Recruiting with the Magic of the 37 Percent Rule

I think we could all agree, as humans, we're predictably irrational at times. Psychologists and behavioral scientists document our susceptibility to numerous cognitive biases and systematic errors that cause us to stumble in our thinking. These biases and errors impair the speed and quality of our decisions. As talent management professionals, we have an opportunity and obligation to use these insights to build better practices, policies, and programs, reflecting our best understanding of human psychology and giving ourselves the greatest chance for success. It is obvious that hiring decisions have an element of uncertainty to them. Some research even shows that 46% of executive hires fail within 18 months and only 19% achieve unequivocal success. In a world of uncertainty, we have probabilities. Knowing anything with 100% accuracy is delusional at best, and the greatest hope is embracing strategies that reduce uncertainty by increasing probabilities of a good outcome. Mathematicians claim the 37 Percent Rule is a “rule of thumb” that gives you the highest probability of making optimum choices.

In a nutshell, the 37 Percent Rule says, spend the first 37 percent of your decision-making process gathering information and committing to nothing. After that period of exploration, choose the best option. Think of the 37 percent as a calibration period seeking a benchmark standard. Brian Christian in his book, Algorithms to Live By: The Computer Science of Human Decisions, uses an example to illustrate the use of the 37 Percent Rule. As he writes: “If you want the best odds of getting the best apartment, spend 37% of your apartment hunt (eleven days, if you’ve given yourself a month for the search) noncommittally exploring options. Leave the checkbook at home; you’re just calibrating. But after that point, be prepared to immediately commit—deposit and all—to the very first place you see that beats whatever you’ve already seen.”  

This oddly precise percentage has a formula behind it (the mathematically curious can see a more detailed explanation here) and mathematicians insist this rule gives you the highest probability of making the best choice. It is critical to remember that heuristics are useful “rules of thumb,” not laws of nature! This rule only maximizes probabilities; it doesn’t guarantee success. Just as with any tool, common sense and context matter - but it is a valuable perspective to consider.

A critical hiring process question is always, “How long do we spend sampling candidates to give us the optimum chances of getting the best candidate?” In the real world, a search is time-bound, so if we wanted to make a hiring decision in 100 days – the first 37 days would be spent on exploring talent. There are rare occasions you meet a stellar candidate who looks like the “Holy Grail.” When that happens, don’t let abstract formulas stand in the way! The best talent will always have multiple options to choose from and they do not have indefinite shelf-lives. But we should also have a healthy dose of skepticism when we feel that way about a candidate because in hindsight, we have all had experiences of knowing that “everything that glitters is not gold.”

Even knowing it would be unwise to blindly follow the 37 Percent Rule in every single instance, doesn't make the heuristic invalid or unhelpful. Spending roughly the first third of your decision-making process gathering information gives you the necessary rigor to feel comfortable deciding and managing the healthy tension of FOMO and analysis paralysis. It is a valuable tool for the hiring process that balances exploration and decisiveness. That is the magic of the 37 Percent Rule to talent acquisition.