Tuesday, August 22, 2017

How Confident Should We Be in Our Hiring Decisions?

Hiring decisions are so critical for leaders, yet they often prove to be the most vexing choices that individuals have to make. Organizations are constantly seeking better ways to screen candidates. Today, I came across a fascinating quote from renowned behavioral economist Richard Thaler about our ability to make good hires. Thaler refers to some interesting research about the National Football League draft. Here's his comment:

“Take all the [NFL football] players picked at a certain position, and rank them in the order in which they’ve been picked. Now ask yourself, ‘What’s the chance that nth player is better than the n + 1?’ If teams were perfect, it would be 100 percent. If they were coin flipping, it would be 50 percent. Across all the drafts and all the positions, the answer is 52 percent. The next time you’re hiring somebody and you’re absolutely sure that this person is the answer, ask yourself whether you have as much information as NFL teams, who got to watch the guy play [in college] for three years.”

Now that is a sobering commentary.  Consider how much work the NFL executives and coaches do in preparation for the draft.  It is an incredible amount of research.  Yet, the success rate clearly doesn't prove to be very good.  The factors that trip up NFL general managers are similar to the issues that impair corporate hiring decisions.  Can the person fit our system?  Do they have the right attitude as well as talent/skills?  Can the person be coached?  Do they have a great resume, but perhaps lack certain key intangibles?  Do they excel in certain areas, but are those the right metrics on which we should focus?  

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