Monday, March 24, 2014

Moneyball and Hiring: Why Businesses Don't Know How to Find Talent

By this time, most people are familiar with Moneyball, whether through the book or the movie, so it's not unfair to expect people to have applied some of the general ideas to their areas of expertise. If you were to search right now, you could find a number pieces posted on Moneyball and hiring. I think that we can safely say that the overall thematic notion has permeated our collective conscious. So why then do so many businesses suck at hiring and building amazing teams?

Forget about individuals for a minute. Instead, think about the predefined restrictions we place on the people we hire. I talked about ageism in this previous post, but there are many other ways. Google, famously, had it's brain teasers even though they later came out and said that the puzzles didn't correlate to better employees. Similarly, they have made college ranking and GPA into an important criteria. And what about all of those job listings that specify experience within a given industry -- sure it might get you off the ground faster, but are you excluding some exceptional talent because of your one-dimensional conventional thinking (e.g. Scott Hatteberg only being a catcher)?

Consider, most tech job listings tend to set Engineering or Business degrees as the preferred background, while liberal arts degrees tend to outperform them on GMAT tests. Why are we focused on Business and Engineering degrees? Conventional wisdom says that they will have the background and training needed to succeed. But what if the real secret to a great team member is the ability to learn new things, to understand complex concepts, to analyze and problem solve? And what about communication? What if communication does not equal cutting and pasting bullets from a Powerpoint?

In that way, the Moneyball strategy is looking for undervalued aspects and using that as the target criteria. If the market puts a premium on young, on engineering degrees, on GPAs and top tier schools, then those aspects are probably expensive. Meanwhile, there are probably lots of bargain talent in the pool of older, experienced workers with liberal arts degrees. And yet, so many businesses and recruiters are reluctant to consider candidates from this pool. Why? Here are three reasons that I can think of immediately:
  1. An inclination to hire "like us" accompanied by an overall disregard for all things liberal arts. Remember President Obama's art history joke? When the guy who goes out of his way to avoid offending anyone uses a demographic as the focus of a joke, it's a telling perspective on 'common knowledge perception' of a liberal arts degree. The thematic aspect of this is the idea that, during college, we worked, we were focused on our future, while those liberal arts students all just read books, looked at art, film and music, or argued about philosophy. We were real world. They were the crazy ones, the dreamers.
  2. The inability to measure or score capabilities and understanding accurately. We all want smart people who fit well in our team, but so many aspects of the interview are stacked against us. There are typical questions that we're expected to ask -- we've published a list of requirements and most interviews are like standardized tests on those topics. Meanwhile, as candidates, we review the test criteria, prepare our answers, practice our delivery and look for tactical ways to deflect things that probe our weaknesses. But companies really want thinking, analyzing, capable, so companies like Google explore techniques like brain teasers -- and candidates begin preparing for brain teasers. But the real problem is, just like in academics, somebody can go through an exercise and produce an answer, an essay or a result that matches the accepted response, but still not have thought about it, analyzed it, or understood the why behind it. But with school, you have several months to shake things up, to ask variations on structure and content in an effort to explore the processing capabilities of the student. Job candidates are typically decided in a couple of interviews, but you never really get a measure until they are on the team and under fire.
  3. Recruiters, hiring managers, and what I'd call the "not shooting at the center effect". Some time ago, The Freakanomics guys did this podcast on soccer and the penalty kick. The basic premise was that, while it was a statistically underexploited approach that should yield more goals, when they have the opportunity to take a penalty shot, few players kick it toward the middle of the goal. The reasoning behind is that, if they do and the goalie stops it, the player looks like an idiot. In that same way, imagine a recruiter saying, "I found this really talented candidate, but they don't have the background that matches your criteria -- but I think that they are amazing." Not only will the amazing candidate probably still going to be looking for work, the recruiter probably will be as well.
Of course, all of this only matters if you need cognitive skills. Just because you understand the effect of heat on proteins doesn't mean you can fry an egg. If your looking for a production person like a line cook, you're probably better suited to hire someone that has repeatedly cooked eggs over an MIT thermal engineering graduate. But in the same way that most real world problems don't look like those word problems you saw on math tests, determining how to solve a problem isn't usually a basic execution problem. Consider the problem, "we need a brochure". Or another common one, "we need to find a new product that we can sell to a new market."

Years ago I was in Las Vegas as part of our company's team to help set up a networked product demonstration. We'd broght along a number of sample products, plus a product manager, an application engineering manager, our ace networking guy, and myself. On the night before the event, we spent several hours trying to set up this demonstration that involved a complicated bit of network routing. For hours, the network guy was trying different things to make it work, without success. After letting the experts bang away at it in frustration, at one point I asked some questions to better understand the problem. Shortly thereafter, I had to ask the question, couldn't you just do this? It was like a light clicked on for the network guy, and suddenly a solution to the problem became apparent. While, at the time, I lacked the specific vocabulary to detail the solution or the technical chops to implement it, I understood enough of the problem to spark a solution.

It's a different kind of thinking that enables these kinds of solutions. You may not need this kind of creative thinking if you're banging out eggs, but if you're an organization dedicated to creating something new under conditions of extreme uncertainty, then you need to be able to learn, adapt, and travel down new paths.

Moneyball Versus The Cheapskate
There are some businesses that look at the idea of bargain candidates as people that we don't have to pay very much because they will be grateful to get paid something. These types of businesses keep the threshold on salaries so low that only the most desperate will accept the salary and working conditions involved.

While you might be able to read this strategy into a Moneyball philosphy, it misses a key element in the psychology of enabling talent. Specifically, in order to get the best performances out of your team, you need people who are engaged, motivated, and want to participate. I could be the Albert Einstein of solving your business problem, but if you ask me to spend my day changing diapers, I'm relatively unlikely to direct much energy or passion into anything you put in front of me.

In that way, while Moneyball may seem like it's all about not paying people very much, what it's really about is finding undervalued talent. With the Scott Hatteberg example, the market was said you're worth zero as a player now and the A's said, we value you. From the mindset of the person being hired, they are being valued at more that their perceived market value versus not less. In practical terms, that means that you are offering them an opportunity, not exploiting them, which also correlates to engaged, involved output.

Moneyball and Your Hiring Strategy
So, if you're not thinking Moneyball in your hiring strategy, perhaps you should ask yourself why. More to the point, if you don't say anything, you're hiring team is also probably avoiding shooting at the center. Somebody like me -- I would probably never make it through even your first round of screening. So, the question is, do you want to keep playing to conventional wisdom or do you want to explore new approaches to building something great.

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