Is it time to centralize hiring?

The job market is weird

The first thing you learn in college microeconomics is that markets are awesome. They bring the people who need something together with the people who can provide it, at a price that makes sense. It takes until the third or fourth lecture for the professor to hit you with the truth: markets fail, in all sorts of ways, all the time.

The job market has problems, and the best evidence for this is that it takes at least 2–3 months of solid effort to find a full-time job. The problem is information: people are complicated, companies are complicated, bosses are complicated, jobs are complicated — and huge amounts of information about all of these elements has to be exchanged before employers and job-seekers can find their ideal match.

How the web tries to help

The internet has, in theory, made it much easier for employers and job-seekers to exchange information. Between job boards, LinkedIn, and applicant-tracking systems, (1) we now have a large public directory of available jobs and candidates, (2) it’s become extremely easy to apply for a job.

These services have some serious flaws, however — job data is unstructured, unstandardized, and entirely self-reported and unverified. As a result, it’s difficult to precisely understand job requirements, and almost impossible to compare job postings across companies. Even worse, the very ease of applying has created serious new problems. Job-seekers can easily send their resumes to literally hundreds of jobs — a zero-sum competition that only wastes their time and employers’. Employers, for their part, now typically receive hundreds or thousands of applications per job opening — but don’t magically have any more time than before to devote to sorting through them. They compensate by using keyword searches — the only technological tool that really works on unstructured data like resumes — or by adopting crude heuristics like “GPA > x” or “ranking(undergraduate institution) < y”. Looking at GPAs and alma maters offers a very poor prediction of how candidates will perform on the job, and freezes out many talented applicants from non-traditional backgrounds — doing a disservice to their companies and applicants alike.

The biggest issue of all is that popular recruiting tools — job boards, ATSs, and video interviewing platforms — don’t add knowledge or intelligence to the hiring process. They don’t do the serious work of actually identifying employers’ needs and applicants’ abilities, and making optimal matches. They don’t proscribe or enforce any right way of hiring. They throw applicants and employers together and let them figure it out. The internet has led to a confusing profusion of information, but we haven’t yet had a real breakthrough in how we hire — how we find the ideal match between applications and positions. As a result, the frontier of recruiting knowledge hasn’t moved forward in decades.

How employers ought to hire

There are rare examples of firms, like McKinsey, that practice hiring incredibly well. McKinsey’s “case study” interviews are well-known — they’re essentially rigorous screening done through work-samples, which organizational researchers agree are by far the best way to screen candidates. The premise is simple: ask candidates to solve problems that they’d encounter during on a hypothetical workday, watch them compose a solution, and get a quick picture of skills and knowledge that entails. McKinsey’s process is highly organized, and the people who administer it are trained in what to do. Consulting firms recruit like this because their human capital is their most valuable asset, and they have the resources to invest in hiring excellence.

It would be great if all employers were so thoughtful. If they could agree on standards they could make the job search far less confusing. And improving their screening would not just lead to better hiring decisions, but give job-seekers confidence in a fairer process. Unfortunately, however, hiring well is hard. Most employers do not have the money, manpower, or the focus to invest in a truly great process.

Next-gen recruiting: centralizing hiring

Realistically, I think the next step for recruiting is third-party companies that do McKinsey-style hiring at scale. This next generation of recruiting will seek to deeply understand jobs and job-seekers, and they’ll use their understanding to make hiring easier, better, and fairer.

Next-gen recruiting should enforce standards for exchanging information in a clear and reliable way. Resumes do not provide enough information to compare candidates, nor are they reliable. But a next-gen recruiting company can make hiring decisions significantly easier for employers by screening job-seekers and making that data part of its marketplace. There are a million ways to screen job-seekers, but as discussed, it’s hard to do it in a really intelligent way, that looks for skills rather than credentials. It’s too much to expect employers to develop these kinds of systems themselves. Instead, hiring should go through a third party that can specialize in screening, developing innovative techniques for capturing substantive and helpful information about job-seekers.

This enables a dramatically better candidate experience as well. A company that knows enough to screen candidates can use its knowledge to make its job descriptions clear and structured, with standardized ways of describing job requirements. It should be easy to compare companies by size and by culture, and to understand individual teams they’re applying to. Even better, a next-gen recruiting company could offer feedback to candidates on their applications, direct them to roles to which they’re better suited, and even help them figure out how to attain the skills that they need to do better. A recruiting company like this should probably be vertical-specific. To truly become an expert in hiring, focus is essential.

One great example of a company doing this for programmers is TripleByte. TripleByte interviews engineers in person and then farms them out to companies. They act as a hub, a central point of exchange in a complex market. With their process of screening engineers in detail before matching them with companies, they’re actually building intellectual capital — developing expertise in their subsection of the labor market, seeing patterns across companies, and figuring out their own hiring best practices for engineering hiring. They’ve already produced amazing insights from their experience.

At HireArt we’re working on doing something similar in an area where screening can be even tougher — soft skills. We screen candidates for roles like customer service, sales, and operations — where college degrees are poor predictors of job performance and where employers often need to hire large numbers of skilled employees, fast. We’ve developed the technique of having applicants record video interviews in which they read a case study of a hypothetical company, and perform a series of tasks as if they were an employee of that company. This work-sample based approach lets us assess applicants on qualities like precision in verbal communication, appropriateness of tone in customer-service interactions, and ability to prospect as a salesperson — then we offer employers a detailed analysis of their strengths and weaknesses as candidates.

We’ve found that this approach has several advantages, for both employers, and applicants:

• Interviewing best practices: Hiring is what we do. Unlike employers, we’re experts in writing interview questions that really show a broad range of an applicants’ traits, and we know how to evaluate their skills based on their answers.
• Simplified employer experience: HireArt can efficiently source and screen candidates for common job roles. This leaves employers to focus on the “last mile” of hiring — just the top ten or so pre-vetted candidates. The employer can concentrate on what they do best, finding an ideal candidate matching the particulars of the job requirements, rather than just wading through possibilities.
• A better job-seeking experience: employers often have many other things to worry about besides their employer brand, and they receive so many applications that they don’t have the bandwidth to treat individual applicants well. But recruiting is our business — our reputation and organic growth depends on our getting back to candidates promptly, getting candidates hired, and generally just being worth their time. We’re able to guarantee that the employers listed on our site are actively hiring. We allow applicants to complete one interview that can be easily sent to multiple employers. We’re even experimenting with providing specific feedback to job-seekers, which job-seekers desperately want, and employers almost never provide.
• Network effects: when we find candidates for employers, we can either use ads and PR, or we can rely on candidates who’ve already used HireArt. As we grow, we’ve been able to find more and more already-screened candidates from our own database, making hiring faster and sourcing cheaper.
• Aerial market view: as a third party, we work with many companies on a variety of roles. When an employer is hiring for a new role, we tell them the salary and job requirements that make the most sense. We know how to market job postings for different audiences.

The big challenges of this approach are:

• Asking a lot of job-seekers. Recording videos of yourself is a lot of work — while most people spend about 45 minutes on the process, some applicants spend more than two hours working on their interviews. We’ve tried to address this by making it easy to reuse your video interview to apply to other jobs, and to demonstrate to applicants that it’s worth the effort given how often it turns into a second-round interview. We’ve had to work hard to make sure that job seekers trust us and believe that this upfront investment of time leads to a good outcome.
• Getting proof. It’s hard to prove the efficacy of a job screening process. Ultimately screening should be measured against job performance, for which there isn’t great data. Also, you don’t get to measure the performance of the people who were screened out. We’re tackling this problem from a number of angles.
• Difficulty of sourcing high-volume roles. An employer that needs to hire 25+ people in a short time strains our sourcing ability. The bigger our marketplace becomes the easier it becomes to find applicants immediately for needs like that.

The internet has unleashed a storm of information into the job market, making it even more confusing, competitive and inefficient than ever before. It’s time for a more centralized hiring approach, that can harness recruiting expertise to do intelligent, efficient matchmaking between the people looking to hire, and the people looking for work. Outsource hiring to specialist companies that can take on its complexity.