Is hiring for culture fit a mistake?
It is commonplace to analyze a successful product, brand, or management team to try to determine what caused their success. After all, if there truly is a repeatable formula that creates success whenever it is employed, like culture fit appears to be at first glance, why not use it?
PayPal’s founding team, often referred to as the PayPal Mafia, is one such intriguing case study. They almost exclusively prefer hiring like-minded friends with identical backgrounds and preferences. This served them well during PayPal’s meteoric rise as the dominant payment provider to a vast array of businesses. What is even more interesting is the success enjoyed by the PayPal founders as they moved on to found subsequent companies including Tesla, LinkedIn, and Palantir.
However, when Max Levchin (Affirm, Glow) reflects on the countless business journals that have quoted him and created a mantra of hiring for culture fit, he notes that the reason PayPal defied all odds and conquered the competition may not have been because of culture fit. Rather, PayPal may have succeeded in spite of it.
Levchin credits trust and respect as the most crucial factors in his team’s success. Each person may have liked their coworkers, but more importantly they all believed that each member of the team was the expert in their discipline.
This echoes the analysis from a recent McKinsey study that diversity has a positive impact on a company’s financial performance. Companies in the top 25% for racial and ethnic diversity are 35% more likely to have financial returns above their industry medians. Meanwhile companies who were in the bottom 25% for racial and gender diversity compared less favorably. They did not perform as well as the average companies in the McKinsey data set.
Perhaps rather than striving for homogenous teams, we should instead facilitate a culture of open feedback.
For more insight, read the full article on QZ.