Everything I Know About Recruiting I Learned From Alex Rodriguez

I spent the Summer between 6th and 7th grade at a sleep-away camp in Wild Rose, WI, which in case you were wondering had a sign that said population 3609. Since the camp had about 3000 people, I'm fairly sure that population for September through May was actually 609.

As you may have guessed, there is not much to do in Wild Rose, and even the radio is quite shoddy- but every Sunday night at 9 we managed to catch 15 minutes of Steve Martin doing stand-up. Not Father of the Bride/Bringin Down the House sit-com-y type junk that he did in the 90s, but 1970s SNL quality stuff from when he was still funny.

And that's when I heard his bit called "Everything I Know About Sex, I Learned From the Neighborhood Dogs." Most of what he said can't be re-printed in this family friendly environment, but I can tell you that the number one lesson was, "No matter how much she kicks screams and bites- NEVER let go of her leg." :)

I'm pretty sure I haven't thought about that act in about 20 years. But, as I read this article about Alex Rodriguez, who will spend the rest of his career playing 3B for the New York Yankees, I found myself playing Steve Martin's game- learning about one set of behaviors from a second, unrelated set.

In the last month Arod has made every conceivable job-seeker mistake- and a couple of great moves worth roughly $275MM over the next 10 years. So now I can safely say that everything I know about recruiting I learned from Alex Rodriguez.

For those of you who may not know the background, I'll give you the short-short version. In 1992, super-agent Scott Boras signed then-high school senior Alex Rodriguez as a client. Rodriguez, or "ARod" as he is known, was drafted by Seattle Mariners, and played his first 7 seasons there before leaving as a free agent in following the 2000 season.

He apologized to the fans of Seattle for leaving, explaining that he wanted to compete for a championship, and Seattle had allowed All-stars Randy Johnson and Ken Griffey Jr. to leave the team, leading him to believe that Seattle could no longer be competitive.

Boras put together what is now known as "The Manifesto"- a statistical document projecting, based on ARod's first seven seasons of production, that he would break every meaningful offensive category in Baseball by the time he retired (including nose hair- thanks Bob "Just a bit outside" Euker).

That Winter, Tom Hicks, owner of the Texas Rangers, gave him a 10 year $252MM contract, which eclipsed the previous pro sports ceiling of $126MM set by Kevin Garnett of the Minnesota Timberwolves. This deal included a player option for the last three years- meaning that Alex could simply walk away after 7 years, AKA, at the conclusion of last season.

Texas finished last each of ARod's 3 seasons there, an aggregate 99 games out of first place, largely because so much capital was tied up in his contract that Texas had no money left to spend on a supporting cast. ARod continued to shatter record pace on most batting statistics.

Prior to the 2004 season, ARod forced a trade to the New York Yankees, in which Texas would continue to subsidize $7MM/year of his salary for the balance of his contract. The same Yankees who had won 4 of the previous 7 world series, appearing in 6, and one of the only teams able to pay his salary. ARod agreed in the process to move from SS to 3B to accommodate New York's superstar Derek Jeter.

You see, ARod wanted to win.

In 2004, the Yankees lost the American League Championship Series after leading 3-0, and ARod was criticized for slapping Bronson Arroyo, perhaps the defining moment of his time with the Yankees. The Yankees have lost in the first round of the playoffs in each of the three years since.

Riddled by poor performance in the playoffs, envied for his rich contract, and compared, unfairly in my view, to iconic performances by "True Yankees" like Derek Jeter and Reggie Jackson, ARod has been considered a disappointment by many fans in New York for underperforming in "clutch" situations. Statistically focused analysts like FireJoeMorgan and BaseballProspectus point out that "Clutch" opportunities make up a small sample size, and that ARod is statistically the best player in our generation, and possibly of all time. Professional baseball teams are run by people who act a lot more like stat-heads than fans.

In 2007 the Yankees would not have made the playoffs without Rodriguez's second MVP season in 4 years, and ARod won over a lot of the fans in the process, but another weak playoff performance left some openly questioning if he could bring the yankees a championship.

Which brings us back to the conclusion of this season, to his agent Scott Boras. Once again armed with a manifesto, Boras was determined to test the market. Word began to leak a few hours before game 4 of the World Series that ARod would opt out of the final three years of his contract, costing the Yankess $21.3MM in subsidies from Texas, and ensuring that the Yankees would not hit Boras's target figure of $300MM for 10 years.

This was also a few hours before anyone in Rodriguez's camp tried to contact anyone in the Yankees front-office. A few hours later, after leaving a voicemail message on GM, Brian Cashman's voicemail, Boras leaked this report *during* the game. You could call this a violation of baseball etiquette. Which would be similar in its understatement to calling passing gas in the Oval Office a violation of White House etiquette.

The Yankees announced that he was done in New York, and they would not negotiate with him.

Then a funny thing happened. No one else talked to him. The Red Sox, Marlins, Dodgers, Angels, & Cubs, all considered to be contenders for his services, simply didn't return Boras's calls.

Many, myself included, believe that the owners colluded to ensure that Rodriguez's salary would be depressed so as not to artificially inflate salary expectations around the league.

And ARod, through his friend Warren Buffett, reached out to some fund managers at Goldman, who is a major investor in George Steinbrenner's ownership consortium, and began to negotiate directly with the Yankees, bypassing his agent in the process. They have agreed in principal to a 10 year $275MM deal (The $300MM the Yankees had expected to offer less Texas's forfeited subsidy, and a penalty for disloyalty), which is once again the largest athlete contract in the history of professional sports, once again worth more than 1/4 of a Billion Dollars (Pinky to the lips Dr. Evil style), and ensures that the now 32-year-old Rodriguez will retire as a Yankee, all but guaranteeing him a championship and a core fan-base.

And now we get back to recruiting.

Rodriguez's biggest mistake was overvaluing the market. Even if you are the best of the best at what you do- and he is- when only 5 teams, which we'll call companies for the sake of comparison, can afford to employ you, and those same companies can by 65% of your production for 20% of the price, you have an ROI problem.

I'll write about this at length in a future post, but the impending private equity slow down will hurt consultants coming out of the market for exactly this reason. As PE investment contracts, the Private Equity firms will need to hire Consulting firms on fewer and fewer due diligence engagements, drying up a major source of consulting revenue. This will contract the firms pushing more skilled consultants into the market simultaneously than normal. Combine this with a contraction in private equity hiring, a favorite target for consulting alums, and you have talent market flooded with supply at fixed demand- meaning falling prices, or salaries in this case.

I'm advising the candidates I work with to get out now before the market floods, and doing that will require an honest assessment of your no-salary compensation and target roles.

Alex also fixed his mistake. His redemption came in the form of using his network! Every firm and every top-tier MBA program has an alumni portal. Use it. That's what it's there for! When ARod saw that the game was stacked against him, he changed the rules by using his network as an advantage. Networking is what recruiters do on your behalf, and it's what you should be doing on your own behalf.

Talk to alumni who have taken your career path. Find out what your options are form someone who is actually in the market. Use your network to find out what companies are currently hiring and what opportunities are right for you.

Finally, as I posted last week, the right recruiter relationship is everything. The wrong recruiter can be Scott Boras, promising you the moon, while weakening your market position. Identify a handful of tightly segmented firms that match your goals and experience (shameless plug coming...) like Hawkes Peers & Co., who focus exclusively on top MBAs and management consultants, and work with them to propel yourself to the top, as Alex Rodriguez did with Warren Buffett.