Automating Technical Hiring
Automating the technical recruiting industry with a transparent two-way marketplace.
The staffing and recruiting in the US alone is a $100B+ revenue generating market annually. (1) Of that technical recruiting, defined as staffing for industries in which a technical skillset learned through higher education like software engineering or life sciences, is a large majority. In fact LinkedIn generates ~$3B annually from their software to help technical recruiters identify talent on the platform. (2)
The vast majority of technical recruiters, many of whom are on the HBS campus regularly, identify talent and present them to a set of employers who are clients. Clients review the candidates, interview them, and if they hire them – they pay recruiters 15-30% of the hired candidate’s base salary as a fee. To avoid this hefty fee, many larger technical companies have brought in in-house recruiters to mine LinkedIn, university campuses, and other networks of talented individuals to hire.
Hired.com, an online marketplace for technical talent, aims to solve this problem but threatens the jobs of several outsourced technical recruiters. Currently, the experience for talent is terrible and technical recruiting is very inefficient. Recruiters many a times use a ‘guess and check’ process by cold-emailing dozens of engineers, scientists, lawyers, doctors, etc. to ask if they are interested in interviewing with one of their clients. Most of the times, the candidate is not even looking for a new job, but in the few times they are – the recruiter instantly blasts their resume to many clients to see which return positive feedback. The candidate then goes through several interviews with each client, many of which are the same test of technical skillset. Several interviews in, if successful, compensation is discussed for the first time and roughly 30% of processes are halted given lack of alignment on this point – wasting 5+ hours of the company’s and the candidate’s time. And if it proceeds, the company faces a hefty recruiting fee, normally between $25000-50000.
Hired aims to make this process more transparent, efficient, and aligned for the company and the candidate. Every week, candidates looking for a new position apply to be part of a week-long marketplace specific for their industry and geography of interest. The application is simple and involves plug-ins to their social networks and example of prior work. The top candidates are then fully featured (education, where they have worked, etc) in a week-long marketplace to the head of engineering, or other relevant technical lead at 1000+ companies of various sizes and growth levels.
Companies who are interested in a candidate can make a transparent indicative offer pending final interviews with them. By doing this, compensation is aligned prior to the first interview and technical skills are gauged to a high level by the hiring manager him/herself.
For outsourced recruiters whose position circles around ‘guessing’ which candidates are interested in a new opportunity, and making the connection between them and companies, Hired presents a threat by allowing candidates to directly interact with the company. Furthermore, Hired charges a 10-15% base fee upon successful hire and retention of the employee, leading to a financial preference more than just transparency.
There are several massive industries that will be disintermediated by technology that aim to make fundamental processes more efficient with less middlemen. There is no reason in the technical recruiting world to have large fee-charging individuals between a candidate and a company. In fact, online tools can begin to automate even more of the processes involved in recruiting, besides sourcing. Creating a digital CRM to help in-house recruiters track future candidates, automating much of the interview process, and making onboarding and payment set-up easier are such examples. While these may not automate a separate industry, it will definitely replace current jobs.
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- http://www.recruitingblogs.com/profiles/blogs/global-staffing-industry-sales-top-400-billion
- Interview w Linkedin Product Manager
This is really interesting, I wasn’t aware of the technological innovations emerging in the recruiting space – thanks for sharing! One dynamic that I’d add is that the candidates seem to actually be bid on (https://techcrunch.com/2013/09/17/developer-auction-is-hired-com/). Whereas in traditional recruiting scenarios candidates were forced to negotiate with each employer one-on-one, I view this as a shift in power – more toward the candidate – by introducing transparency and a bidding system. That said, I think it also de-emphasizes other aspects that a candidate might consider when selecting an employer, such as social fit/culture (as the article herein explains). I’d also be interested to see data around retention compared to traditional recruiting to see whether hires are actually “better” (stay longer) or at least the same.
Interesting post and a compelling articulation of the value of a new platform that would take the place of existing intermediaries and recruiters. A few questions and thoughts came to mind for me in reading this:
-Competency articulation: I’ve done some work in the postsecondary education/workforce/labor space, and one of the challenges I’ve encountered is that many employers don’t actually have a good articulation of the competencies that lead to success in their fields.(1) It seems like Hired is well-equipped to add value to employers based on the technical skills they have identified as needed, but there may be room for Hired to play a role in evolving efforts to support companies and sectors in exploring and codifying the skills and discrete competencies that are most predictive of success. There are a few interesting examples of nationwide convenings and organizations trying to bring companies together to try to articulate the competencies that matter most, and maybe that creates some opportunity for Hired to add additional value. Interesting ones to check out include ACT Foundation and Business Roundtable’s National Network of Business and Industry Associations (2). Even if this topic remains peripheral to Hired’s core offering, it seems important to be aware of how this conversation might change the ways that companies are hoping to screen talent.
-In addition to the refined view of hard-skill competencies, there may be room for Hired to incorporate other kinds of assessments into its process. Are there “soft skills” that would matter to hiring decisions? Diversity targets? What about the “performance versus potential” questions we discussed in LEAD? It makes me think about the portion of the hiring process that Hired is best and least suited to supplant. Or maybe it just impacts the portion of jobs Hired is suited to support with (i.e., very technical, individual contributor type roles)
-By delivering its core product, Hired gets access to a really interesting and large data set that could create a competitive advantage over time. Specifically, Hired gets to see what job types and what skill sets are most in-demand. Hired can use this information to work with other players in the pipeline to career (postsecondary education, boot camps, etc.) to ensure sufficient demand of the needed talent over time. Hired will have a good aggregate view of labor skill demand that it can use to design the services it provides to companies and to talent.
Thanks for the post!
1. https://www.bridgespan.org/insights/library/big-bets/billion-dollar-bets-to-establish-pathways-to-car
2. http://actfdn.org/what-we-do/catalyzing-action/national-network/
Thanks for the post Sujay!
Hired definitely aims to solve inefficiencies in a process that has been the same for long time! I also believe that besides a more transparent and cheaper process, Hired should also focus in trying to shorten the time it takes to make a match. I wonder if currently there is a “pre-screening” phase inside the company that filters out candidates that are not necessarily good prospects? Additionally, as the database becomes bigger, I believe the time component will be an important differentiator hence the use of technology to do matching, screening and candidate assessment will be key (1). Is there anything planned in this area? Finally, I am also curious about the retention data the NS commented above. If I understood the process correctly, through Hired, candidates do not submit a resume, which in my opinion is the most objective piece of information for companies as it lists concrete achievements. Do you feel that by not requesting this, Hired is adding subjectivity to the hiring process which could result in a poor match?
Thanks for the post!
(1) https://www.eremedia.com/ere/your-future-as-a-recruiter-you-better-know-how-to-sell-because-most-of-what-you-do-today-will-be-done-by-technology/
Thanks for posting Sujay!
I like the idea of having to submit an application as you end up only with people who are actively looking for jobs. However, I would want to know how the 10-15% fee is determined. Is the fee determined by how many people a company hires at the week-long marketplace? Or is it based on the position(s) that a company is hiring for? Either way, it might be beneficial to have a standardized pricing structure to create transparency in the process.
Thanks for the post Sujay, it is clear that you have a deep understanding of the industry and the company.
In my opinion digital tools will eventually replace many of the tasks currently done by recruiters, such as scanning through CVs (as we saw on the Accenture case), or even assessing the strengths and drawbacks of a candidate using public online data.
Marley Dominguez, CEO of Haystack Job Search, said in an interview for Business News Daily that “We expect that the next trend will be not just sourcing social and mobile recruiting data, but actually applying intelligence to summarizing the important information.” [1]
Does HIRED incorporate advanced analytics to assess candidate information?
[1] http://www.businessnewsdaily.com/6975-future-of-recruiting.html
I am astounded every time I look at the recruiting / headhunting / job placement industry because it seems like such an unnecessarily laborious and expensive process. In my mind, companies such as http://www.monster.com have fixed one problem (provided a platform for getting a bird’s eye view of vacant jobs) but created another (added to the information overload faced by both job seekers and employers). The information overload problem is an important one, since employers I have interviewed frequently complain of the need to purchase Applicant Tracking Systems to filter through the overwhelming number of applications for each vacant position based on key words used in an applicant’s resume and cover letter.[1]
LinkedIn showed (and still shows) a great deal of promise by flipping the job application process on its head and allowing companies to reach out to potential job seekers, rather than rely on job seekers to bombard employers. Where Hired excels (and where LinkedIn falls short) is in its ability to match based on interest and intent – and not simply based on qualifications or key words on one’s resume.
While interest and intent are important, fit and retention are still lacking. Companies are increasingly worried about employee retention[1] and the average tenureship of tech employees is the lowest of any industry.[2] Will we look back at history and compare Hired to Monster in its fixing of one problem, only to create another? Low employee tenure / high employee attrition is ultimately a good thing for Hired – but terrible for their corporate clients.
[1] http://www.forbes.com/sites/danschawbel/2016/11/01/workplace-trends-2017/2/#2b40005833bb
[2] http://www.shrm.org/Research/benchmarks/Documents/Turnover%20by%20Type_FINAL.pdf
Sujay,
Great post. As GNG mentioned above, I think it is very interesting how the job board industry has changed the hiring process, from monster.com and now Hired. However, like an assembly line, solving one bottleneck and increasing the capacity has dramatically increased the pressure on another chain – the interviewing process.
Historically, where a job was posted on a newspaper classifieds, there may have been 10 or 20 resume applications, of which an HR hiring manager might choose 5-10 to interview. From there, the manager may choose 1 or 2 to actually hire. Now, with tools like monster.com and Hired, there are thousands of potential resumes to review. Additionally, with Applicant Tracking Systems (ATS), the “belt” of the applicant assembly can “move” a limitless amount of applications down the “assembly line”. As a result, there is a massive bottleneck with interviews in the modern corporate talent acquisition workflow.
While tools like Hired are helpful, like an assembly line, the throughput is only as large as its smallest link. I think there are companies out there that are trying to solve this new problem, like PeopleAnswers, which was acquired by Infor [1]. PeopleAnswers uses assessment tools to pre-screen candidates based on their answers, which has had enormous impact on companies who use the tool, including a 21% increase in sales per employee at HSBC and 58% reduced turnover at ADP [2].
Again, thanks for the very insightful post Sujay. I’m excited to read about the evolution of the talent acquisition space as fixing one problem shows another problem that needs to be fixed as well.
[1] http://www.infor.com/company/news/pressroom/pressreleases/PeopleAnswers/
[2] http://www.firstsourcing.com/talentassessment.html
Sujay, one thought came to my mind while I was reading the article and it is how much talent would be wasted if only those actively looking for work are included. A vast majority of the people working in professional services may be ready to move on to a new job at the right offer, but might not have the time to actually open an account Hired and all of the similar pages out there.
I agree that the current model is probably inefficient and needs a redo, but I don’t know if this industry will be completely digitized.