Recruiting technology continues to be a hot investment space, with venture capitalists and global enterprise solution providers investing millions in developing and acquiring innovative new point solutions. By the end of the third quarter of 2018, investment volume in HR technology had nearly tripled what was invested in 2017.
“There is a lot of money going into all aspects of recruiting and talent acquisition,” said David Mallon, vice president and chief analyst with Bersin, Deloitte Consulting. “It’s generating a lot of innovation, but also a lot of noise.”
Trends around social recruiting, mobile apps and video interviewing are now the norm, noted Barbara Marder, senior partner and global innovation leader at Mercer. “We are still seeing improvements in these areas but they are now entrenched in the talent acquisition process.”
Newer trends focus on implementing artificial intelligence, machine learning, gamification, and chat bots into the recruiting platforms. “These are all still leading edge and we expect to see a lot more adoption in the coming years.”
Diversity Drives Innovation
How these tools will be applied varies based on the challenges clients face. One area gaining a lot of attention is diversity in recruiting. Diversity ranked as the top hiring priority in LinkedIn’s 2018 “Global Recruiting Trends” report, with 78 percent of companies citing diversity as important to their strategy. However, the majority of these companies also report that finding diverse candidates to interview is their biggest obstacle, said Monica Lewis, product manager for LinkedIn. “They are not getting enough diverse candidates in their funnel, and they are looking for ways to reach a broader audience,” she said.
This challenge has won the interest and innovation of aspiring HR tech start-ups, who have been launching a variety of potential solutions. Vendors like Hired and Gapjumpers offer platforms that hide candidates’ names, universities and other defining features that can lead to bias in hiring. Other vendors forgo résumés all together, forcing companies to choose candidates based on their performance in coding challenges or assessment results rather than college pedigree.
More recently, vendors have begun adding virtual job fairs and analytics tools to help clients expand their talent pool and to be more holistic in honing their short list of top talent. “If companies want more diverse candidates they have to scout in more places,” said Marder. Virtual technologies allow them to canvas on more campuses and to connect with more candidates. “Once they are able to flood the pipeline, they can use machine learning algorithms to screen the data and find the best people.”
These algorithms can track any combination of individual and industry trend data to figure out who will be the best fit for a position, and they get more targeted with every search, she said. “It levels the playing field for diverse talent.” Companies need to be certain their algorithms aren’t also biased. Amazon recently discovered its recruiting algorithm was biased against women, because it was based on the traits of past high performers, who were predominantly male.
Chatbots Add a Human Touch
Vendors are also continuing to develop tools that improve the recruiting experience — for candidates and clients, said Mallon. That includes using chatbots to provide “human” interactions to keep candidates up to date on their applications, or to answer questions about the process. He noted that chatbot technology has gotten a lot more advanced in recent years, making these interactions more engaging than just waiting for an email. “It provides a lot of value while reducing the number of actual humans in the process.”
As these small vendors continue to demonstrate the value of their solutions it will surely lead to another flurry of acquisitions in this space.
“The recruiting industry is currently at ‘peak boutique’ with a lot of little players showing a lot of innovation,” Mallon said. That is often the point where enterprise providers start acquiring all the innovative point solutions to expand their own talent acquisition suite.
For companies wondering whether to implement these new technologies today or wait until they mature, Marder urges them to think about their recruiting pain points, and whether a best-in-class solution is the answer. “If one of these tools solves your recruiting problem and creates daylight between you and your competition — that can give you an edge at least for a while,” she said. That can make the investment in a startup solution worth the risk.