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In many cases, that assumption is false.
If the manager doing the hiring has limited technical expertise about the job, the manager will not hire the most skilled person as that manager will feel threatened by a talented subordinate.
Such managers will prefer to hire someone just adequate to do the work who will be submissive and never question whatever the boss tells them to do.
This occurs a lot in the information systems field where the top managers have business degrees, but know nothing about operating, designing, or programming computer systems. They hire senior system analysts who know a little bit more than they do, but not much.
There may be a few programmers at the lower end of the pecking order, maybe one or at most two in a small shop, who are reasonably competent, but that is the reality of the work place.
This is true in all fields of work. In the case of the acquaintance you mentioned, the hiring manager didn't imagine how bad he would be on the job. He assumed that the guy couldn't be THAT bad, and previous managers were reluctant to tell what he was really like, and risk a possible law suit.
As for the really talented people, they actually have a harder time finding a job, because they are competing against a large number of the merely mediocre who are less threatening to most managers, and cost less.
My suggestion to your friends who are talented and having difficulty finding work is to not over promote themselves. In difficult economic times, sometimes being adequate will do better for your job search.
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