When asked why senior executives at Alberta Health Services are so generously compensated, the government’s response is either: I have no idea, those over-the-top supplemental pensions and extravagant expense accounts were before my time (Minister Horne) or the AHS has to pay well in order to attract competent managerial or clinical talent (acting CEO Chris Mazurkewich).
The first response is an abdication of responsibility (see last week’s post). The second response is based on the flawed premise that paying top dollar will buy top talent. This isn’t true in the private sector—just review the headlines over the last 10 years starting with Enron and ending with JP Morgan’s $6 billion “mistake”—and it’s not true in the public sector; just peruse the headlines starting with Dr Duckett and ending with Allaudin Merali and Sheila Weatherill.
I suggest we scrap the “top dollar equals top talent” mindset. It’s time to play moneyball.
In his book Moneyball, Michael Lewis, a financial journalist and former Salomon Brothers bond trader, describes how general manager Billy Beane transformed the Oakland A’s baseball team from a pathetic crew of losers into a top notch baseball team.
Lewis sets out 5 simple rules for making a good hire. While the fit to the government recruiting process isn’t perfect, let’s see whether Mr Merali would have made the team.
Rule #1—clearly identify your objective. The A’s objective was to win the pennant (or whatever it is you win in baseball). The government’s objective is to deliver on its 5 Year Health Action Plan.
Rule #2—identify gaps on the team. The A’s needed pitchers, first basemen, you name it, they needed it. They were in terrible shape. The AHS is a $12 billion operation funded by tax dollars. It desperately needs a competent CFO.
Rule #3—be prepared to abandon traditional recruiting methods if they produce flawed and unpredictable results. Prior to Billy Beane’s grand experiment the A’s relied on scouts and agents to identify young players. Unfortunately many of them failed to develop and were cut. It’s unclear how Mr Merali made it to the top of the short list but we do know that from 2005 to 2008 Mr Merali worked as CFO for Sheila Weatherill, CEO of Capital Health. We also know that Ms Weatherill was a member of the AHS board when Mr Merali was hired. One wonders whether the age-old adage “it’s not what you know but who you know” came into play.
Rule #4—replace ineffective recruiting tools with ones that are evidence-based. Billy Beane exchanged the “wisdom” of scouts and agents for an analytic tool called Sabermetrics. This tool focused on on-base and slugging stats which proved to be a better predictor of success than batting averages. The AHS had facts at its disposal. The quality of Mr Merali’s work had been called into question by the Auditor General for three consecutive years. Mr Merali made headlines when he was implicated in the Ontario eHealth expense scandal. It would appear that an evidence-based review of Mr Merali’s work experience, if one was conducted at all, was not particularly thorough.
Rule #5—understand and believe that an inexpensive team of undervalued players, if properly developed, can beat an expensive team of superstars. The Oakland A’s, a small team with a payroll of $41 million, successfully challenged superstar teams like the New York Yankees whose payroll exceeded $125 million.
The government has hired HR experts to evaluate its hiring practices and employment contract procedures for senior executives. So this one is under development.
Time will tell whether the government can free itself from the fallacy of “top dollars equal top talent” and other “traditional” methods of recruiting and commit itself to revitalizing the public service with bright employees who are valued in a non-traditional ways. It’s the only way to bring a fresh perspective to a bureaucracy that is collapsing under the weight of the old boys’ club.
To paraphrase all those umpires on all those baseball fields all across Canada…let’s play Moneyball!