This article also appeared in Finweek Magazine in their 3-Oct-2013 issue
Worldwide we’re facing exceptionally high unemployment levels. And yet in spite of this, companies complain they can’t find good people. How do you explain this disconnect? And what can we do to fix it?
According to StatsSA’s labour survey released in mid-2013, South Africa’s official unemployment rate has risen to 25.6%, with the broader rate of unemployment climbing to 36.8%. The number of unemployed people has increased to 4.7 million, while the number of demotivated job-hunters has grown to 2.4 million. Adding these two groups together, that means that, for the first time ever, the number of South Africans without a job has climbed above 7 million. That’s a big number.
Elsewhere around the world, things are not looking much better. In the US, unemployment lies at around 7.3%, while in the UK it is sitting at 7.7%. Across the EU the unemployment rate has stayed at a record level of 12.1 %, with the highest rates being recorded in Greece (27.9%) and Spain (26.3%). No matter how you plot them, the numbers don’t look good.
With a larger supply of job applicants to choose from, surely it should be easier for companies to find good people? But that’s not the case. Organisations still complain that they cannot find A-players with the appropriate skillset. The South African media is full of articles about the shortage of good teachers, nurses and web developers, to name only three industries.
So why are companies struggling to fill their vacancies? According to traditional thinking, two factors are to blame: not enough good people in the talent pool, and a failing in the education system to equip people with the right skills. However, Prof. Peter Cappelli, the George W. Taylor professor of management at Wharton and director of Wharton’s Center for Human Resources, isn’t buying this.
In Sydney Pollack’s film “The Interpreter”, one of the characters is famous for saying: “… there are no more nations anymore. Only companies. International companies. It’s where we are. It’s what we are.” In his book Why Good People Can’t Get Jobs, Cappelli asserts that it is companies themselves that have caused the disconnect between unemployment and unfilled vacancies – and that only they can fix it.
How so? According to Cappelli, it comes down to two key, but interconnected causes: the systems that many organisations now use to find prospective applicants, and the widespread reluctance in many businesses to train new hires.
A Damaged Hiring Process
Where has the hiring process gone off the rails? In Cappelli’s book, he describes short-staffed HR teams battling to identify the appropriately skilled, qualified jobseekers in a mountain of applications. This has led to the tremendous growth worldwide of automated recruiting software systems like PeopleMatter HIRE, Recruiterbox, SuccessFactors and iCIMS.
What exactly is automated hiring software? These are computerised systems that streamline the hiring process, or various elements of it, from screening to applicant tracking to onboarding. They simplify the work that companies must do to sift out top candidates. With only a bit of complex coding the software can analyse applicants’ information and materials like CVs for the correct keywords. Once it finds the applicants that fit the keywords, the company can interview them.
On the one hand, if used wisely, automated hiring systems can help companies simplify the application process, evaluate applicants fairly and thoroughly, take much of the manual burden out of recruiting and cut down hiring time.
On the other hand, however, there is a human intelligence to the hiring process that only real people can bring, and which cannot be automated. Automated screening on its own does not guarantee perfect hires. Automation is only as good as its human operator. And this lack of human element in the automated screening process is precisely where the technology falls down.
To avoid overstepping discriminatory hiring laws, cautious HR managers and recruiters may intentionally use vague wording in the requirements sections of their job ads. This, together with the high unemployment levels, leads to mountains of applicants. To resolve this issue, companies then use automated screening software to sift through the responses using precise requirements and search terms that eliminate most—and in some instances all—of the candidates. Here’s the problem: these systems seem to have been built to reject high volumes of candidates, instead of finding the inexperienced rough diamonds who are capable but need extra time or training to move up the learning curve. Hence the disastrous outcome: businesses either find the perfect hire, or no hires at all.
How can companies fix the system?
In the past, how did high-potential, inexperienced hires get into the workforce? Conventionally, they could persuade a hiring manager that they were worth the risk, and then they’d spend some time on the job building the skills needed to do it effectively. In fact, this is exactly how my sister-in-law, a maths teacher by training, was hired by Investec some years ago, ahead of more suitably qualified, experienced actuarial applicants. Investec took a chance on her and she went on to become their head of credit reporting and analytics today.
However, in many industries, on-the-job training has become an outdated practice. Why? Because companies are becoming wary about investing time and money to train staff. Staff that competitors can then poach. This means that workers – and applicants – must spend their own time and money getting the skills that they think employers may want. This scenario is a lose-lose for everyone: For the workers who land up even more cash-strapped in their efforts to stand out from other applicants. And for the companies, who cannot make sure the training is relevant to their jobs or of high enough quality.
It’s time for companies to fix their own systems. It’s time for them to bring back the human touch in the screening process, and to start taking the risk on promising, inexperienced hires again, with on-the-job training.
In Cappelli’s own words: “The time has finally come for employers to develop a more realistic sense of what their own interests are with respect to workforce issues and what best serves both their interests and the well-being of society as a whole.”
In his bestseller Outliers: The Story of Success , Malcolm Gladwell couldn’t have summed it up better when he said: “To build a better world we need to replace the patchwork of lucky breaks and arbitrary advantages today that determine success – the fortunate birth dates and the happy accidents of history – with a society that provides opportunities for all.”
What can job seekers do?
In the meantime, if you’re on the hunt for a job, you can still take charge of your career path. Don’t wait for employers to fix their broken hiring processes, as that is out of your hands. According to job site Vault.com, there are quicker, more effective ways to jump to the front of the job application queue. One option is to copy some – but not all – of the language in a job ad. This will boost your application’s chances of getting past the automated screening stage into an interview with a real human being. Another alternative is to circumvent this stage completely: do your research on the company you want to work for and contact the hiring manager or the boss of the position you want.
As laborious as those workarounds may be, they work a lot better than sending yet another copy of your CV down the automation hole. And until more businesses start listening to Cappelli and fixing their systems, bypassing it altogether could be the most effective thing you can do.