In the movie Maverick, Mel Gibson plays a con artist and poker player. Trying to get a seat at the table in a new salon, Gibson promises to lose for at least an hour. He’s as good as his word, but when the second hour begins, he starts winning hand after hand. When things are about to get rough because the other players suspect he is cheating, Gibson reveals his secret: “What do you think I was doing during that first hour? I was learning your tells.” Gibson goes on to inform the men how their lack of poker faces gave away the strength of their hands.
We’ve long been fascinated by the commonalities between poker and recruiting. Like recruiting, poker is a game of both luck and skill. Poker players and hiring managers both rely on picking up small hints that reveal the other person’s hand. On an almost daily basis, we see articles telling hiring managers how to uncover the true nature of a job candidate by paying attention to a few subtle hints and signs.
There is nothing necessarily wrong with looking for the hidden clues candidates may give about themselves. The real question is: Does it pay off for recruiters and hiring managers to invest in learning this Gibson-esque technique, or are there more productive ways of predicting on-the-job success?
Recruiters might find an answer to this question by looking back at the history of poker.
The Mathematical Revolutions
To learn more about poker’s past, we spoke with poker historian James McManus, author of Cowboys Full: The Story of Poker. According to McManus, poker evolved from European bluffing games like English brag, German Poch, and French poque, as well as the Persian game As-Nas.
“In the 19th century, and a few decades into the 20th, poker was accurately called ‘the cheating game,’” McManus says. The highest-stakes games tended to be dominated by cardsharps. They often worked in teams, using mirrors, cold decks, marked cards, and devices to slip cards hidden up their sleeves into their hands at key moments. Old road gamblers operated by depending on their gut instincts, intimidating other players, and trying to read the behavior of other players — as well as by cheating.
Starting in the late 1950s and continuing into the 1970s, a number of poker authors changed the game, with David Sklansky, Doyle Brunson, and Herbert Yardley being the most notable ones. These authors taught players how to win by playing strategically and applying probability theory. This first mathematical revolution in poker gave rise to new stars, including poker legends Brunson and Sklansky themselves, as well as Amarillo Slim and Crandell Addington.
“The second and maybe the bigger mathematical breakthrough in poker came in 2000, when Chris Ferguson won the World Series of Poker Main Event,” McManus says. “Ferguson gives off a tough impression, having long hair and often wearing cowboy hats and leather jackets. Looks can be deceiving, though. Ferguson holds a PhD and has a solid understanding of game theory.”
This new approach to poker typified by Ferguson involved applying game theory on top of the probabilistic approach. Imagine you have a pair of fives. The probabilistic approach will tell you this is a pretty good starting hand and you should open the pot with a raise. In game theory, you also need to take into consideration the games your opponents are playing. If one of your opponents only calls if she has a pair of sixes or above, you should play less aggressively if she calls.
“The game theorists have completely dominated the game since 2015,” McManus says. “You can still get lucky and win against them, but it’s getting increasingly difficult.”
What’s most notable about this second shift in poker is that players are no longer relying on what seems to make sense. Instead, these players are taking a highly empirical approach. They’re observing the past behavior of other players and testing how well their theories predict actual behavior.
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You Can’t Beat the Pros at Their Own Game
What does this have to do with recruiting? Have companies, like poker players, shifted from relying on intuitive methods to applying more rigorous mathematical approaches?
The simple answer is no. According to SHRM, three-quarters of organizations don’t even try to measure the quality of their hires, let alone the quality of their hiring techniques. Most organizations still rely on recruiting methods that seem to make sense; they don’t bother to check whether their theories align with reality.
Curious to find out more about the impact of the mathematical revolution on poker, we got in touch with David Sklansky, author of what many consider the most influential book on poker, The Theory of Poker. Sklansky has written many books on the subject, but he doesn’t consider himself a pure theorist. He has put his knowledge to use, winning three World Series of Poker bracelets and dozens of other tournaments.
“Instinct does matter,” Sklansky told us, pausing to make sure we understood his point. “A math geek who has no instinct will still lose to a player who understands just a bit about probabilities but has a good instinct. However, the mistake most players make is to think that their instinct matters more than understanding the math.”
These players are fooled by the sporadic positive reinforcement they receive from winning once in a while. What they fail to see is that the players with technical skills playing disciplined games win far more often.
We asked Sklansky to explain how his probabilistic methods changed poker.
“I didn’t invent the idea that probabilities mattered in poker,” he says. “Most players knew a thing or two about probabilities and, if pressed, would admit that probabilities mattered. They just thought that probabilities mattered less than following their instincts, bluffing, or reading the other person’s bodily clues. There is more skill and less instinct to the game of poker than even old-time pros and newer good amateurs realize. If I know something about the game that you don’t or you refuse to adapt to, I’ll win your money.”
Maybe the best example to illustrate Sklansky’s point is the Big One for One Drop series of tournaments. With $1 million buy-ins, they are among the most lucrative tournaments in history. These seven-figure buy-ins attract both business leaders and poker professionals. Make no mistake: the business leaders include hedge fund managers, loan sharks, and casino owners — people who know a thing or two about probabilities, poker, and reading people.
So, how have the business leaders fared?
In the opening 2012 tournament, pro player Antonio Esfandiari took home the record-setting prize of $18 million. A pro won the 2013 event as well. And the next one. And the one after that.
Tournament founder Guy Laliberté worried this might deter the business leaders from participating, so he turned the tournament into an invitation-only event in 2016, practically banning pro players from at least the bigger $1 million buy-in events. A few months later, however, Laliberté decided to allow some lower-ranked pros to participate.
Who won the 2016 event? A pro. The same goes for the 2017 event. How about the year after that? You get the point.
In hindsight, it may seem obvious that the businesspeople were doomed before the first card was dealt. Sure, they may have built billion-dollar businesses, but that doesn’t mean they’d have a chance at beating the pros at their own game. Plenty of people, however, didn’t have this seemingly obvious insight before the tournament.
The important question for our purposes is whether CEOs and HR managers realize that, when it comes to recruiting, they are sitting in a tournament in which 490 organizations and counting (based on analysis presented in Evidence-Based Recruiting) have already started playing the odds and following a disciplined game.
Google and Amazon are leading the charge in this mathematical revolution in recruiting, but even more traditional firms like Schneider Electric and Nestlé have started following suit. These organizations are building dedicated talent analytics teams and engaging top executive search firms that obsess over calculating the odds of making better hiring decisions.
So think about your current recruiting strategy. Do you have the foresight to realize you can’t beat the recruiting pros at their own game?
Atta Tarki is the founder and CEO of ECA and the author of Evidence-Based Recruiting (McGraw Hill, February 2020). Ken Kanara is the president and managing director at ECA.
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Atta Tarki is the founder and CEO of ECA, a data-driven executive search, interim management, and project staffing firm, and the author of the book “Evidence-Based Recruiting” (McGraw Hill, February 2020). Prior to starting ECA, Atta spent six years as a management consultant at L.E.K. Consulting. Ken Kanara is the president and managing director at ECA. Ken works with private equity investors to place project consultants across their portfolio businesses. Prior to starting at ECA, Ken spent 10 years as a management consultant at Booz & Company.