According to a new report, automated systems are affecting the US labor market.
Automated resume-scanning software contributes to a “broken” hiring system in the US, says a new report from Harvard Business School. Employers use such software to screen job applicants. However, according to the study’s authors, it is incorrectly rejecting millions upon millions of potential candidates. This software contributes to the problem known as “hidden workers,” who are willing and able to work but are prevented from getting jobs due to structural problems in the labor marketplace.
Although many factors can prevent people from finding employment, the study’s authors say that automated hiring software is the most important. These programs are used daily by 75% of US employers and 99 percent of Fortune 500 businesses. They were developed in response to the rise in digital job applications since the 1990s. It is now easier than ever for people to apply for jobs and for companies to reject them.
AUTOMATED SOFTWARE RELIES ON OVERLY SIMPLISTIC CRITERIA
Although the exact mechanism of why automated software rejects candidates is complex, it generally results from using too simplistic criteria to distinguish “good” applicants from “bad.”
Some systems will automatically reject candidates who have had gaps in employment for more than six months without asking why. This could be because the candidate was pregnant, caring for a sick family member, or finding a job during a recession is difficult. Joseph Miller, one of the study’s authors, cited more specific examples in an interview with The Wall Street Journal. He said hospitals would only accept candidates who had experience in “computer programming” on a CV. They didn’t need workers to input patient data into a computer. A company rejected applications for a position as a retail clerk if they didn’t list floor-buffing on their resumes, even though all other criteria were met.
The hiring industry seems to be dependent on too much software. While digital technology was supposed to make it easier for companies to find qualified candidates, it created a flood of applicants instead. The study found that the average job posting for a corporate job attracted 120 applicants in the early 2010s. However, this number had increased to 250 applicants by the end of the decade. This deluge has prompted companies to implement rigid filters in their automated screening software. This has led to the rejection of viable candidates and contributed to the large number of job-seekers.
This software is now a significant business. The report states that automation has dominated almost every stage of the recruitment process, including applicant tracking systems and candidate relationship management—background checks, sourcing candidates, assessments, scheduling, scheduling, and scheduling. The global recruitment technology market grew to $1.75 Billion in 2017. It is projected to almost double to $3.1 Billion by 2025.
These problems are not unknown to companies, however. Nearly 9 out of 10 executives who were surveyed said that automated software was incorrectly filtering out qualified candidates. Some also stated that they were looking for other ways to hire candidates. The study’s authors point out that fixing these problems will require a “review of many aspects” of the hiring process, from how companies search for candidates to how they use the software.