Wednesday, July 28, 2010
The math of risky hiring
Here's an interesting post on how one should think about risky hires. Essentially he takes the financial theory of volatility or "beta" and links it to making choices between safe 'low beta' hires and riskier 'high beta' ones. He points out that the rational hiring manager will only be willing to take a risk on a 'high beta' candidate if the expected value of that candidate's output exceeds that of a 'low beta' candidate. He then draws the appropriate conclusions for those seeking jobs for which they are not 'perfectly' qualified. More here.