The Visible Hand

In 2004, Columbia economics department chairman Don Davis realized he’d missed an opportunity: He’d come close to hiring both Mark Duggan and David Autor, two coveted young economists then at Chicago and MIT who’d been friends in grad school and frequent co-authors. But Columbia didn’t make an offer to Autor in time for it to figure into Duggan’s calculation. Neither of them bit. It was a textbook example of what economists call coordination failure: “Had the timing [of Autor’s offer] been a little different, it might have nudged me over the top,” says Duggan.

Most private-sector companies follow a standard recruiting formula. They extend an offer, throw in a few perks, and give the one-big-happy-family speech. What they almost never do is mention who else the company is recruiting—at least not until those other people have accepted.

Seeing a lesson in the previous year, Davis decided to junk this model. What replaced it was an experiment: He not only informed prospective hires about whom Columbia was recruiting, but he also kept the candidates updated on the status of the outstanding offers and actively encouraged them to compare notes.

It worked beyond all expectations. Even the best departments rarely have more than one in four candidates accept their offer. This year, Columbia went seven-for-fourteen. The candidates spent much of the winter and spring having conversations about how excited they’d be to move to Columbia if the others came, too. “There was a lot of coordination. I talked to the other candidates, most of whom I know well,” says Pierre-André Chiappori, one of the new hires. “In the end, we convinced ourselves that it was likely to work.”

The lesson for the private sector seems obvious: The prospect of working with other top people can only sweeten the deal for a recruit you’re trying to win over. So there’s much to be gained and little to lose from letting him know who else is in the running. Could it work for large corporations as well as it did for Columbia? “I think there are circumstances when that would be a factor that would help sway a candidate,” says Brooks Chamberlin, the New York–based managing director of financial services for Korn/Ferry International, one of the world’s largest executive-recruiting firms. “But you have to be extremely careful about breaching the confidence of one candidate to another.” Sounds like a definite maybe.

See also:
To cash in on the hottest academic trend, Columbia bought in bulk.
Who They Hired
Columbia added seven renowned scholars to its economics department in just one year.
Who They Might Hire
The buying spree’s not over.

The Visible Hand