See earlier post for Lauren Rivera study of recruitment at elite law firms, consultancies and I-banks. I refer to these as "soft" elite firms, whereas I will refer to hedge/venture funds, startups and technology companies as "hard" elite firms. ... In the latter category performance is a bit easier to measure, and raw prestige plays less of a role in marketing to customers or clients -- i.e., the customer can directly tell whether the gizmo works ("these search results suck!") or the fund made money. Whether or not the advice received from a law/consulting/M&A firm is any good is much more nebulous and, well, soft.
1) Rivera's work confirms that in the real world, people believe in folk notions of brainpower or IQ. ("Quick on the uptake", "Picks things up really fast", "A sponge" ...) They count on elite educational institutions to do their g-filtering for them. In the past, as noted by one commenter, firms often asked for SAT scores.
Why don't firms that hire 22-year-olds ask college seniors to take the GMAT or GRE or LSAT and have those scores sent to them?
2) Elite soft firms generally want people who are smart, but not too smart. Other factors, like personality, communication and leadership skills, etc. are valued as well. Startups, hedge funds, MSFT/GOOG, etc. generally want the smartest people they can get their hands on, at least for technical roles.
3) The soft firms know that what they do isn't "rocket science" -- it just isn't that hard, and any academic admit to a top university is smart enough. They just have to appear elite and smart enough to snow their clients and sell the work. Thus the emphasis on factors other than intelligence, once the threshold requirement is satisfied. Someone who appears smart and inspires confidence in clients is better than a smarter person who doesn't get along with (often middlebrow) clients.
4) In Rivera's research school prestige was the number one signal used by soft elite firms in evaluating prospective hires. Extracurricular activities came in second, but this is probably just a way to differentiate between applicants who have already been filtered using school prestige.
5) It is odd that the soft firms, which market themselves to clients as being super-smart repositories of brainpower (of course this is largely a fiction; see point 3 above), would rely so heavily on university admissions committees. They effectively outsource a big chunk of due diligence on their most important investment (human capital) to a group of people whose judgement they somehow trust, but perhaps without detailed understanding. When I was on the faculty at Yale I knew people in admissions and it's not clear to me that they were the best able to spot potential in 18 year olds. In studies of expert performance admissions people are less good at predicting UG GPA than a simple algorithm. (The "algorithm" is simply a weighted sum of SAT and HS GPA!)
But this doesn't matter if the success of HYPS grads becomes a self-fulfilling prophecy. Once soft elite firms and large parts of the rest of society (in particular, clients) have accepted the idea that elite universities should be trusted to do the filtering, these schools will automatically produce large numbers of successful alumni -- the imprimatur itself has value.
When I was in charge of introducing personal computers to the marketing research firm where I worked in 1986, I put an ad in the Chicago Tribune asking for somebody who could solve PC problems. I specified "must have college degree," because ... well, I'm not sure why I did that. I got 400 resumes from college graduates.
Fortunately, I didn't throw out a detailed letter sent me by one high school grad -- a farm boy who had enlisted in the Navy's nuclear submarine powerplant engineering program out of high school. He explained the problems I was encountering and how he would solve them for me. I called him in for an interview, and he was so much sharper than anybody else I'd talked to -- hell, he was a lot sharper than I was -- so I put aside my college-only rule and hired him.
He was ridiculously good at dealing with personal computers, and he went on to make a lot of money. A decade later he was living on the North Shore two houses down from Scottie Pippen. He was a handful to manage, a little ornery, which caused me some office politics problems. Four years of college might have put a little more social polish on him. But, basically, so what?
I can only recall one specific time that my six additional years of higher education taught me anything that he didn't know. He came in one day convinced that we could save money by buying all the parts for PCs and assembling them ourselves instead of buying them from Dell. Being an Econ major, I said that the PC business was highly competitive, so the cost of assembling them ourselves would no doubt be slightly higher than what we could buy them from an assembler like Dell for. He went off and spent two hours building a spreadsheet with the prices for all the parts ... and found my top-of-the-head guess based on economic theory had been right.
But, that's the only time my half dozen years of expensive higher education (BA triple major and MBA double concentration) taught me something that would have saved him a few hours.