There are some assumptions in corporate hiring processes that sound like “tough love conservatism” but are just wrong. One of them is that false positives (bad hires) are worse than false negatives (passing on good people). While true on paper, this is often used as an excuse to reject good applicants for the slightest of reasons. Currently unemployed? Rejected. Lost social polish at the end of a 7-hour interview session? “Not a culture fit.” Capable of doing the work, but not yet operating two levels beyond it? B player, so pass.
People are mostly context
Over-hiring (that is, hiring people who are more skilled than the role requires) is actually more dangerous than under-hiring. Overqualified, bored people can easily become toxic to an organization and, when they go into attack mode, they have sufficient credibility to make it really hurt. Perhaps unexpectedly, it’s often the mechanisms companies use to catch and remove low performers that turn the over-hires into aggressive morale problems, rather than harmless ghosts who’ll find their way out without noise.
Let’s get into the first misconception about hiring. We’ve all heard that phrase, “A players hire A players, but B players hire C players.” The idea is sound. If you hire mediocrities (B players) you’ll find that they hire truly awful people. The solution? Don’t hire mediocrities. The problem? People are mostly context. (For evidence behind “people are mostly context”, see: Stanford Prison Experiment.) An organization will always have B players. Some people will gain influence within the group and others will be ignored. The output, from people who fall into low status, will be mediocre. If you have 100 people who would be “A players” in most other contexts, you’re still going to have a few people who, for a variety of reasons, check out and start coasting.
If people are mostly context, it stands to reason that some work environments will turn B players into A players, and vice versa. That is the more important question. A company that turns B players into A players will kick ass, and a company that turns A players into B players (as most do) will slowly decline. Companies think they can outguess the labor market and “hire only A players” while offering B-level salaries and work conditions. For the most part, they’re wrong. Believing oneself to be smarter than a market, on a hunch, is a dangerous assumption. Companies can do very little (other than offer more) to improve the quality of people that comes in the door. What they can control is how they evolve once there. Some environments are empowering and improve the people they take in. Others (most) are stifling and artificially limit people.
While they won’t admit it, because it’s not socially acceptable, most corporate executives want high levels of internal competition, whether for promotions or the best projects, and create false scarcities to make it happen. The problem is that this is exactly the sort of thing that creates the checked-out, “B player” attitude among former or potential high-performers. They’re smart enough to see the false scarcity that is restricting their autonomy and career advancement, so when they lose a political fight (there were two A players, so one had to take a dive) they aren’t likely to say, “Man, I really need to step up my game around here.” Either they leave, or they use it as “a recovery job”, which means that they’re essentially coasting.
Is it true that A players hire A players (or, as some say, A+ players) while B players hire C players? It is, but it’s not about innate ability. Rather, it’s about political security. People who expect to be in good standing at the same company 24 months later will tend to hire people better than them, because they view their association with that team as a semi-permanent residence. Those who are insecure will tend to hire people they can control or, worse, “insurance incompetents” who come in handy in event of “low performer” witch hunts or stack ranking. Increasingly, companies strive to have everyone a bit insecure, under the delusion that aggressive performance reviews and micromanagement bring people to their best. It doesn’t work that way. It’s insecurity that begets not only mediocrity, but those sorts of blatantly political operations.
This gets worse, because “don’t hire B players” becomes code for “don’t hire people who are different, have unusual career histories, or might have anything wrong with them”. Forty years old and only a Manager II? Bzzzt! B player, no hire. “A player” becomes code for “people who think, act, and look exactly like me.” This sort of homogeneity imposes artificial limitations on a company’s ability to grow, and tends to foster arrogance rather than improvement.
False negatives are false positives
One irksome claim about hiring that, on paper, appears true, is the claim that “false negatives are better than false positives”. It’s actually blatantly false, and I’ll get to that, but let me make an observation. When a company passes on a good person (false negative) what happens? It has to keep hiring, taking on the risk of a false positive. If it has a fixed number of positions to fill and those must be filled, then the cost of a false negative can be measured in false positives. Let’s avoid the complexity of the truth (people are mostly context) and pretend that there are specific numbers of “good” and “bad” people. Say, there are 100 good hires and 900 bad hires out there. Let’s assume that the existing hiring process has a 50% false-negative rate and a 4.4% false-positive rate, and that job applicants come uniformly from the population. (That’s an incredibly wrong assumption. In reality, the perception of employers that most job seekers are idiots comes from the disproportionate over-representation of low-skilled perennial candidates– and resume spam from unscrupulous recruiters.) Then, out of 100 applicants, there’ll be 5 good people and 4 bad people offered jobs. This means that turning away a good candidate costs the company 0.44 bad hires. A false negative is, in essence, 0.44 false positives! It gets worse, because if we assume that companies hire not to fill positions but to meet specific needs, and use the approximation that only good hires count toward those needs, the cost of a false negative is 0.8 false positives. This is a made-up example; in practice, that number can exceed 1.0.
What about a much tougher hiring process? It’s easy to increase the false negative rate, but hard to improve on that 4.4% false positive rate. Some people have the social and political skills to acquire credentials, make allies, succeed at interviews, and get promoted despite being utterly useless. Increasing scrutiny doesn’t keep them out. In fact, it can give them an advantage. An example of this is seen in reference checks. The “classic 3″ (three references, basic verification) can flush out candidates who lie about their backgrounds or who did really bad things at work, and it’s about as thorough a reference check as one can get without having this counterproductive result. Why? Let’s say that a company does 10 reference checks, some back-channel. This isn’t a basic background verification that 95% of the population will pass, it’s a competitive cavity search. What type of people win? Two types. The first are people who never pissed anyone off. That means they’re B players. There isn’t anything wrong with that. In fact, I’d argue that companies’ prejudice against “B players” leaves them prone to dangerous over-hiring. But that intrusive a reference check is hardly worth it if you just want to hire B players. The second are the wheeler-dealers who charm the powerful and frighten the powerless. Psychopaths. (False positives.) On the other hand, most normal people, if they accomplished anything, will have made enemies and will fail an intrusive, 10-ply reference check. (False negatives.) The reason the “Classic 3″ in reference checking is limited to three checks is that any more scrutiny is dangerously counterproductive. If someone passes a 10-ply back-channel reference check, the odds are thousands to one that he’s had people directly intimidated (either by legal professionals, or by illegal professionals) in order to clean his story.
How expensive are false positives?
The claim that false positives are worse than false negatives is, in fact, dead wrong. This is backed by the claim that it’s somehow hard to fire false positives. I should mention that there are two classes of false positives. The first are those who are unethical, but acquire the trust of the group and don’t seem like bad hires until, often years later, they do something harmful to the organization. Those people are truly toxic, but they’re not caught early (that’s why they can do so much damage) and, given their ability to evade detection in a year of employment, no amount of pre-hire scrutiny is going to catch them. The best way to handle them is not to attract them, but that’s a topic for another essay. The second are the obvious bad hires. They’re brought on and, within three months, it’s clear that they’re not up to the demands of the job. Some can be trained or re-assigned, others can’t.
The “problem”, as often stated, is that it’s “too hard” to fire such people. They’re rarely malicious or blatantly incompetent. They’re just mediocre, and a bit harmful for morale. Cold-firing one might result in a lawsuit or public disparagement by a well-liked (if below average) person. Putting one on a PIP risks turning a harmless low performer into a morale killer. The PIP’s purpose is not to improve performance but to document low performance, but people on PIPs either bring their performance up to a high enough level to “beat” the PIP, but will then slack again when attention is off of them, or (more often) sabotage their manager with the time they have left, and neither is a desired outcome. So, companies end up letting such people underperform for several years. This is the source of the “false positives are more expensive than false negatives” claim, but it’s the company’s fault.
It’s actually easy and cheap to fire someone like that. Write a severance equal to 1.5 to 2 times the expected length of a job search for that level, and include non-litigation and non-disparagement. Quick, easy, and everyone’s happy. The cost of a false positive is bounded, if the company’s willing to do the right thing, cut its losses quickly, and write a fair severance rather than kicking the shit out of morale with a PIP. (Most companies aren’t. The preference for PIPs over severances is a way for HR departments to claim they “saved money” on exit payments, while externalizing the costs to a manager, who has to conduct the PIP’s kangaroo court, and the team.) What about the cost of a false negative? That cost is the negative of whatever that person would have produced, and some people turn out to be extraordinarily valuable, not only in their own contributions but in terms of the people they’ll bring on in the future. Practically speaking, the cost of a false negative is unbounded.
Explaining what is
The silly prejudices that companies acquire, toward the young or the old, toward people with too few or too many jobs, and so on… those seem counterproductive, and they are. So why do companies develop these (evidently untrue) pretenses of never hiring “B players” and keeping a hawk’s watch over “false positive” hires (at the admitted cost of numerous false negatives)? Mostly, it’s to create a narrative. It’s to expand executive arrogance into something that the lower-level players can participate in. I’d argue that organizations actually want to reject quite a few good people, not for intrinsic reasons, but the boost the morale of the grunts on the team. It makes the peons feel like they’re part of an elite squadron and, in truth, this makes it a lot easier to take advantage of them. One might also argue that vicious hiring practices (such as back-channel reference checking) go a step further, by encouraging the slightly disaffected (but still profitable, for the organization) peasants to be terrified of the job search process, in order to keep them where they are.
Erring on the side of exclusivity and, even, elitism has its purposes for the organization’s executives. They want the disaffected to feel that it’s better to be on the bottom of their current organization than to be anyone else. The “we never hire B players” narrative helps offset the cognitive dissonance of inhabiting an organization that won’t do the least to help them, and justifies overt cultural toxicity as “tough love”. That sort of thing can hold an organization together, for a while, when it faces a state of decline. However, is it a sensible way to grow? Does it make the organization better and, much more importantly, does it make for an organization that makes its people better? Probably not.