In May, Charlie Youakim, the CEO of buy now pay later (BNPL) firm Sezzle went on the World of DaaS podcast which is hosted by Auren Hoffman, the CEO of Safegraph, a large location data broker. Both companies are data harvesters that package and resell data to other parties. Towards the end of the episode, the two self-professed data nerds segued to a favorite subject amongst entrepreneurs: Team-building, a euphemism for hiring, managing, and firing. Or, as Hoffman put it, “Moneyballing for talent.”
“It’s very similar to our product, taking as much data as you can at the initiation of meeting someone and use that data as part of this matrix of how you look at them and evaluate,” Youakim said. “We use Wonderlic”—an aptitude test whose validity in a variety of settings has long been controversial—”but it’s not the be-all-end-all for us. It’s a data point. So we look at that. If you’re a younger potential employee, I want to see a transcript. Like how did you do in school? What was your GPA?” Later they referred to SAT scores as another data point.
Then, Hoffman floated an idea: “Now if there is, like, a World of DaaS listener out there and they started a co-op to gather all the data of, like, inputs of what people look like and then how good they did in your company and you could see this across thousands of companies….”
“That’d be awesome,” Youakim said.
“Would that be something you’d want to subscribe to or something?” Hoffman asked.
“Oh, absolutely,” Youakim enthused.
Through one lens, it was a mundane musing between two CEOs of data companies talking about how awesome it would be to have more data on something. But in the context of experiments occurring in the tech industry around hiring practices, it was two influential CEOs encouraging other entrepreneurs to create a business that would be an absolute nightmare for workers, a type of credit score for workers that could be a permanent HR file that follows workers from one job to the next, and where a worker who struggles at one job may have trouble getting another. Youakim did not respond to multiple Motherboard interview requests to elaborate on the concept.
It is also in line with a growing trend among tech companies that, spurred by work-from-home and hybrid work, are increasingly interested in quantifying employee performance. The most prominent example is Coinbase introducing an app so employees can constantly rate each other’s performances, a scenario even the normally cheery TechCrunch said “sounds rough.”
Over the last several years, there has been a boom in employee management software solutions such as Workday, Lattice, CultureAmp that are used across thousands of companies for performance reviews and other sensitive HR tasks. Technologically speaking, what Youakim and Hoffman are talking about is opening those confidential resources—or some condensed version of them that can be easily digested and analyzed—up to everyone. None of these HR software companies have indicated that they have any intention of doing this.
Laszlo Bock, Google’s former head of people operations—its term for HR—once described hiring as “a complete random mess.” In a 2013 interview he said, “Years ago, we did a study to determine whether anyone at Google is particularly good at hiring. We looked at tens of thousands of interviews, and everyone who had done the interviews and what they scored the candidate, and how that person ultimately performed in their job. We found zero relationship.” At its most charitable, the idea Hoffman and Youakim outlined would be to inject logic and statistical rigor to this random mess. But, experts who have studied hiring extensively draw a different conclusion, that it would allow this complete, random mess to follow workers their entire careers, affecting their job prospects, earning potential, and their broader lives.
“The idea is intriguing, but I believe it would actually be much more detrimental for companies than it would be helpful, as it opens the door to further bias in the hiring and recruiting process,” said Dave Carhart, vice president of Lattice Advisory Services, a division of Lattice that advises its customers, in an email to Motherboard. “It may at a glance seem like a way of streamlining and condensing an employee’s ‘profile’ and therefore making the hiring process smoother, but it actually runs the risk of flattening an individual into a ‘score’ that doesn’t really take into account their dynamic strengths, successes, and growth areas.”
CEOs and hiring managers have long had pet theories for how to identify “talent,” as workers are often called in the HR world. For much of human history this amounted to outright racial, ethnic, and gender-based prejudices, nepotism, and other pseudoscientific rubrics. In recent decades, such methods have gone out of fashion and even been outlawed.
Nowadays, bias in hiring is often more subtle and difficult to detect. In 2009, Google began a multi-year intensive study of its own hiring practices and leadership capabilities in an attempt to, among other things, determine what makes good bosses. “The point, they say, is to provide the data and to make people aware of it, so that managers can understand what works and, just as important, what doesn’t,” the New York Times said. In fact, the article noted one of the biggest “traps” was in hiring. “Managers often want to hire people who seem just like them,” the article pointed out, which sums up the mechanism for bias in modern hiring practices.
This is widely acknowledged in HR circles today. The Society for Human Resource Management, the main professional society for HR professionals, specifically says that job performance reviews are not trustworthy and often demonstrate bias.
Carhart echoed these concerns. “Many companies’ employee performance management and assessment processes are ripe with bias, inaccuracies, and inconsistencies. And even while the HR industry has made great strides—and will continue to do so—to address these challenges, the fact remains that not all companies judge success and failure, good performance and poor performance, in the same way. They also aren’t measuring employees in the same way, on the same scale, or tracking the same metrics.”
In the podcast, Youakim provides a seemingly harmless anecdote that illustrates how this works in practice. In response to Hoffman’s question about how he identifies outstanding candidates, Youakim recalled asking one interviewee to meet him for coffee at 7 a.m. on a Saturday as a test for “entitlement.” To decline to meet at such a time would, in Youakim’s mind, illustrate a lack of “going above and beyond.” The person who not only agreed to meet him then but showed up early is now one of Sezzle’s “superstars,” as Youakim put it, apparent confirmation his 7 a.m. coffee test is a good one.
But John Hausknecht, a professor of human resources at Cornell University, says he’s heard all kinds of stories like these over the years. Some CEOs put extra weight on how interviewees treat the wait staff at a restaurant, showing up early to interviews, or putting prospective employees through stress tests or brain teasers as indicative of some deeper qualities. But he says they’re little more than superstitions.
In fact, this is exactly what Google found in its massive study. In the 2013 interview, Bock said that, among the findings, “we found that brainteasers are a complete waste of time” and that GPAs and test scores are “worthless” as a criteria for hiring (except for very recent graduates with no employment experience where Bock said there is a “slight” correlation; Youakim said on the podcast they ask for transcripts and test scores for applicants five years out of school). Instead of brainteasers, Bock and Hausknecht both advocated for structured questions asked identically to each candidate. Otherwise, Hausknecht said, hiring managers are simply engaging in “shortcuts.”
Specifically with test scores and GPAs, Bock said, “After two or three years, your ability to perform at Google is completely unrelated to how you performed when you were in school, because the skills you required in college are very different. You’re also fundamentally a different person. You learn and grow, you think about things differently.”
This echoed a point Hausknecht made about the co-op of data-sharing companies. It assumes people don’t change, that jobs require similar attributes, that a person’s experience at one company is relevant to another where they will be in a different environment with a different manager and different company culture. It assumes the problem to be solved is attracting the “right” worker, which is the wrong question. Google found that, as a result of its study, it was much easier and more effective to help underperforming managers improve rather than hiring new people. The problem, in other words, is not hiring more loyal workers, but fixing bad leaders.
More to the point, the idea of scoring workers across companies, Carhart argues, is regressive, pushing the HR industry backwards. “Performance abilities should be based on alignment to company culture, quality of management, and opportunities for growth,” he said in an email. “The idea of having 'a score' goes back to when HR was seen as having a one-directional function and purpose—to be a resource to the company—as opposed to where we are now, where HR and People functions are strategic business partners to help facilitate the kind of people success that ultimately drives business success.”
Or, to put it a different way, “Just because we can track it, collect it, and ask about it,” Hausknecht said, “doesn't necessarily mean we should.”
Might as well rename this as "CEOs seething over losing control of their employees". How dare they get financial independence without their approval!
