Why Do Firms Value Personality and Fit Over Capability?

Do you want to spend all day every day with someone you hate or is awkward and has no social skill? Also I know countless 3.8+ ivy leaguers who were terrible analysts, GPA is not everything it is helpful as a guide but not a sole indication of the quality of a candidate.

ReachThePeach:

Why don't hiring managers put more focus on you applying your skills and test if you are actually capable of completing the job in an interview instead?

Much business at banks/firms is a people game. It's a sales game. It isn't just crunching numbers. Are you going to trust the guy with a 4.3 GPA to lead a billion dollar deal when he's great with numbers but can't have a conversation with someone?

Sales = a skill that's not quantifiable in school. That's what they're hiring.

For most roles, diminishing marginal returns render talent/skill unnecessary beyond a certain point and so an individual's fit with the company culture, decision making, ethics, etc. receives more focus.

In my experience, once on the job, it is better to develop a strong contextual understanding and sufficient technical skills than to be the absolute best in the latter area.

Hard skills are easier to learn than soft skills to someone who is oblivious

Odds are somebody with a 3.5 can do the job as well as someone with a 3.8. Maybe the 3.8 will have a more thorough understanding of some details. However, the 3.5 may have a better understanding of a particular area. Also, the more qualified candidate may think they are above the job or know more than they actually do. Obviously, if you can snag a 4.0 that is not awkward then you give them the offer. However, that is not always going to be the case.

I don't know as much as others on this forum, but I think there is a couple of reasons.

1. It doesn't take a genius to be an analyst, you could take an ambitious student from Penn State and he could probably do as well as a kid from Dartmouth.

2. Investment Banking is a sales job, and having the personality to get deals (13+ years down the line) is more important than a 4.0 from John Hopkins Bio-med.

3. If I had to spend 12+ hours a day with someone, I would like to be able to tolerate him/her.

Pretty much everyone who bothers to apply has the ability to do the technical side of the job - it's not that hard. As others have said IBD is primarily a sales job (especially at the higher level) and you hire people you can work with. There's simply no need to be in the top 1% of technical ability / intelligence to actually do the work required, but if you're in the top 1% of social ability then you'll be a real asset to the bank in the future.

Well, it shows that you have respect for the firm and the particular culture within that group.

Let me give you an example from Stat Arb that runs counter to banking.

The last thing that our Stat Arb team wants to do is hire someone who thinks we're supposed to be an IBD culture.

We expect our researchers to do a lot of complicated stuff. We expect our researchers to make a few mistakes along the way.

Our models are extremely complex and we expect some mistakes and some judgment calls that we disagree with.

Screaming about it-- even being surprised or upset about it-- gets in the way of that. Having a small enough ego to admit when you're wrong-- that's something we need. We're a team that fires strategies and ideas, not people. Taking stuff personally risks changing that. We throw a lot of ideas at the wall, and we try to be right 60% of the time. Oftentimes, making a mistake, realizing we've made it, retesting an idea and proving it still works regardless of whether the mistake is there helps us shore up confidence in the idea.

As a consequence, screaming, egos, politics, etc aren't a part of our culture. We're too busy building stuff and innovating. Egos destroy value.

On the other hand, if someone fcuks up a pitch book and costs the bank a deal, that really scuks (note: spelling deliberate). IBD is a place where mistakes are expensive and you have to be right 100% of the time.

Different cultures work for different objectives. Bankers don't understand how stat arb QR guys make money-- how do a bunch of fcukps like IlliniProgrammer and James Altucher stay in business year after year when they can't even walk around without their shoes coming untied? (Note: again, spelling deliberate. Mostly to annoy the bankers at this point.) Meanwhile we don't understand how they operate-- how a business that has a few more assholes than normal manages to sell mostly overpriced BS year after year by sucking up to people (who are apparently too dumb to see through the whole charade).

That's all ok. Different strokes for different teams. Their culture would lose money in stat arb and our culture would lose money in investment banking. Stat arb has a right to its culture, and bankers have a right to theirs'.

IBD and sales aren't the only places in the front office in finance. You'll find a spot that works for you. If IBD doesn't work for your personality, Stat Arb probably will. We make just as much money and we have something awesome that IBD doesn't have-- personal lives (if dorky ones).