Some measure of employee quality, as evidenced in the interview. To make this simple, let's take an exam instead of an interview:

* Let's say I was hiring someone to do calculus.

* I want applicants who typically score at least a 90% on a calculus AP. The exam has a std. dev. of 3 points.

* I get an applicant, and I give them an AP exam.

* They score a 91. What do I do?

That means they are 1/3 of a std. dev. above my cut-off. They might typically score 88 and got a little bit lucky, or even 85 and got very lucky. Or they might typically score a 94, and got unlucky.

If I hire that person, although they're probably qualified (assuming a uniform distribution of applicants), I'll get a lot of bad hires.

To avoid that, I set the cut-off at 93% or 96%. This means I intentionally reject most people who meet my cut-off. On the other hand, if I hire someone, I can be pretty confident they're qualified.

The cut-off needs to be high in part since the distribution of applicants isn't uniform. Most applicants are unqualified morons. Qualified people will apply to a few places, and are quickly hired. Unqualified people will apply over, and over, and over, everywhere they can.