13 March 2007

$70 M rewards loyalty?

by Michal Berman

Recently much was made of hockey goalie Rick DiPietro's 15-year $67.5 million contract, some commentators went as far as to call the move insane – owner Charles Wang said he believed in rewarding loyalty as a principal of doing business. What a refreshing message or reminder of the value that can be placed on loyalty, the faith (in humanity) required to set out on such a deal, and of how unfortunately rare this commodity (in the sense of an "article of trade") is in business.

Hockey commentators are still shaking their heads at this move and are questioning the merits of offering this type of a deal to an athlete considering the risks of injury and the affects on motivation to maintain a high level of performance. However, NHL and NBA analyst Maria Rotundo indicates in her research that these types of moves may be exactly what is needed to improve overall team performance and reduce counterproductive or retaliatory behaviour on the rink/court. I'm not arguing for or against this kind of contract in sports what I'm more interested in is the message that owner Charles Wang is sending by rewarding loyalty in what is deemed as such a controversial move. Just who wouldn't want to feel some of that organizational "love" at your company?.

Loyalty, according to many industry pundits, is an important business goal. It's sought after to build great teams, to enable revenue growth via customer retention and for those some would argue, more enlightened companies, it's a powerful productivity tool.

The current business climate seems to be far from realizing the concept let alone the ideal of "investing in loyalty in reward for superior value". It's the exception to be able to establish a relationship whether as an employee/employer or consumer or service/goods provider that lasts the long haul e.g., 15 years or more.

Although we don't know the personal aspects of this deal, it will take all the stakeholders (the owner, the individual and the team) to create success from this start. While maybe a bit trite or sophomoric to those whose business is hockey or other sports (or for organizational theorists and psychologists), a great example of the human and environmental complexity required to support this move is the film Jerry Maguire. Ultimately the success of all involved came down to loyalty, loyalty between player and agent, agent and business partner, and player and fans. Loyalty is a quality hard to offer, challenging to maintain and impossible to mimic. I'm hopeful from the various quotes I've read by Wang and DiPietro that all involved will have the faith in each other to sustain this public commitment, (and we all know, deals, whether in writing or not, are broken every day).

A refreshing example, well who knows really? Guess we'll have to wait the 15 years to surely find out in this case.

If you want to read more about loyalty in a business context, check out University of Toronto, Business school, Rotman's latest magazine on the subject.

Michal Berman is a multi-national technology consultant from Toronto, Canada.

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