Friday, June 29, 2012

Hire the Uglier Model

Hedge funds look for mispriced assets. Billy Beane popularized a similar mindset for evaluating baseball players. Some organizations in other industries have used a similar method for getting ahead. For example, in this Slate story, George Mason University hired conservative faculty members--the idea being that academia is generally hostile to conservative thinkers, so the ones who have shown success must be very strong to overcome the barriers.

Susan Cain's book Quiet: The Power of Introverts in a World that Can't Stop Talking details a similar occurrence with introverted people. She explains how our culture undervalues people with traits more suited to listening, thoughtfulness, and introspection.

Maybe there's a model here. Regardless of realm, identify a system that treats a portion of its people consistently unfairly. Given two candidates with similar credentials, hire the person from the unfair channel. Put this way, it may seem too self-evident to have any insight value. But consider what is regarded today: the longer the list of impressive institutions, the better.

An example with two people:  Candidate A attended the most elite schools from pre-K through prep. With rich parents, A spends his free time on music lessons, travel sports, foreign languages, and world travel. Candidate B grew up solidly middle-class (or to quote Homer Simpson, "upper-lower-middle class"). Both candidates got great GPAs and SATs and attended the same top 10 college. Upon graduation, it is safe to say that Candidate B has accomplished more, given the extra hurdles. To think otherwise would be like comparing the power of two cars by only looking at the mileage covered, instead of then dividing by hours. We should care about mph, not m, when estimating future value. Job interviews will ask not only about your output, but also the input it took to get that output.

When hiring two similarly successful...
salesmen, pick the quieter one.
models, pick the uglier one.
power forwards, pick the shorter one.
researchers, pick the dumber one.
graduates, pick the poorer one.

You won't just be giving charity, you'll most likely get an undervalued asset while your competition pays for an overvalued one. It's fiscally irresponsible to do otherwise.

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