The Human Capital Factor: Strategies for Dealing with Performance Challenges in Business and Sport Management

Article excerpt

Executive Summary

Why do some sport management organizations follow the standard rules of business and fail to succeed, while others break the rules and emerge successful? The answer may lie in the acquisition, retention, and development of human capital as a strategy to overcome other commonly noted organizational deficiencies. When faced with explaining declining performance relative to competitive strength in sport organizations, prevailing excuses to the shareholders and other stakeholders seem to include items such as lack of resource acquisitions, inadequate economies of scale or scope, incompetent managers, incompliant performers, or imprudent political agendas (a last ditch effort to divert responsibility on the part of a high-level executive). However, the commonly published management explanations seem to seldom include admissions of poor human capital practices on the part of the organization. The acknowledgment would be a foolish disclosure, since such behavior is an expected component of appointed executive leadership. At the same time, the savvy shareholder knows that these other excuses could at least be mitigated by and sometimes the reason for the lack of human talent within these organizations.

Introduction

An organization is as strong as the knowledge, skills and abilities that people contribute to it (Darby, 2003). When shareholders hold executive managers responsible for declining competitive positioning of sport enterprises, the excuses supplied usually involve various explanations that appear to overlook the lack of human capital. For instance, executives may blame deficiencies in material resource allocation or capital investments intended to yield economies of scale as reasons for lowered competitive strength. Alternatively, the causes given for declining performance may be assigned to incompetent management, lack of worker compliance, or the admittedly misguided political agendas on the part of key managers. Absent from the list of excuses by management would be the declaration that a lack of adequate human capital is the cause of poor performance. After all, it is the job of managers to acquire, maintain, and develop a pool of talented performers. Hence, the typical stakeholder would not deem this an acceptable excuse for organizational deficiencies. In reality, the truly knowledgeable shareholder would see through all the justifications, knowing that each is a scenario that may be overcome with, and some may be deterrents to, the development of human capital.

Both the academic management literature and the anecdotal examples derived from sport management demonstrate the capacity to address issues related to poor performance in sport organizations. The authors of the article present five commonly held management excuses for the loss of competitive positioning and demonstrate how the academic literature may be applied to substantiate, as well as refute these misguided practices in the professional arena. Additionally, anecdotal examples are presented to reinforce management realities that human capital investment is a vital overriding component of other organizational shortcomings in professional sports organizations. The article is not intended to indicate that human capital issues are mutually exclusive of other organizational factors. Rather, 'human capital versus X' refers to the power of talented human capital to overcome unfavorable scenarios relative to issues such as material resource acquisition, economies of scale and scope, leadership, political environments and compliance issues. The authors posit that practitioners may consider a holistic approach inclusive of the literature, as well as personal observations, to determine the validity of commonly held management precepts.

Human Capital versus Material Resource Acquisitions

Corporate executives may find it necessary to encourage shareholder groups to finance capital investments in material resources to include information technology systems citing competitive advantage as a primary justification. …