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What Moneyball Can Tell Us About Business Management, Retention, and Cost Containment

It's easy for employers to feel like the deck is stacked against them. Endless labor shortages, skyrocketing benefit costs, and a lukewarm economy have combined to create a difficult operating environment, particularly for small-to-medium sized businesses with limited resources. People leaders looking for a way to boost their organization's competitiveness under these circumstances may be able to take inspiration from an unlikely source: Major League Baseball.

More than two decades ago, a management revolution suddenly overtook the world of professional sports. This revolution started with the Oakland Athletics, a franchise that was operating on a shoestring budget compared to top-tier teams such as the New York Yankees. Out of nowhere, the Athletics changed baseball forever by discarding outdated assumptions about player worth and adopting a data-driven franchise management strategy. This strategy allowed them to secure undervalued talent, leverage hidden strengths, and dramatically outperform expectations in the 2022 MLB season.

Though moneyball philosophy was initially focused on talent acquisition and franchise management in baseball, its themes are relevant to any organization in any field that is attempting to outperform its budget.

This new type of franchise management, often called Moneyball after the 2003 bestselling book and 2011 film of the same name, spread like wildfire and upended a decades-old status quo. Though moneyball philosophy was initially focused on talent acquisition in baseball, its themes are relevant to any organization in any field that is attempting to outperform its budget. As various economic stressors continue to squeeze employers from all sides, the case for adopting a moneyball-esque strategy for the management of corporate resources has become increasingly powerful.

Benefit offerings play an outsized role in talent acquisiton, retention, and overall competitiveness in the marketplace, so it's particularly important for employers to get their benefit strategy right.

Below, we present a broad roadmap that employers can use to apply the moneyball framework to their benefits strategy, as benefits spending represents one of the most challenging costs to control. By following these steps, people leaders will be well-positioned to optimize their benefit strategy for the needs of their employee population and punch well above their weight in terms of attracting and retaining scarce talent:

1. Review benefits utilization data and measure this against costs

Employers should evaluate the cost of benefit offerings relative to employee utilization. Benefits with high utilization and low costs are more likely to be delivering value to your employees and your organization, while benefits with low utilization and higher costs might merit a closer look.

2. Account for employee socioeconomic and demographic information

Consider the life circumstances of your employee population and evaluate the ways in which these influence their benefits needs. What issues are people like them most likely to face? What sorts of services would improve their quality of life the most? Map your conclusions to potential offerings that you do not currently provide.

3. Survey existing employees for their benefits preferences

Employers should consider soliciting employee input and involve them in the policymaking process. Gather their thoughts on current benefit offerings, ask them what new offerings they would like to see, and give them a voice on what types of benefits should be prioritized. Involving employees in your benefits optimization initiative is an excellent way to secure buy-in, ensure that future offerings are tailored to their desires, and reduce the risk of making decisions that will be perceived as management “taking things away.”

4. Benchmark benefit offerings against competitors

Are competitors in your industry offering something valuable that you do not? What benefits would make your company compelling to talented jobseekers in the roles that you need to hire for? Incorporating this information will allow you to tailor your offerings for not only the employees you have today, but the employees that you want to onboard tomorrow.

5. Pull these threads together and find opportunities for strategic pruning

A major step towards optimizing your offerings is identifying benefits that are not currently providing a good return on investment. These benefits may be underutilized, undesired, or more costly than the value they provide to your employee population. Strategically pruning these low-ROI offerings and replacing them with data-driven alternatives that are better aligned with the needs and preferences of your workforce can be an effective way to control costs while better serving your employees. If eliminating some offerings entirely is a bridge too far, consider converting them into voluntary benefits, which will save your organization money while still allowing employees to access said benefits at a discounted rate.

Benefits optimization is just one of many applications of moneyball philosophy in the world of business management.

For more information, check out the Moneyball Benefits Series on OneDigital's Employer Advisory Podcast.