Internet Data Rule Cloudy, But With a Silver Lining
Thanks to a 90-day grace period, the thousands of firms that contract with the U.S. federal government have until May 8 to comply with the regulation, as long as they are working toward compliance and abiding by previous rules for tracking applicants’ demographic data. Still, the new requirements have resulted in some confusion. What’s more, major recruiting software companies are steering customers away from once-touted features or working to upgrade them.
Despite any such headaches, the new rule will trigger better hiring, says Gerry Crispin, co-founder of consulting firm CareerXroads. "I think it will significantly improve our understanding of successful recruiting practices," he says. "There’s a great silver lining."
The roots of the rule lie in the rapid emergence of online recruiting practices over the past decade. The regulation is issued by the Labor Department’s Office of Federal Contract Compliance Programs. Its goal is to help make sure that companies doing business with the government do not discriminate on the basis of sex, race or ethnicity when they do such things as review e-mailed job applications and search online résumé databases to fill a position.
Under the rule, employers must try to gather demographic data from Internet applicants. An "Internet applicant" is defined as someone meeting four criteria. Among these is that the individual "submits an expression of interest in employment through the Internet or related electronic data technologies."
In addition, the rule says that when contractors use external résumé databases--like that at Monster.com--to consider individuals for particular positions, they have to keep records. Those include such things as "the substantive search criteria used, the date of the search and the résumés of job seekers who met the basic qualifications for the particular position who are considered." Similar requirements to capture the "substantive search criteria used" and the date of the search also hold true for queries of internal résumé databases for specific positions.
The Labor Department published the rule in October and said it would take effect February 6, but it was clear that contractors needed more time. A survey earlier this year of nearly 1,000 companies by recruiting software company Peopleclick found that 71 percent of respondents were not prepared for the deadline.
In late January, the Labor Department announced the grace period. It also has a Web site answering frequently asked questions about the rule, as well as a toll-free help line. Still, there’s uncertainty about how to comply.
One gray area centers on the practice of hunting for talent without formal job openings. Strictly speaking, the rule does not apply to searches done without a particular position in mind.
But companies that do much of their hiring in this fashion without collecting demographic data risk the Labor Department’s wrath in an audit. Charles James, who heads up the OFCCP, says hiring without specific positions in mind--and therefore avoiding steps to ensure equal opportunity for women and minorities--is an old tactic that has led to biased results in the past. "It will be interesting to see if all the ‘great people’ are white males," he says.
Another concern relates to the precise data that federal contractors must collect. The OFCCP’s new rule allows companies to use techniques such as random sampling to whittle down the number of applications it considers, so long as the technique does not lead to biased results. Companies also can set up specific application procedures and ignore would-be candidates who fail to follow the guidelines.
Even so, not everyone is clear what it means to "consider" an applicant. On an Internet discussion board, one person posed this question about the guidelines for searches of external résumé databases:
"Does this mean that résumés must be saved for all candidates in the search pool? (After basic criteria and/or ‘data management techniques’ are used to reduce the pool size)," the participant wrote. "Or, must just the search criteria be saved, plus résumés for any candidates whose résumés are actually viewed and evaluated?"
Asked about this posting, James replied by e-mail, saying that contractors need not keep résumés of individuals identified from an external database search "who were not considered; that is, the search brings up the individual’s résumé, yet the contractor never opens the résumé."
Another controversial topic is how the new rule applies to so-called "conceptual" search engines. These are tools that rely on sophisticated algorithms for understanding the content or concepts in a document such as a résumé. For example, Peopleclick has a conceptual search engine as part of its recruiting system that comes up with a new set of terms that may be synonyms of words in the original or terms that are associated with the original content. Peopleclick’s tool allows the user to take a promising résumé and search for others similar to it.
A potential problem with this technology is that the terms generated may run afoul of the OFCCP’s rule, says Kathy Barton, senior vice president of marketing and product management at Peopleclick. The rule specifies that applicants’ basic qualifications be objective. But a conceptual search engine may produce search terms like "Harvard" or "Princeton" when seeing "graduated from Yale" in a résumé, rather than the objective credential of "college degree."
Will the Equal Employment Opportunity Commission follow the OFCCP's lead with an internet applicant rule?
Carol Miaskoff, assistant legal counsel at the agency, says the EEOC does not expect to take action on the proposal in the "near future."
Barton says it is vital under the OFCCP rule to record new search terms generated by a conceptual search, and that Peopleclick’s technology does so. But the system currently doesn’t make the terms visible to recruiters. Peopleclick is upgrading its system to let users see the new terms so they can pick objective ones for a search. That fix is due this summer, Barton says. For now, customers are advised to use Peopleclick’s key word search rather than the conceptual search feature. "At this point, we’re saying it’s better for you to wait," she says.
Taleo, another major recruiting software vendor, also has been steering customers away from a conceptual search feature it offers. The company recommends using other search and screening tools that come with its product. Not unlike Peopleclick, Taleo is concerned that results from its conceptual search engine could be seen as subjective. But the company believes its conceptual search will pass muster under the rule should customers want to use it. "We’re very comfortable (that) we meet the requirements," says Chris Tratar, director of product marketing at Taleo.
Taleo says its conceptual search tool does not generate new search terms. The feature, based on technology from software firm Autonomy, "converts the text block into numbers and searches for matches in the patterns created by the numbers," Taleo said in a statement. "The number pattern or ‘digital signature’ that is created is an exact numerical representation of the exact text put in."
In Taleo’s conceptual search product, the "digital signature" is not made visible to the user, but is retained by the system and could be accessed in case of an audit, Tratar says.
Nonetheless, he argues that capturing the user’s search input satisfies the rule. "All the regulations require is that you save the criteria upon which you searched, not how the search was done technically," he says.
James of the OFCCP suggests that tech companies and their customers pay close attention to whether search tools alter the nature of the query. "Software vendors should advise their clients about possible changes to a client’s search criteria made by hidden features of the software product," James wrote in an e-mail to Workforce Management, "so that the client firms can make informed decisions about actions for which they are accountable."
Analyst Crispin says most recruiting technology vendors up to now have failed to provide good tools to help customers meet the new rule. Exceptions, he says, include recruiting software firms BrassRing and Peopleclick as well as the major online job boards--Monster.com, Yahoo HotJobs and CareerBuilder.com.
A key question is whether the Equal Employment Opportunity Commission will follow the OFCCP’s lead with an Internet applicant rule. The EEOC, whose guidelines apply to all U.S. employers with 15 or more employees, is part of a four-agency group that issued a proposal similar to the new OFCCP rule in 2004. The EEOC conceivably could adopt that proposal as a formal rule. But Carol Miaskoff, EEOC assistant legal counsel, says the commission does not expect to take action on the proposal in the "near future."
Despite the uncertainties and the scramble to change technologies and practices, Barton sees a beneficial side effect of the OFCCP’s new rule. She notices recruiters specializing as either "hunters," who find candidates, or "farmers," who nurture candidates into potential hires. While hunters must develop a firm grasp of recruiting technology and the new OFCCP rule, farmers can avoid those tasks. The new rule, in other words, is leading to more efficient corporate staffing departments. "It will drive some best practices around the role of recruiters," Barton says.
How well recruiters and firms are complying with the Internet applicant regulation probably won’t be clear for some time. Audits normally cover a period beginning at least six months prior, and they can last 12 to 18 months, James says. "We’re not going to know until 2007," he says.
Workforce Management, March 27, 2006, pp. 45-46 -- Subscribe Now!