Executives Agree: Automated Hiring Software is Making it Harder to Find Skilled Candidates

October 26, 2021

A new Harvard Business School survey explores how the vast majority of hiring managers are missing out on “hidden workers” — with Applicant Tracking Systems to blame.

In so many ways, digital technology has changed hiring for the better. It’s never been easier to send a resume, arrange a job interview, negotiate a job offer, or conduct back checks— all remotely, of course. At Argentus, where companies tap us to recruit for a variety of supply chain management positions, we’d be utterly in the dark without digital recruiting tools. LinkedIn, Zoom, SMS are our bread and butter, and we’re always on the lookout for better digital tools to enhance our process.

But as an agency focused on building long-lasting relationships with candidates, and delivering the absolute best possible recruiting experience to our clients, we’ve realized something along the way: no matter what tools we use, our clients get better results when we focus on the human. When we take the time to have in-depth conversations with companies to understand their requirements, rather than just taking a job order. When we go beyond a resume to gain a deep understanding of a candidates’ skills and accomplishments. Digital tools can enhance our ability to connect with talent, but we — and our clients — run into trouble when we let them replace the human factor. We constantly ask ourselves, as well as our clients, a fundamental question:

When is technology helping your process, and when is it hurting it?

And there’s one tool that we believe consistently hurts companies’ hiring. It’s a tool that feels like a natural outgrowth of job boards. A tool with a considerable marketing push that has led to mass market adoption. 75% of U.S. Employers use this tool (as well as almost 99% of Fortune 500 companies), at tremendous expense. This tool promises to remove the grunt work of hiring, creating a frictionless experience that makes it easier than ever for candidates to apply. In reality, it creates extra work for HR departments, and filters out the best candidates for arbitrary reasons — often without the company realizing what they’re missing, or the candidate realizing why their application has gone in the bin.

Have you guessed what tool we’re talking about yet?

It’s the Applicant Tracking System (ATS).

In short, these systems claim to automate the candidate funnel in your hiring. They make it easier for candidates to make an application, and sometimes automatically post your role on job boards, giving you more candidates to choose from. They then offer sophisticated filters that automatically remove candidates without the right keywords. Sounds great.

But as we’ve written about before — companies often buy these solutions based on the promise of automation without actually measuring the results. Many companies come to rely on ATS as the standard in hiring, without actually stopping to ask if these systems are actually connecting them to better candidates, or whether they actually make their hiring process easier.

In our opinion, they don’t. Companies come to Argentus to hire for specialized positions in supply chain, procurement, and similar functions. Often, they’ll have had roles sitting open for weeks — or months — before they reach out to us. Companies are finding it harder to hire, and it’s been our opinion for a while that Applicant Tracking Systems bear some brunt of the blame.

Now, a new study from the Harvard Business School, written about in a great article in The Verge, shines a spotlight on the shortcomings of automated hiring. The report, conducted in collaboration with Accenture, surveyed 2,250 executives in North America and Europe, as well as 8,000 “hidden” workers — people who routinely get left behind by Applicant Tracking Systems, despite their considerable skills. The report has lots of great insights about the broader phenomenon of “hidden” workers whom companies aren’t able to access in their hiring. But we were especially interested in its particular insights about how software has transformed hiring, and not always for the better.

Here are some of the biggest takeaways:

Executives are dissatisfied with the results they get from automated hiring systems.

94% of executives surveyed in the report said that they knew ATS programs were filtering out good “middle skilled” candidates, and 88% agreed that ATS programs were filtering out the best “high skill” candidates. Many executives said that they were exploring alternate, human-based ways of hiring candidates.

The problem is one of candidate quantity vs. quality.

According to the report’s authors, the average corporate job posting attracted 120 applicants in the early 2010s, and by 2020 this figure had risen to 250 applicants per job. Which seems like a good thing on its face. But because Applicant Tracking Systems make it easier to apply for jobs, they create huge backlogs of applicants that aren’t right for the role. This creates extra work for human HR recruiters doing initial screenings — work that’s more likely to go to junior HR staff without a deep understanding of skills requirements. The alternative to deal with these tsunamis of candidates is to filter applications automatically, which leads to the next problem.

Applicant Tracking Systems are inherently exclusionary.

By their design, ATS filters people out rather than in. The report’s authors highlight how these systems encode the biases of their creators, which means that more likely to filter out the diverse candidates that many companies are seeking. Even if your company champions diverse hiring, the system you purchase might not. Many systems filter out candidates for reasons that are counterproductive: some systems filter out any candidate who’s been unemployed for longer than six months, without accepting any explanation (for example a family leave or health matter). They focus on keywords rather than capability, which means that candidates get rejected because they chose to use a different word to describe their skills than the keywords in the job description.

Stale job descriptions contribute to narrowing your candidate pool.

When was the last time your company completely redid your job descriptions? If you’re like most companies, you keep the same job templates, and add more qualifications to the description as the role evolves. The HBR report’s authors outlined how, by plugging an overlong list of qualifications into a rigid filtering system, companies end up filtering out even more good, diverse candidates via keyword exclusion. In their words, “the more employers add requirements to job postings, the more they narrow the aperture on finding the talent they need.” They recommend revamping job descriptions regularly to keep requirements to the absolute essentials, and avoid jargon wherever possible.

Companies have more hiring success when they access the “hidden” workforce.

The report’s authors define “hidden” workers broadly, but the include careers of children, relocating partners and spouses, people with long-term health problems, veterans, immigrants, and a number of other groups that automated systems reject. Hidden workers are more likely to be more diverse than the rest of the workforce. According to the study’s authors, companies that make inroads to hire hidden workers are 36% less likely to face talent and skills shortages. According to the executives surveyed, these workers also tend to outperform other workers when it comes to attitude and work ethic, productivity, quality of work, and attendance.

We encourage everyone to check out the full report, titled: Hidden Workers, Untapped Talent. It has lots of insights to offer about what hidden workers can offer companies, and ideas for how to engage them and widen your talent pool. But in our opinion, you don’t have to be a hidden worker to be excluded from these automated systems for arbitrary reasons. There’s a reason why automated job postings are the least successful way to apply for jobs for any candidate.

As we said in the beginning, technology has a crucial role to play in the hiring process. It’s streamlined many tasks that used to be major time sinks, and it’s made it easier than ever to connect candidates with employers.

But evaluating candidate applications is the very core of hiring. Building and assessing the pipeline is front line that decides everything that comes after. For that, the focus should be on quality over quantity. It should look at the holistic individual, rather than keywords.

And for our money? When evaluating candidates, the human beats the automated system every time.


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