Hiring Good Employees: Not as Easy as You Think

The most dangerous part of the hiring process is what you think you know, but which might not be true.  I just finished reading Michael Lewis’s Moneyball, a best seller from a few years back that EVERY business manager should read.  The book is officially about baseball, but if you can’t relate it to your own business, it may be time for you to retire.

Baseball has more statistics than almost any part of your business, except your sales department.   When I was growing up, my best friend never read a book, but he studied the Dodger statistics every day.  While most companies were managing on no more numbers than you’d find in a quarterly financial statement, baseball fans were devouring detailed daily statistics.

Surprisingly, though, baseball management was ignoring most statistics.  As Moneyball explains, baseball managers and scouts had traditional ways to looking at players, and pretty much ignored the hard data available.

Billy Beane, General Manager of the Oakland A’s, hired a quantitative analyst who pored over the research of many amateur baseball analysts.  Then he went digging in the data himself.   The result was player arbitrage.  Take the expensive players that other teams wanted, replace them with less expensive players who had the right stats.  Billy Beane won more games than average, with fewer dollars of salary than average.  Anywhere else you’d call it efficiency.

So do you just “know” how to spot a good customer service representative, just like baseball’s old scouts just “knew” how to spot a standout minor leaguer?  Any chance that you’re judgment would stand up to statistical scrutiny?

Beane (actually his quant guy) also learned that some of the traditional statistics don’t do the best job of describing values.  They ended up ignoring fielders’ errors.  Instead of batting averages and RBIs, they focused on less common measures, such as on-base percentage and slugging percentage (a weighted average of bases per hit).

The business lesson here:  what you think you know may not be true.  The metrics you are using to justify what you are doing need to be subjected to tests and validation.

This is a great book to read after, or even before, Competing on Analytics, which I reviewed earlier.  If it motivates you to rethink your hiring strategy, take a look at this post: The 4 Steps to Using Metrics in Hiring Decisions .