A manager only considers candidates with industry experience for technician roles. Even though the required skills to be a technician in his industry are not very difficult to master, he's convinced sticking with industry veterans will save him on training and ramp-up costs. He thinks assessments are a waste of money, believing he can spot a good technician as well as anyone. Over time, his operation evolves into a mediocre performing business unit filled with B and C talent cast off from his competitors.
A company executive meets someone at a networking event that impresses her. She decides to bring him on as a sales rep. When he takes the required company assessment, his results are not ideal. The executive decides to hire him anyway, preferring to trust her instincts over what a computer says. Four months later, she terminates his employment, telling colleagues that he over-sold himself.
Both of these are examples of the same phenomenon. The manager starts with the candidate, then rationalizes why the candidate will be a good fit for the organization. Managers with really good hiring instincts will achieve a decent hiring success average using their instincts alone, but many overestimate how good those instincts are.
A better way is to start with the job, not the candidate. Let the job speak! The way to let the job speak is to conduct a benchmarking exercise with a broad range of stakeholders. You'll want to include some people who currently do the job well, someone who supervises the people who do this job well, and some other stakeholders who depend on this job to do their jobs well. Really dial-in the job description and then benchmark a good set of assessments to the job, not to individuals.
I loved Jim Collins' Good to Great, but his advice regarding getting the right people on the bus, first, and then deciding what seats to put them in has been misinterpreted by some to mean, hire people you like and hope they do well. You still have to get them in the right seats!
If you want to guarantee mediocrity, let most managers make hiring decisions based on their instincts alone. But if you want to avoid mediocrity, enhance good hiring instincts with good interviewing skills training along with a properly benchmarked set of assessments.