Ace in the Hole

The return of pitcher Cliff Lee to the Philadelphia Phillies for about $30 million less than he could have earned elsewhere offers some lessons to HR leaders about the value of softer HR issues -- such as corporate culture, teamwork and direction of the organization -- in comparison to compensation.

By Anne Freedman

The old expression, "Money talks," struck out this week as Cliff Lee, the top free agent in Major League Baseball, spurned about $30 million in salary to return to his former Philadelphia Phillies team.

There is some food for thought for HR leaders to take from Lee's decision to accept a five-year contract that reports put at $120 million instead of a reported six-year contract with the N.Y. Yankees for $154 million.

Lee had pitched for the Phillies in 2009, including an unsuccessful attempt for the team to repeat as World Series champions, but he was traded one year ago because the organization felt they would not be able to afford to re-sign him as a free agent.

The situation demonstrates for HR leaders the value of being an employer of choice, of being a place with an attractive corporate culture and good morale, says Peter Cappelli, director of the Center for Human Resources at The Wharton School in Philadelphia.

"What does it cost to be the kind of place where people want to work?" he asks. "The answer is it doesn't cost very much. ... I think this is a pretty persuasive story."

Fran Luisi, a principal at Charleston Partners, a retained-search firm based in Rumson, N.J., agrees that he has "seen top talent ... not always go to the most attractive financial offer but [instead make decisions based on] more of a corporate-culture perspective."

The courting of top talent -- as that scenario played out between the Yankees and Phillies (and of course, the Texas Rangers, for whom Lee played in the 2010 World Series and which also offered him more than the Phillies) -- is a situation executive recruiters see all of the time, says Luisi.

"Compensation is on the list [of job candidate desires]," he says, "but it's not as high as you would think."

Other important elements, he says, are corporate culture, the health and direction of the organization, leadership style and "the team that is in place -- there are some parallels to this particular example."

While executive compensation "is sexy and romantic territory that grabs the attention" of the C-suite and the board directors, it's often other, softer HR issues that are generally more important to top talent, he says.

"You hear about a deal like this," said Phillies centerfielder Shane Victorino to MLB.com, "and you're kind of shocked. But it shows how much Cliff loved Philly. He turned down money to come back. That says a lot about him."

It's a lesson HR leaders and organizations should have learned by now, experts say.

Fred Foulkes, director of the HR Policy Institute at Boston University School of Management in Boston, says too many organizations believe that "everything is just the dollar or the package, but for so many people, it's more than that."

And that's nothing new, he says, recalling stories of incidents over the years and up to the present, when highly valued employees join companies -- or remain with companies -- at lower compensation than they could get elsewhere for a variety of reasons.

"There are a lot of things that appeal to some people," Foulkes says, noting that HR leaders should look for "low cost and high value" workplace benefits.

For some, he says, it relates to flexibility or corporate citizenship, such as offering a "green" building in which to work. For others, it could be added-value offerings, such as one company that transforms its cafeteria into a cafe that can provide "gourmet-to-go" meals for employees or another that provides back-up childcare services when necessary.

Such desires vary by individual and often by age, he says. His students, Foulkes says, wouldn't be swayed by a better 401(k) plan, but would probably take a consulting job that paid less if it offered more workplace flexibility.

"I see it all the time," he says, "students evaluating certain [job-offer] factors and they don't always go for the top dollar."

Quality of life and the company culture play a big role, he says.

Lee was quoted in the past as saying how much he enjoyed playing in Philadelphia and that he had missed his former teammates.

"It's a wonderful atmosphere there," he said to MLB.com.

That speaks to cultural fit, Luisi says, noting that top talent often can fit into any organizational structure, but when there is a "natural fit," an effective partnership will be more easily achieved.

"Is this a place you can work at fitting in," he asks, "or a place you can naturally fit in?"

Eileen Finn, principal of Eileen Finn and Associates in New York, agrees it is often an issue of comfort. Lee "knew what he was going to get into and what the team was like and the city was like," she says.

"The lesson is that it's not always about what I call the 'extrinsic' part of the offer. It's about what playing for the Phillies meant to him in the past and it's a level of familiarity in this environment," she says.

For HR leaders and recruiters, that could mean paying more attention to building a personal connection with prospective top talent so they can speak to issues of individual importance to the candidate.

Cappelli says the Lee scenario also "reminds us that when people leave you, they don't always leave forever. How you part with people matters because you may want them back at some point."