Interviewing is Unreliable
The biggest problem with interviewing is that few are trained to do it well and there are a lot of ways to become expert at being interviewed. The second is that it is often used abusively and can either drive away a candidate and turn them against the company or result in resentments the candidate can carry into the job. If interviewing is to be used reliably it needs to be monitored, it needs to take place over a very short period of time (one or two days) and it needs to be largely done by people who are actually trained to do it right. Otherwise there is little overall value to the process other than allowing the candidate and interviewer to meet and, for that a more informal setting might actually be more valuable.
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Strong background checks are vastly more capable of helping determine whether an employee is a good hire but often, in the rush, background checks are either not done or done superficially shifting the weight of the review to interviewing, which wont take that weight. Timing is important as well. With good background information the trained interviewer can ask questions tailored to the candidate and, in a relatively short period of time, reach a decision that is backed up by both background facts and impression. Done the other way around, even a trained interviewer has nothing but a resume to work from and a generic question set which will reduce dramatically the effectiveness of their process.
Google vs. Microsoft
Both companies have had a heavy reliance on education as a foundation for their selection process, and employees and managers in both companies are complaining about the predictable result: reduced productivity and increased frustration.
Google is trying to fix their process by lowering the value of education as a metric, however there is no indication that they are providing the training needed to make interviewing more effective. Eric Schmidts comments that he wants to increase the standards for new people so they are qualified for jobs 2 or 3 levels above where they are hired may actually create more problems than it solves. People who are overqualified for jobs are seldom happy in them and may focus more on getting out of the job than on doing it right. More important: can you imagine how hard it would be to lead a group of folks that thought they were better qualified for the bosss job than the actual boss is?
The underlying problem is that too few people have actually studied HR from a behavioral standpoint. That goes back to the loss of testing, because it was testing that drove this line of thinking. And once it died, HR largely became a compliance organization with little ability or authority to focus on actual hiring quality.
One of the lessons here, and one Netscape learned rather dramatically, is that learning on the job particularly when it comes to something as critical as staffing quality can be an incredibly costly practice. While we admire Google for trying to do something about a problem that is clearly endemic to the technology industry, given that they are a search organization we would suggest they actually research the problem first before making decisions that could turn their high flying company into the next Netscape.
In this end, this is what you should take away from this: People truly are your most important asset. If you dont select them properly, train them adequately, and assure a good match between their skills and the job they are actually being asked to do, the end result wont be good for your company. And while you may be able to dodge the problem yourself for awhile, in many cases it probably will come back to haunt you as well.
One rule Ive generally found to be true is that if you take care of your people they will take care of you. If you dont, the same words apply but take care takes on a completely different, and very negative, meaning.