Life insurer scored agents with actuarial hiring formula

In the early 1920s, life insurance companies hired sales agents largely on a manager's subjective impression of a candidate, sometimes narrowed to one crude proxy — Holcombe cites age alone as a common single-factor screen. Turnover among agents was severe and expensive: a company spent real money training and licensing a man before anyone learned whether he could actually sell on commission, and the industry had no systematic way to tell in advance who would succeed and who would quit within the year.

The obvious fix was better interviewing, a stricter age cutoff, or more experienced sales managers doing the choosing. None of it addressed the underlying problem: nobody had ever gone back and checked whether a manager's judgment, or any single proxy, actually correlated with which hires succeeded. One person's read on a stranger's future performance in a genuinely variable job — commission selling, subject to territory, timing and luck as much as skill — was simply trusted, never tested.

Applied actuarial scoring to hiring: tested biographical items against real outcomes on 447 agents, kept only predictors, and weighted them into one composite score.

Replaced untested manager intuition with a score built from observed correlations on hundreds of prior agents.

Discarding non-predictive items (like age) prevented folk wisdom from inflating the score.

Weighting predictive items let many weak signals compound into one strong predictor.

Validating on a separate sample proved the score's predictive power, not just its fit to the original data.

When hiring relies on gut feel, mine your own historical data: split past hires by outcome, test each predictor empirically, and combine the ones that work into a score.

On a held-out validation sample of 148 agents, men who scored above +1.5 on the composite succeeded 80% of the time; men scoring +1.5 or below succeeded only 43% of the time. Presented to the Taylor Society in March 1922 explicitly as a tool to cut the cost of agent turnover, Holcombe was careful to call the method tentative rather than proven at scale, and pointed to his own scatter chart showing at least one man who scored very high on the formula and still failed badly in the field.