Real-time hiring with prediction markets

Epistemic sta­tus: speculation

I have a cou­ple of as­sump­tions about hiring:

  • It is difficult and of­ten un­pleas­ant.

  • No one is very good at it.

  • It has a lot of hid­den costs.

I have a fur­ther as­sump­tion about the need for la­bor:

  • The peo­ple do­ing the work now have the best in­for­ma­tion about the amount and type of work needed.

Most of the time I have seen a new po­si­tion open up, it worked ap­prox­i­mately like this: man­age­ment no­tices a short­fall → they make a case for a new po­si­tion → there will be ne­go­ti­a­tion with se­nior man­age­ment/​HR/​fi­nance about the needs and available re­sources → green­light to post a job open­ing and col­lect ap­pli­ca­tions. This seems like costs be­gin to pile up un­til man­age­ment takes no­tice, and then con­tinue dur­ing the hiring pro­cess. The goal is usu­ally to get a pool of qual­ified ap­pli­cants, and then make the low­est offer that will get ac­cepted. Con­trol­ling ex­plicit costs like com­pen­sa­tion seems to be the dom­i­nant con­cern; there is lit­tle to none for lost pro­duc­tivity.

I think if a pre­dic­tion mar­ket were im­ple­mented where cur­rent em­ploy­ees bet on the value of ap­pli­cants (their fu­ture col­leagues), we could get bet­ter hiring de­ci­sions. If we com­bine this with con­tin­u­ous hiring, which is to say always ac­cept­ing ap­pli­ca­tions, we can cut out the en­tire above pro­cess.

As new ap­pli­ca­tions come in, the mar­ket will price them. A high price is worth a look, be­cause it means the team wants to add them. Price in­fla­tion over­all im­plies the team is in need—though I am not clear on where ad­di­tional funds would come from.

It seems like this leads to a con­di­tion where a com­pany could hire pro­duc­tive peo­ple as soon as it needs them, with­out even hav­ing to rec­og­nize that need. This sounds ideal to me.

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