Hiring 2.0: Moneyball, and Why You Must Defy Conventional Wisdom

Hiring 2.0 is the operating system for the next generation of hiring tools. The objective of Hiring 2.0 is to establish the standards for making hiring top talent a systematic business process. To get there, we’ll need to challenge every aspect of conventional wisdom (CW). This is first stage of the revolution. Read Moneyball: The Art of Winning an Unfair Game, by Michael Lewis (Norton, 2003), if you want a glimpse of how the next generation of hiring tools will be developed. In this fascinating behind-the-scenes look, Lewis

shows how the Oakland Athletics have become a consistent divisional winner while spending the least amount of money on player salaries. The Athletics defy CW by not drafting the players their expert scouts promise to be sure stars based on traditional criteria. This is generally their batting average, fielding skills, speed, athletic prowess, appearance and charisma. Rather, they focus on statistics that win games. The most important is on-base percentage. So you can be slow, dumpy and error-prone, as long as you get lots of walks, tire out the pitcher, and get a few hits. There’s a comparable version of Moneyball for the hiring process that you should know about. The results can be just as startling. The thing to remember is, just because everybody does it and it’s part of the conventional wisdom, that doesn’t mean it’s right. Here is some of CW that might be worth challenging:

Job boards are somewhat useful. The reality: they are useless for hiring top people, and maybe somewhat useful for hiring average people. While there are some very fine candidates who use job boards to find jobs, the process is so inefficient that it’s not worth the effort. It’s better to spend your time and resources on other, more productive sourcing channels. In an absolute sense these alternatives (like proactive networking) would be less costly, and on a business-case basis (making the ROI evaluation based on candidate quality) the alternatives would be an order of magnitude better.
Top candidates and top employees are the same. They’re not, but everyone must assume they are, since most hiring activities involve finding and hiring top candidates. Top employees work hard; they’re motivated to do the work required; they consistently meet objectives; they’re technically sound; they work well with others; and they solve problems, among other similar traits. Top candidates, on the other hand, have good resumes; they’re prepared, on-time, and answer questions well; they’re enthusiastic, assertive, and make great first impressions. It’s obvious that top candidates and top employees are different. Yet we build our hiring processes to find top candidates and are quickly disappointed when they are not top employees. The comparable Moneyball statistic: the percent of people you hired this past year who you thought would be great, but weren’t. Now double that percent, since this is the same percent of top employees you inadvertently didn’t hire because they weren’t top candidates. If the stat is over 30%, you need to design your hiring systems to meet the needs of top employees, not top candidates. (By the way, job boards process candidates, not top employees.)
Behavioral interviewing is the best interviewing system. The reality: it works better than an unstructured interview, but not too much better. The problem is that past behavior is not the best predictor of future performance, past performance is. So look at what the person you’re interviewing has accomplished in the past, and then compare this to what you need to accomplish in the future. The key is to look for the behaviors in the accomplishments, not the accomplishments in the behaviors. Good candidates are thoroughly trained to give you examples of initiative, team work, problem solving, objectivity, etc., but only top employees have accomplished comparable things to what you need accomplished. While not a true Moneyball measure, just ask six of your recent candidates if they feel the person interviewing them really learned what the candidate accomplished. You’ll quickly discover why traditional behavioral interviewing doesn’t get any STARS for focusing on the wrong stuff.
Branding is important. It is, and it isn’t. Being an employer of choice is a good thing. You’ll be able to attract an unusually high number of good people who want to work at your firm, even in lousy jobs. If you’re an employer of choice and have some money, branding is also quite easy to do ó have a great website, offer candidates your strategic vision, tie your expensive collateral material together, and put on compelling events with free pens, maybe a mug, a carrying bag to hold the collateral pen and possible mug, and, of course, individually packaged snacks. (Note: For the event-challenged, it’s not good to put out large bowls of chips with common dipping bowls.) If you’re not an employer of choice, branding won’t help much. In this case, you must brand each job if you want to attract a better class of employee. Start by writing long, compelling, highly visible, and audacious job titles to get people interested. Make sure the job description focuses on the opportunities and doesn’t just list requirements. Describe what the person will do, learn, and become in the ad copy. Tie this to the company strategy, which is clearly spelled out on the company website. If you’re not seeing enough top people, it’s probably because you haven’t branded the job properly. The best Moneyball stat for this is how many good people respond to your ads. Indirect stats are opt-out ratios at each step, number of page views per viewer, and total time on the site. Your job branding is working when these trends improve. (Note: this is how you manage job boards to yield optimum results.)
Recruiters don’t matter. Actually, nobody would ever say this ó but what people say and what they do are not always the same thing. If corporate recruiters matter (which they do), why do we let them spend so much of their valuable time pushing paperwork or feeding the applicant tracking system? Getting top people hired requires good recruiters to constantly and personally intervene at every step in the hiring process. They must handhold these top people, network with them personally, overcome important job concerns, push the process forward with the hiring manager, coordinate time-consuming interview schedules, address counteroffers and potential competitors, and negotiate every aspect of the offer. The quality of your recruiting team and how they spend their time will directly determine the quality of the people you hire. This is the Moneyball equivalent of the on-base percentage. My estimate is that a minimum of 65% of a recruiter’s time must be spent working directly with top people ó interviewing, recruiting, counseling, closing, and networking. From what I’ve seen in most corporate recruiting departments, this is actually less than 20%.
Metrics are important. Here’s another one of these “yes they are and no they’re not” issues. The right metrics are important, the wrong ones are useless. Six Sigma black belts will all tell you that real time (almost instantaneous) metrics are needed to control a process or activity. The longer it takes to measure something, the longer it takes to fix it. So you need to measure errors as they occur ó not days, weeks, or months later. The Moneyball approach is to look at all of your metrics and determine how long after the event occurred they were measured. If any are more than a week old, you’re just reporting, not controlling processes.

Hiring top people is the most important thing we do! The reality ó it is, but most companies just talk about it. Let’s go right to the Moneyball stat for proof. If you can answer yes to 60% of the following questions, your company walks the talk.

Do your managers get directly rewarded for hiring top people?
Do managers schedule their time around the needs of candidates or are interviews reluctantly squeezed in?
Is the recruiting department given the appropriate resources to hire the best people, and do the best people want to work in the recruiting department?
Do your senior executives formally commit a large percentage of their time and attention to ensuring that top people get hired at your company?
Is hiring top people an integral part of the operating plan, vision statement, and company culture?

These are five simple yes/no questions. If you don’t get at least three yeses, hiring top talent is really not a company objective. Making hiring top people a systematic business process is a worthy objective, but it can’t be done with today’s tools and yesterday’s thinking. You’ll need to challenge ó and frequently defy ó the conventional wisdom. This is what the Hiring 2.0 revolution is about. Join. Play Moneyball. [Note: If you’d like to help make Hiring 2.0 a reality, join the hiring revolution. Our Band of 176 will become the focus group to set the standards for these next generation hiring tools. Our first “Satisfaction with Current Hiring Tools” survey will be sent out shortly to all revolutionaries. We’ll present the results in an online conference. This will be your first chance to join the growing number of people who want to dramatically change the way top people are hired. Separately, my national hiring revolution Zero-based Hiring tour has begun. The short-term schedule includes Chicago on October 15, L.A. on November 5, New York on November 19, and San Francisco on December 11. We’ll hit the rest of the country in 2004. I look forward to meeting you in person at one of these tour stops. Be heard. Join the revolution.]