Hiring as a Probabilistic Exercise

Poker is a great game for business people. It requires players to think in probabilities rather than absolutes. You can make the right play in poker and lose some percentage of time because luck is involved. (This is a great primer on poker math.)

Many new managers think about hiring in absolute terms. They use language like "Will this be a great team member?" Team members in the hiring process are asked to do the impossible and predict the future.

I view hiring with probability in mind. I ask, "What is the percentage likelihood this candidate is a great team member?" This kind of thinking accepts the idea that all hires could fail and that's OK.

Let's take two candidates.

  • Candidate "Jane": 60% of being an A-player. 40% of being a bust.
  • Candidate "Jim": 10% of being an A-player. 90% of being a B-player.

    Jim is the safe choice but Jane offers the greater upside. Given A-players in some industries are 5x or 10x more productive than B-players, this risk on Jane can make sense if you need to build a really strong team.

    Using this mindset, companies can hire employees who are riskier but have a higher potential to be A-players (i.e. Top 10% performers at their pay band) as long as you willing to quickly move out busts.

  • Show Comments