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Is AI the answer to reducing recruitment budgets?

Tuesday 25th April

Is AI the answer to reducing recruitment budgets?
Read time: approx. 2.5 minutes 

At the start of the year, we looked at the top six HR trends for 2023, which included AI and automation in recruitment - a trend that has continued to grow in strength. Now, as the year progresses recruitment budgets have been slashed and TA teams are being asked to do more with less, which in turn has forced a rush to technology and automation to find efficiencies.

Generative AI, specifically ChatGPT, has been heralded as providing a new era of efficiencies for recruitment. However, our belief is that the way we recruit has to be rethought as much as the steps that should be automated or improved with AI.  We need to be clear on ‘who’ we want to recruit before we ask AI to help us with the ‘how’.

Much has already been said and written about the digital skills crisis facing many organisations, so there is no need to cover old ground on this. Nevertheless, the problem has not gone away and Gartner’s recent report on the priorities for HR in 2023 highlighted the issue of the skills crisis in two of the top five priorities. The clear message is that we can’t carry on recruiting from the same narrow talent pools if we want to deliver better outcomes - even less so with a reduced team or agency budget!

Why using AI to review CVs is flawed

The answer to solving your skills gap is not, as thought leaders like Dr John Sullivan and HR Tech Series advocate,  to look at ChatGPT to screen CVs or Résumés. To start with any AI application comes with a huge risk for this type of task. As an experienced and qualified practitioner of occupational psychology will point out, the use of an algorithm to sort through data is highly dependent on the data that it is trained on. Furthermore, before any such algorithm is used, the outputs must be compared to general population data and checked for adverse impact. Is the average hiring manager or talent acquisition manager really going to have the time and expertise to do this properly? If the best data scientists at Amazon go this wrong 5 years ago why would anyone be promoting further untrained usage?

The bigger issue, which the rush to automation and new technology fails to address, is the continued focus on hiring for narrow areas of experience in restricted talent pools. Automation and AI may help some organisations find selected and specific talent for some roles better in the short term but once everyone has the same AI tool then we are left with the core problem - a shortage of skilled talent. The focus has to shift to hiring from a broader talent pool, where transferable and soft skills are the drivers rather than experience.  In this scenario, the CV (or Resume) is simply the wrong starting point and automating the way you review becomes pointless. 

Hire for what you need not what AI tells you

If experience is no longer the differentiating factor in an application, then the concern is an open-door policy where no CV or past experience is required will result in a deluge of applications with no means of separating any of them. In fact, this problem is coming with the CVs and application forms anyway. You heard it here first - within the next 12 months cover letters and CVs will become increasingly redundant and meaningless. ChatGPT while being the great leveller will also mean any candidate can use it to create the ideal response, and talent acquisition teams will not be able to distinguish between a human and an AI-generated application. 

The point is that the process has to be rethought and so we might as well start with what we need (transferable and human centric skills) and think about how we screen for those. This starts with a change in mindset and processes, not with a piece of technology. The centre of this change lies with the job description. Our job descriptions are antiquated, overlooked and in many cases have the least amount of thought put into them compared to other parts of the hiring process. Yet the job description sets the tone and the need. Focus this on potential and not polish and the door to new talent pools can be opened. 

Once a new type of job description has been agreed then the rest of the recruitment process can be centred on how you measure what matters and how automation and technology can facilitate that. AI can help in many ways throughout this and automation can be used to enhance an approach which has a better not poorer outcome. 

Get this right and the benefits can be huge. Siemens Electrification in Manchester went from having a recruitment approach where certain roles were open for up to 200 days; to finding great fit candidates in 41 days by refocusing their process on ‘hiring for potential’. Cost of hire and quality of hire were improved too. Technology had a part to play in this but these results could not have been achieved without rethinking ‘who’ to hire as much as the ‘how’. 

Looking for a way to maximise your 2023 budget with a better process and automation?

Read our latest article on Three reasons to hire for potential as TA budgets plummet. 

Download our Playbook for CV-less hiring sets out the six key steps you’ll need to take to escape the experience trap, measure potential, and hire sustainably in this new economy. Download your copy today.

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