Why recruitment is still in the Stone Age

Everyone around us is buzzing about tech revolution. We come across start-ups disrupting traditional markets, digital companies replacing established institutions and innovative individuals redesigning the conventional business. We can say that these tech businesses are so successful because they address one or more gaps built-up by companies over many years of doing business-as-usual.

While we have seen examples for tech-revolution in diverse sectors, such as commerce (Amazon), social media (Facebook), communications (WhatsApp), transport (Uber), finance (Bitcoin), dating (Tinder) and tourism (Airbnb), we are still waiting revolution to hit the recruitment.

Some authors are identifying LinkedIn, Indeed or Monster to be on the wave of tech revolution in recruitment. But have those websites really changed anything within traditional recruitment or have they just shifted the conventional process onto virtual platforms, thereby repeating or even widening the efficiency gaps in the system? It is true that jobseekers now can browse jobs and submit their CV online. But once the ‘apply’ button is clicked, their CV disappears into the virtual nirvana and the applicant has no control of his or her application. Only 2 out of 5 candidates receive a response after they apply for a job. But what are the main issues around traditional recruiting?

Quality of Hire

The reality is that companies on average access only 2-3% of the available talent pool to fill a given vacancy. We observed that almost all recruitment solutions are reactive, sourcing candidates when the need arises. The immediacy of that need means that companies are entirely reliant on candidates already in the market: signed up with agencies, looking at ads, on job sites or on databases. However our research has shown that these jobseekers only represent around 20% of the qualified candidates in the marketplace. And the struggle does not end there: to access the total of 20% of suitable candidates, companies have to go trough an infinite number of agencies, databases and advertising media.

Time to Hire

Given the typical reactive recruitment environment, the average hiring time is 8-12 weeks (from job opening to accepted offer), during which time the role is unfilled. For that period there is either no productivity, or productivity is provided by diverting someone else, likely the manager, or by using contract labour. All these options have a tangible cost, and if the hiring timeline slips, the cost goes up. We have calculated that in-house recruitment teams generally have longer hiring times than agencies or outsourced recruitment solutions - on average 12-16 weeks, due to a lack of extensive databases and wider industry contacts. These are big numbers, having in mind the headline costs it is clear that the in-house solution is looking as less attractive as outsourced.

Gamble of Predictions

The essence of recruitment is prediction – providing an accurate forecast of a candidate's likelihood of performing well in the future. Yet most organisations lack reliable systems for measuring employees' performance, which explains why many employers simply hire the people they like. The result is a game of untested predictions, which turns recruitment into a leap of faith. Up to 160 candidates apply for a single advertised position and the employer has to pick just one! It's the equivalent of investing a great deal of money in weather forecasts without subsequently paying attention to the actual weather.

Default Preference for Extroverts

Our survey indicated that employer has a clear’s preference towards an extroverted work force. Influenced by the idea that if a candidate is not action-orientated or motivated to network he is not a useful addition to the team, employers came to place emphasis on the social; team-work and ability to build relationships. They favour team-work and the ability to build relationships. They prioritise risk-takers, networkers, decision-makers. We see employers correlating extroverts being a good leader, and perceive them to be more intelligent, more attractive, more likable and capable, without any proven link between this perception and actual ability. Huge questions therefore exist around how we create environments that cater for everyone and how we build organisations that thrive and reap the rewards of the diverse strengths of different personalities.

PitchMe's vision of the future HR industry

One thing seems to become evident: the tech revolution in recruitment is not satisfied by the simple criterion that interaction between applicant and recruiter is happening online. To start a revolution in the recruitment sector the whole way of thinking must change. The PitchMe survey showed that job seekers have a mind-set of “Job hunting – CV sending” created decades ago by the conventional recruitment.

We see future recruitment going down the path of predictive hiring. This goes far beyond the common talent search happening out there, which is largely based on keyword searching which is garbage in and garbage out. There’s a long way to go to introduce concepts such as artificial intelligence and digital approach into the minds of HR professionals and recruiters while they are still stuck on CV reading.

There’s always going to be tension about software and whether it can do things better than a human. At PitchMe we are of the strongest viewers that software has to support human decision-making, not remove it altogether.