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Controversial Salary Lessons from the NBA

  • Publish Date: Posted almost 7 years ago
  • Author: Jon Davis

Controversial Salary Lessons from the NBA

In July 2010, the world of professional basketball was rocked by the news that superstar LeBron James was headed from Cleveland to Miami. Not to mention the fact that he agreed to accept far less than what industry experts thought he could demand. LeBron James, along with Dwyane Wade and Chris Bosh, who also took pay cuts, told the press that money was not their primary motivation. They operated beyond the paycheck. They were pursuing a higher motivation than just the dollar.

Controversial Salary Lessons from the NBA

Hey, I know it’s hard to relate to these numbers, but try to keep it in perspective. Sure, the money they got was big — huge, in fact. But, not as big as it could have been. James and Bosh signed matching six-year, $110.1 million contracts with the Miami Heat. Dwyane Wade took an even bigger cut to stay in Miami, signing for six years and $107.5 million.

Why? James, the two-time NBA most valuable player, said he decided that the only way he could fulfill his dreams of winning multiple championships was to leave his home state and a city that hadn’t celebrated a championship in 46 years. “It’s going to give me the best opportunity to win,” James said. “We’re going to be a real good team.”

Collectively, in order to play together, the trio left $15 million on the table. It’s virtually an ironclad rule within agencies and professional sports that no one leaves money on the table. No one. That’s not how the game works. But that’s what they did. And in the process, they changed the “game” of sports recruiting and because of their actions, wrote sports history.

It worked. After losing to my Dallas Mavericks in 2011, in 2012 and 2013 the Miami Heat won the NBA title. LeBron James, Dwayne Wade, and Chris Bosh each decided to be underpaid so that they could position themselves to win — and they did. In an interesting twist of fate, Cleveland’s prodigal son returned home to help the Cavs win it all in 2016. In the process, James became the highest paid single season athlete in NBA history – surpassing Jordan. Many say that none of this would have happened had he not taken a step back to Miami to get his first ring. This landmark deal with Cleveland is a three-year $100M contract.

Another example is Dirk Nowitzki of the Mavericks. In July 2014, Nowitzki took a $14.73 million salary cut – down to $7.97 million. It was one of the largest one-year reductions in NBA history. It was a truly significant move because the Los Angeles Lakers and Houston Rockets were each willing to pay Nowitzki more than $20 million a season for four more years.

Why leave $12 million on the table? When Nowitzki hit the free-agent market in July 2014, he had already decided he wasn’t going to desert the Mavericks after spending his 16-year career with them. And he knew he was going to accept a massive pay cut to help the Mavericks have the salary-cap space to chase quality free agents. Nowitzki knew that if the players at the top of the payroll didn’t take significant pay cuts, the team couldn’t afford to recruit the best players. The Mavericks used a large chunk of their savings to secure free agent Chandler Parsons for $46 million over three years. Nowitzki, who had taken home roughly $200 million during his career, took one for the team.

OK…I know what you’re thinking… “I just can’t relate to this!”  How in the world do these salaries in the stratosphere have any comparison to my career and income in 2017?” I get it. None of these guys had to prioritize their options when picking premium add-ons to their cable bill. It’s a given there was no debate between Netflix or Amazon Prime.  And if they ever did do the grocery shopping, they never expended any brainpower debating the merits of organic/grass-fed beef versus “managers special.”  And, I’m sure none of them have gone through the family cell phone plan – painstakingly seeking relief from monstrous data overages. So, what’s the connection between these sky-high salaries of NBA all-stars and you?

More of a connection than you think.

For as long as anyone can remember, there has been one primary driving force in every career: money.

Spending more than 20 years in the executive search and staffing industry, I’ve had a front row seat to the delicate dance of work, money, jobs, and employers. During that time, I have witnessed thousands of candidates seek their next position and hundreds of organizations onboard top talent.  My observation probably won’t surprise you - salary is always one of the, if not the, top criteria candidates consider before taking a job. And why not? The amount of money you make (or don’t make) can have a dramatic impact on how you live. For most of us, the math is simple: more money = more security = better life.

As if the “better life” argument isn’t compelling enough, the ubiquity of technology (smartphones with corporate email, VPN, SaaS-based systems with corporate issued laptops), has blurred the line between our personal lives and work. Much like our devices, we’re now expected to be “always on”. Because of this constant demand for high availability, maximizing income isn’t just smart, it’s fair . . . right?

Unfortunately, most workers miss the real driver behind compensation in the eyes of the employer. People typically aren’t paid more simply because they have a prestigious education, impressive credentials, new skills, longer tenures, or vast experience. People are paid more only when their education, skills, tenure, and experience translate to greater value to their employers. That’s the secret compensation math that so many never seem to understand.

Which leads me to my point: Be underpaid.

This probably sounds strange coming from a career headhunter, since we get paid based on what you get paid. But, I passionately believe that if you over-deliver… or are underpaid, there will always be a seat for you at the table. Please hear me, I don’t believe you should be taken advantage of in this worker/employer relationship. Abuse of any kind towards employees and anything less than excellent leadership don’t have their place in today’s work environment. My message is that you should be delivering more real value to the company than what you are paid in dollars. Work relationships are based on mutual need and mutual benefit. You need a job and the associated money - and companies need your skills, abilities and experience to meet their objectives. I realize this concept isn’t necessarily sexy or highly leveraged for your short term benefit. Experience has taught me that more often than not, those with the “I’m gonna get what I deserve and not let the man get one over on me” approach to the employer/employee relationship tend to be unhappier, more unfulfilled and quite frankly, spend more time on the bench. In their constant leapfrogging for the next best thing, they miss the opportunity to create an impactful career that builds on successive wins and experience. They forget (or never learn) that this long-term approach yields them a career asset that grows in value through time. If managed properly, this asset grows - benefiting both the worker in terms of compensation and opportunity, as well as employers in terms of output and overall success for the organization.

Back to sports. Think about the top NFL quarterbacks today and their enormous salaries. The value they bring to the franchise must still be greater than what they are paid, or they lose their spot on the roster. Sure, the money paid to Tom Brady, Aaron Rodgers and Tony Romo is almost too much to wrap your head around. But, real-world economics validate that the value they bring to their respective organizations is greater than the millions they receive in salary. You see it all the time on ESPN. As soon as their value to the team dips below the millions they are paid, they are cut or traded. Just watch this play out over the next year with the Dallas Cowboys and Tony Romo.

Whether you’re a top NFL quarterback, IT developer, finance manager, or marketing guru – to keep your seat at the table – always strive to over-deliver for your employer. I know it sounds counterintuitive, but I suggest that you feel just a little underpaid for your contributions.

It’s also important to keep in mind that your career is more than just your current job. Remember LeBron’s move to Miami and the associated pay cut taken to achieve his dream? If you approach your career as a marathon and not a “what’s in it for me – show me the money” sprint, the long-term gains you’ll enjoy will give you not only the income you desire, but job satisfaction and employment security so many never find.

Anyone can become underpaid. How do you do it? Work harder and smarter. Learn new things. Become indispensable. Mentor new employees. And yes, have a great attitude. In short, add more value to the organization than they are paying you. Twenty-plus years of doing this and sitting front row to literally thousands of job changes representing top US corporations and sought-after talent will validate the reality of this approach.

Being slightly underpaid offers more options to maximize your career growth. In the long run, this is how you maximize your total compensation. Truth bomb: those who are underpaid have more career opportunities than those who are overpaid.

Now more than ever, companies are focused on results. In our ultra-competitive world is flat environment – organizations must constantly be laser locked on their value to the customers they serve. Where possible, tie yourself to tangible activities that directly support the organization’s revenue and profit generators. Doing this further strengthens your spot for long-term opportunity.

Many job seekers today are looking for that “big jump” in salary or title as their primary objective. While there certainly may be that potential, real-world experience has taught me that compensation gains and title growth for the individual more often stem from improved performance, value and results for their employers. Sustainable income growth generally follows a track record of providing ever-increasing value to the organization you support. Your best approach for long-term results is to put yourself on the right side of the equation. Demonstrate real value first, and then see your earnings and options expand. Compensation growth never leads performance; it follows it.