What Causal Inference Can Tell Us About Hiring

One area I’ve gotten interested in lately is causal inference. For those of you not familiar, it’s a methodology that attempts to find and validate cause-effect relationships between variables. The key is that it attempts to do so using data without having to rely on controlled experiments. (For an introduction for the casual reader, I highly recommend Judea Pearl’s book The Book of Why.)

One concept I found interesting was the implications of something called a collider. A collider is a variable that is the effect of two or more variables. As a simple example, consider the following:

The way to read this diagram is that fame is a function (or effect) of money, talent, and looks. In other words, fame = f(money, talent, looks). In this example, fame is a collider relative to money, looks, and talent because they all have arrows pointing into fame.

The interesting implication from the book is the following: given that you hold the level of a collider constant, the other variables become dependent upon each other even though there is no causal influence on them.

To understand this better, let’s use an even simpler example: X + Y = Z. In this case, Z is a function of X and Y (i.e. Z = f(X,Y)), so Z is a collider with respect to X and Y:

Here’s the key point: if we fix the value of Z at some specific value (say 10, so we’re left with the relationship X + Y = 10), then X and Y become correlated. In other words, if I know the value of X (say 8), then I can infer Y (i.e. 2).

The interesting finding from causal inference is that this dynamic generalizes. Said another way, for a given level of Z, information about X automatically gives me some information about Y, even if I can’t observe Y directly.

Almost Famous

Why is this interesting? Let’s go back to our fame example. Assuming our causal model is valid, then we can say that for a given level level of fame, if we know something about their level of wealth, we can infer something about their level of looks and talent. If we simplified it down for a minute to say just include looks and talent, then we could say – for a given level of fame – we’d expect that a person who is more attractive is likely to be less talented. (Another way to think about this is if they were both attractive and talented, they’d be even more famous).

I haven’t done an analysis to verify this yet, but it’d be interesting to run an experiment. For example, look on social media for actors who have a similar level of followers (as a proxy for fame). Within that cohort, if the model is valid then you would see a spectrum ranging from the good-looking-but-hacky to the talented-but-ugly.

Counterintuitive Hiring

This finding has interesting implications in many places. Take hiring, for example. Consider, for example, a hypothesis that seniority_level = f(skill, likability). If you think both skill and likability are positively correlated to seniority level, then – for a given level of seniority – consider that the most skilled person is likely to be the one you personally like the least.

These are of course toy examples; the causal structure of real life is likely to be much more complex. But they illustrate both the power of causal analysis and the sometimes counterintuitive truths behind the way the world works.

Types of Work

In an organization there are many different roles that need to be filled. There are also many different ways of talking about or describing various aspects of those roles. One way I’ve come up with for talking about the type of work that different people like to do is using the analogy of building a house. For each of these different roles, you can ask how well each describes you:

  • Visionary. You see an empty field and you like thinking about what type of house should be built. You can see things where nothing exists. This role is all about the vision: a grand house with a garden, a large patio… maybe even a fountain in back. Heck, maybe everyone else thinks it should be a house, but you come along and realize what it really should be is a ten-story highrise, since in 3 years a major highway is going to run right by here and we’re going to be well positioned to capitalize on it and…. (you get the idea.)
  • Architect. OK, so we’ve agreed on a house. What’s the house going to look like? How many bedrooms? Where’s the kitchen and how’s it laid out? Is it going to flow well? How do you design it so that there’s morning light in the bedroom, that the design is naturally energy efficient, and that the minimum of material is needed? This is marrying the artistic and holistic with the practical engineering. This design looks nice, but is it technically feasible? Will it cost too much to design? Will the layout be too complex for people to walk through? This is where you get excited: taking the high level idea and creating a plan and design for translating that vision into something real.
  • Capitalist. You’ve studied the plans and now you want to know if this investment is going to make money. To do this, you know you have to run the numbers. What are the material and labor costs? What’s the expected price per square foot at sale or rental? Should we flip it or rent it? Equity or debt? What’s our expected yield? Does building that roof deck have a positive ROI? What are our assumptions? Whether it’s doing quick math in your head or preparing a detailed financial model, you know that it always comes down to ‘the money’ and keep an eye on the bottom line.
  • Promoter. So you now have the vision and plan. It’s time to secure the resources necessary: investors, the team, permits, supplies, etc. This is where you shine. You know lots of people, love talking to them, and are really good at getting people excited and involved. You’ll talk to everyone you know and everyone you meet, excitedly tell them about what you’re working on and why they should get involved, and ask them to ask all their colleagues, too. After all, who wouldn’t want to be involved in this?…
  • Closer. So the promoter has the investors and/or customers excited and got them to the table. Now it’s time to close. At the end of the day you know that money talks and that investment and revenue make or break a business. Your style might be intense or relaxed but at the end of the day you know that only one thing matters: closing the deal.
  • Conductor / General Contractor. All right, we’ve got everything we need: the vision, the blueprints, the timeline, the budget, the money, the permits, and the team. It’s time to begin construction. This is where you shine. You’re good at coordinating people, holding them accountable, keeping everyone in sync, and raising red flags should anything come up. You keep the project running on time and on budget.
  • Builder. This is where the rubber meets the road. You’ve got your plan and timing and now it’s time to execute. You get it done. Quickly and well. You’re able to stay relentlessly focused on accomplishing the task, and if things come up or break, you’re resourceful enough to figure out how to get. the. job. done. You’re practical, focused, determined, and resourceful. Brick by brick, piece by piece, you thrive on doing real work and doing it well.
  • Inspector. You like details, precision, and perfection. Sometimes, you actually like finding the mistakes and errors people make – not to make them feel bad or point blame, but because you know that it makes the end result that much better. It’s almost like a game.
  • Administrator. You love order. Making lists and checking things off them is one of the highlights of your day. In fact, sometimes you add things to your list after you’ve already done them just SO you can check them off. The files on your computer are all organized, your inbox is alway empty, and you’re generally just on top of your stuff. Crossing T’s and dotting I’s is your thing. (In fact, you’ve already noticed several typos in this post…)

When I’m interviewing people for a role I’ll often ask them to rate themselves 1-10 on each dimension, with a 5 meaning average and a 10 being world-class (for whatever they consider to be their peer group). For example, compared to my peer group, I’d rate myself a 7 Visionary, an 8 Architect, a 6 Capitalist, a 4 Promoter, a 5 Closer, a 6 Conductor, a 6 Builder, a 5 Inspector and a 6 Administrator.

How would you rate yourself?

All Types Needed

The reason I like this question is it helps get both the level of abstraction at which people enjoy working and the type of work they like to do. And the important thing here is that you really do need all roles to build the house:

  • Without the visionary what gets built is uninspired (and maybe the wrong thing altogether)
  • Without the architect what gets built will either never match the vision, won’t actually work in practice, or both.
  • Without the capitalist you may not make any money.
  • Without the promoter you won’t have all the resources you need to bring the vision to fruition, no matter how good the blueprint.
  • Without the closer the deal doesn’t actually get finished.
  • Without the conductor you will have lots of activity but quality, time, and budget will suffer.
  • Without the builder, there will be lots of talk but no action.
  • Without the inspector your building/deal is at risk of death by a thousand paper cuts.
  • Without the administrator balls can get dropped and speed and quality of execution suffers. Sometimes irreparably.

In order to be effective, an organization needs to have all types, put in the appropriate roles for them, and in the right proportions.

There are many ways of thinking about the types of people you need in an organization. This is one that I’ve found useful.