> Counterintuitively, if you pass on too many of the "good" candidates, in your overzealousness to reject bad candidates, you're actually INCREASING THE ODDS OF A BAD HIRE.
Yes, but what hiring managers are doing isn't passing over candidates that they know are good, they're passing over candidates that they're not very sure about.
> Because "good" candidates are rare, every time you pass on a good candidate that increases your odds of making a bad hire! This is simple Bayesian reasoning!
Similarly, of course this is true, but again hiring managers aren't passing up candidates that they know to be good, they're passing up on candidates that they're not sure about, whom the acknowledge could be good.
Under certain conditions, every time you pass on a candidate you're not sure about, you decrease your chance of making a bad hire. The conditions are that increasing hiring standards must weed out more bad candidates than good candidates.
Let's work with your model. Suppose 1% of candidates coming for an interview are good and 99% are bad.
Hiring strategy A manages to hire all good candidates it interviews, and 1% of the bad candidates it interviews. End result: for every 100 people you interview, you get 1 good candidate and 1 bad candidate.
Hiring strategy B is more conservative and hires 50% of all good candidates it interviews, and 0.1% of the bad candidates it interviews. End result: for every 100 people you interview, you get 0.5 good candidates and 0.1 bad candidates.
The claim is something like, the team produced by strategy B is better than the team produced by strategy A, even though team B has less good candidates than team B.