Google's Former CEO: Here's What Most Companies Get Wrong When Hiring

It's a well-worn truism among founders and business leaders that they always try to hire people smarter than themselves.

In actuality, though, that rarely happens, according to Google's executive chairman and former CEO Eric Schmidt and former SVP of product Jonathan Rosenberg, in their new book "How Google Works."

One of the major things that companies get wrong when hiring, Schmidt and Rosenberg say, is that they can't actually follow this cliche, because they use a hierarchical hiring recruitment structure, where one manager makes all the decisions. When one manager is doing all the hiring, their ego can get in the way of finding someone who is actually smarter than them.

Schmidt explains hierarchical hiring this way:

The hiring manager decides who gets the job, while other members of the team provide their input and senior executives rubber-stamp whatever decision the manager makes. The problem with this is once that person starts at the company, the working model is (or should be) collaborative, with high degrees of freedom and transparency and a disdain for rank. So now a single hiring manager has made a decision that directly impacts numerous teams besides her own.

Schmidt and Rosenberg agree that the hierarchical model is bad news.

Instead, they argue, a company should hire new employees in the same way that a university decides which faculty members get hired, promotions, or tenure: by committee. The point is that hiring should be peer-based, not hierarchical.

Companies - like universities - need to invest a lot of time finding the perfect people. Especially when the team is small, a collaborative hiring effort ensures that everyone feels good about this foreign person joining their team. The new employee needs to mesh well with the other people he or she will be working in day-in and day-out with, after all. The focus should be on bringing super-talented people into the company, even if their experience doesn't perfectly line up with any job description posted.

"In a peer-based hiring process, the emphasis is on the people, not the organization," Schmidt writes. "The smart creatives matter more than the role; the company matters more than the manager."