School of Management researcher uses MLB stats to understand employee value

Companies often say that their employees are their most important resource — but what exactly do they mean? And how does that idea ultimately affect success?

Rory Eckardt, an associate professor of strategy at Binghamton University’s School of Management, is studying these complex questions related to “human capital resources” from a number of different angles, trying to figure out the tricky balance between keeping individuals motivated to fully utilize their human capital and making organizations profitable.

“A tractor doesn’t really care what price you buy it for or the price that you pay for subsequent tractors. It doesn’t expect to get paid more if its performance improves after it comes to the organization.

“People care a ton about these things,” he says.

“If anyone comes in and has amazing performance, they’re going to want a raise. If you give them the full raise that they want, which is equivalent to the value they think they are adding, then those employees are going to be capturing that value, not the firm. If the firm says no, though, the workers are going to be angry. They might leave the organization or they might reduce the effort they put into their work, both of which would be destructive to the value that is created.”

Eckardt — who had a career on the investment side of the forestry industry before earning his PhD and coming to Binghamton five years ago — focuses his research on a variety of topics related to companies’ use of human capital resources, such as acquisition, development, deployment and retention.

He is particularly interested in the idea of “complementarities” — aspects of an organization that go together with a particular set of human capital to increase value. For instance, a star saleswoman can achieve a higher level of performance when coupled with a strong support staff. Likewise, high-quality leaders can help amplify the performance of their employees. Other things that could prove to be beneficial are access to certain technologies or a job’s location.

Eckardt says the interest in complementarities is about realizing more value from human capital resources in a way that provides the firm with a credible bargaining position to capture a portion of this increased value. He says this is essential for human capital to be a strategic resource that translates into improved financial performance for a business.

The problem with studying these complementarities is that they are generally difficult to quantify and track. Researchers can look at how much product someone sells or produces, but how do they put a number on the helpfulness of coworkers, the boss or the dozens of other factors that may come into play?

One context that does provide a wealth of data related to complementarities is Major League Baseball (MLB). In a study published in the Journal of Management in 2014, Eckardt and his co-author analyzed detailed statistics from the 2012 regular season. Using play-by-play data, they assessed the association between pitcher skill and performance, and found that it was largely dependent on the presence of complementary human capital among fielders and managers.

“You can think about pitchers and fielders in a similar way to surgeons and their surgical teams,” Eckardt says. “It translates over into a lot of organizational settings.”

Among other research he has in the works are a few more papers utilizing baseball data, including one that will look at human capital selection in the annual MLB player draft. For that study, he dove into the Baseball Hall of Fame archives in Cooperstown for team media guides from 1987 to 2011.

By sifting through and quantifying 12,000 pages of information about scouts, coaches, managers and team rosters, Eckardt hopes to show that the experience of individuals involved with the draft correlates to their ability to select player human capital in a superior manner. His main question: Do MLB franchises have superior capabilities in selecting human capital? And, if so, how do these capabilities relate to the unique experience profiles of those tasked with player selection?

Despite spending a substantial amount of time with MLB statistics, Eckardt claims that he’s not a baseball enthusiast.

“I played baseball and was a fan when I was younger, but have limited time now with three young kids and a tenure-track faculty position,” he says. “I use the MLB context more because of the precision of measurement and analyses that it provides.”

Eckardt is the first to admit that for organizations seeking success, “everything around human capital is 10 times more complicated than you think.”

“While there’s no doubt that people and their knowledge, skills and abilities are really important to the success of organizations, the ability for that to translate into sustained superior financial performance for the organization is very complicated,” he says.

“You have to have superior abilities in acquiring human capital, in being able to build it into a cohesive group, in being able to retain over time, and in being able to deal with the complex pay and performance links.”

Even given the research challenges, though, Eckardt enjoys stepping up to the plate and swinging for the fences.