The Moneyball Method of Hiring Executives

The best-selling book, Moneyball, which was also made into
a movie, offered us a valuable lesson about judging future
performance on superficial attributes, rather than
fundamentals.

In the employment arena, the concept of the “Four A’s” is
the common mistake hiring managers make. By over-relying
on the interaction in the interview, a manager uses the
Four A’s of Attractive, Aggressive, Articulate, and
Amiable to make a hiring decision, rather than the actual
accomplishments and/or potential of the candidate.

From a compensation perspective, a recent paper by
professors, J. Scott Armstrong and Philippe Jacquart,
challenged the popular belief that higher pay leads to
selecting CEOs who will outperform their lower-compensated
counterparts.

Armstrong and Jacquart cite a study showing that CEOs who
won awards in the press saw a marked increase in pay,
while CEO runners-up for the awards saw little increase.
However, the stocks of the firms controlled by the
“superpay” CEOs actually underperformed compared to the
stocks of the firms of the CEO runners-up.

The fact is that there is no evidence that paying top
dollar will get or retain the best talent.

HR POINTER: Companies need a more Moneyball approach to
hiring decisions. Companies need to make employment
decisions with the same objective diligence that they make
other business decisions. Using the Four A’s or hiring
the highest paid executive in a given field will not
guarantee extraordinary performance.

It is an extreme to apply Meehl’s Rule: Never meet a job
candidate until you decide to make him/her an offer. The
late Paul E. Meehl designed this rule to eliminate the
bias from the cosmetic or Four A’s approach to hiring.

However, it is not an exaggeration to require senior-level
candidates to exhibit their skills and ability to think
during an interview. Unfortunately, most companies don’t
take the time to structure an interview in this way.

Additionally, companies that hire search firms are often
victims of the anti-Moneyball effect by virtue of the way
the search firms position the candidates to the hiring
managers or the search committees. These search firms are
often limited to the publicly available achievements and
the total compensation of an executive in determining the
“value” a candidate.

Who doesn’t want to watch the baseball player who makes
$29 million per year? The assumption is that this player
must be good if he makes that amount of money – WRONG!

Unfortunately, the same money assumption is made about
executives and the reverse holds true as well – “If he is
only paid $X_amount, how good can he be?”

Many companies are so entrenched in their subjective
recruitment methods that they are reluctant to try
anything different. The quote from Winston Churchill says
it best, “Men occasionally stumble over the truth, but
most of them pick themselves up and hurry off as if
nothing had happened.”

If you are interested in a more objective/Moneyball
approach to hiring, you are invited to download the first
5 chapters of our e-book, Secrets to Hiring Success, from
the link below.

http://www.yourparttimehrmanager.com/human-resource-white-papers/

 
Additionally, if you would like to read the full PDF
version of our e-book, you can email the Member-Partner
who sent you this email or contact our corporate office.

 

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