the opportunity exists for academics to influence

workforce analytics usage and implementation especially when such

research (a) leverages a longitudinal multivariate design, (b) links

workforce strategy to firm strategy, (c) offers new or insightful

approaches or measures, and (d) takes into account workforce differ-

entiation to answer questions as to how value can be created, cap-

tured, and leveraged (Angrave et al., 2016; Pawson & Tilley, 1997).

Workforce analytics research could also be even more powerful if it

complements single organization case studies with studies focused

on multiple organizations or even entire industries over time (Gerring,

2006; Yin, 2013). This article thus focuses on a study that we believe

meets each of these criteria. By using a longitudinal, multivariate

design with 111 years of data on all players from all teams in Major

League Baseball (MLB) over our study period, we leverage workforce

differentiation theory (Becker et al., 2009; Huselid et al., 2005; Huse-

lid & Becker, 2010) and network closure theory (Coleman, 1988,

1990) to showcase how workforce analytics with big data can pro-

vide insights on managing and supporting a differentiated workforce.

In this article, we argue that team performance is determined not

only by the level of human capital a team has but also by social capi-

tal in terms of employees’organizational and competitor experience

ties. We adopt Nahapiet and Ghoshal’s (1998) definition of social

capital as “the sum of the actual and potential resources embedded

within, available through, and derived from the network of relation-

ships possessed by an individual or social unit”(p. 243) and focus on

team’s social capital with organizational experience ties pertaining to

the internal social capital (see Adler & Kwon, 2002; Leana & Pil,

2006) via network resources from those who work together on the

same team and competitor experience ties pertaining to external social

capital (see Leana & Pil, 2006) via network resources derived from

current or previous work with others on different teams (Fracassi &

Tate, 2012). We use the tenets of differentiated workforce theory

(Becker et al., 2009; Huselid et al., 2005; Huselid & Becker, 2010) to

determine strategic and support roles in professional baseball, an

industry which, from an HR perspective, has been favorably com-

pared to broadcasting, advertising, accounting, law, public relations,

consulting, and software development firms in having selection prac-

tices primarily based on credentials and expertise, development pri-

marily based on on-the-job learning along with a predominance of

high turnover and cross-employer career paths (Sonnenfeld & Peiperl,

1988, pp. 591–592). We believe this research will provide additional

insights into how to manage a differentiated workforce (Becker et al.,

2009) by using analytics composed of both sophisticated perfor-

mance measures and organizational and competitor experience tie

information to help line and HR managers decide which employees

should be in strategic and support roles and when changes in team

membership may be warranted.

2|THEORY AND HYPOTHESES

A foundation of strategic HRM is that key organizational outcomes

are affected by the way talent is managed. Evidence backs up this

claim as researchers have demonstrated the positive impact of human

resource practices on firm performance (Collins & Clark, 2003;

Delery & Doty, 1996; Huselid, 1995), team performance (Chi,

Huang, & Lin, 2009; Mathieu, Gilson, & Ruddy, 2006), and worker

productivity (Datta, Guthrie, & Wright, 2005; Koch & McGrath,

1996), each of which is important to many firms, including those hav-

ing an operational excellence strategy with similar job roles across

firms (Ahmad & Schroeder, 2003; Treacy & Wiersema, 1997), such as

MLB teams trying to outscore their opponents. These positive HR

impacts have also been demonstrated in work environments that

have some similarities to professional sports teams, like MLB, includ-

ing accounting and consulting (Lee Cooke & Xiao, 2014), law

(Sherer & Lee, 2002), high tech (Collins & Clark, 2003), manufacturing

(Birdi et al., 2008; Ichniowski, Shaw, & Prennushi, 1997), oil and gas

(Wright, McCormick, Sherman, & McMahan, 1999), telecom (Batt,

Colvin, & Keefe, 2002), health care (Akdere, 2009; Gittell, Seidner, &

Wimbush, 2010), and retail (Allen, Shore, & Griffeth, 2003). That said,

there is much concern over whether firms should take an inclusive or

exclusive approach to their HR practices in the key areas of selection,

training, mentoring, pay, and knowledge-sharing as past studies have

shown that implementing practices in bundles across HR practices

can enable a synergistic, combined effect on performance (Ichniowski

et al., 1997; Laursen, 2002; MacDuffie, 1995).

Talent management has become a salient and sustained concern

of CEOs and HR managers primarily due to ongoing fears about per-

ceived skill gaps for key job roles, an aging workforce, and the ability

of talented employees to choose from a plethora of employment

options (Dries, 2013; Mellahi & Collings, 2010; Economist Intelligence

Unit, 2004; Ready & Conger, 2007). These challenges have put pres-

sure on HR professionals to play a critical role in determining whether

their organization’s talent management philosophy and bundle of HR

practices should be inclusive or exclusive with the latter approach

entailing providing differential resources to talent segments having a

disproportionate strategic impact on organizational outcomes. Rather

than focusing generically on hiring talent across the board, the exclu-

sive strategy is focused on having the “right talent for us”(Becker

et al., 2009). This choice of talent management approach then has

impacts on not just HR practices but also the management of teams,

as well as analytics and reporting, as talent management exclusivity

privileges certain employees over others as exemplified in workforce

differentiation theory (Becker et al., 2009; Huselid et al., 2005; Huse-

lid & Becker, 2010).

2.1 |Using workforce differentiation theory to

determine strategic and support roles

Workforce differentiation theory proposes that we should differenti-

ate among employees as we do products and customers (Huselid

et al., 2005). The theory asserts that differentiating the workforce

and making disproportionate investments in resources, development

opportunities, and rewards for high performers in strategic roles is

“the most effective way to increase the strategic contribution of both

your workforce and the HR function”(Becker et al., 2009, p. 50). That

is because differentiation “will determine where you invest, what jobs

you focus on, who is accountable for workforce success and how

762 WANG AND COTTON