AI in Recruiting

Transcript

1. IT SLOAN SCHOO F MANAGEMENT AI in Recruiting: How Technology is Changing the Recruiting Process by Hannah Ono December 2024
2. How does the recruiting process work, and knowing this, how can I put my best foot forward as an applicant? 2 AI refers to the use of LLMs, machine learning, and genAI.
3. 3 Identifying Research Scope Literature Review Expert Interviews Utilized tools such as Perplexity.ai and ChatGPT as a benchmark. Using Google Scholar and Google search to find articles. Close reading of articles in combination with Notebook LM. Conducted interviews to fill in gaps in research and compile anecdotal evidence. Methodology
4. Recruiting is a key component of a company’s success - Recruiting top talent is a competitive advantage. Research shows that top performers in highly critical roles deliver 800% more productivity than average performers in the same role. 4 00 - Securing top talent means casting a wide net, having an efficient and effective assessment process, and curating a good experience for candidates. McKinsey, Attracting and Retaining the Right Talent, 2017
5. The volume of applications has multiplied 5 Semuels, S. Time, You’re Not Imagining It—Job Hunting Is Getting Worse. 2023. Workday, Workday Global Workforce Report. 2024. - Reports indicate that application rates per job have increased by approximately 3X from January 2021 to April 2023, particularly in business and tech roles. - Applications are growing 4x faster than job openings. - Significant growth is due to newfound ease of recruiting and market factors.
6. AGENDA 01 How AI is used in recruiting 02 Implications for companies 03 Implications for candidates 04 Where recruiting is headed 05 Future areas of exploration
7. AGENDA 01 How AI is used in recruiting 02 Implications for companies 03 Implications for candidates 04 05 Where recruiting is headed Future areas of exploration
8. The steps in the recruiting process 1 Recruiters at Company post job advertisement Recruiters can use genAI to create job postings with accurate keywords based on previous job postings. Recruiters can also identify traits of successful candidates to quickly build personalized job descriptions. Applicant submits application Applicants may use third party services such as Workday and Handshake that matches applicants profile to relevant job postings. Applicants can use genAI to draft cover letters and edit resumes. 2 Recruiters screen applications Recruiters use Applicant Tracking Software to identify good candidates based on keyword matching. Company assesses applicant Companies may use a number of different methods such as tests, video interviews, and real time interviews. AI can aid in asynchronous testing and interview scheduling. 4 Company sends offer letters Applicants can use genAI to negotiate offers and understand contracts. 5 8 3
9. AGENDA 01 How AI is used in recruiting 02 Implications for companies 03 Implications for candidates 04 05 Where recruiting is headed Future areas of exploration
10. AI is used widely in recruiting 10 26% Blue derived from: Workday, Workday Global Workforce Report. 2024. Burrows, C. Meeting of January 31, 2023 - Navigating Employment Discrimination in AI and Automated Systems: A New Civil Rights Frontier 99% 78% Companies using AI in recruiting Companies’ use of specific AI tools 26% 17% 12%
11. Using AI in job postings increases applications 11 Chen, Z. Collaboration among recruiters and artificial intelligence: removing human prejudices in employment, 2022. Jobvite, Employ. Automation and AI in Recruiting: Balancing the Risks and Rewards in a Modern Hiring Environment. 2023. 1 Recruiters at Company post job advertisement Applicant submits application 2 Company assesses applicant 4 Recruiters screen applications Company sends offer letters 5 3 - Recruiters can use genAI to create job postings with accurate keywords based on previous job postings. Recruiters can also identify traits of successful candidates to quickly build personalized job descriptions. - LinkedIn matches job seekers with opportunities and making it easier to connect candidates with recruiters and talent acquisition professionals. - Recruiters can reduce time spent on sourcing by around 30%.
12. AI in resume screening is faster but may be biased 12 Chen, Z. Collaboration among recruiters and artificial intelligence: removing human prejudices in employment, 2022. Workday, Workday Global Workforce Report. 2024. Ozturk, H. Hiring Branch. 6 Quick-Read Stats About AI and Talent Acquisition. 2023. Wilson, K and Caliskan, A. Gender, Race, and Intersectional Bias in Resume Screening via Language Model Retrieval, 2024. - Recruiters use Applicant Tracking Software to identify good candidates based on keyword matching. - AI can save up to 75% of the time typically spent on resume screening. - A study of three widely used LLMs for screening by the University of Washington found that the algorithms favored white applicants 85% of the time and female applicants 11% of the time. Black men are disadvantaged up to 100% of the time. 1 Recruiters at Company post job advertisement Applicant submits application 2 Company assesses applicant 4 Recruiters screen applications Company sends offer letters 5 3
13. AI use in evaluations saves time and money 13 1 Recruiters at Company post job advertisement Applicant submits application 2 Company assesses applicant 4 Recruiters screen applications Company sends offer letters 5 3 - Companies may use a number of different methods such as tests, video interviews, and real time interviews. Assessments evaluate reasoning, risk appetite, and behavioral factors. - AI can aid in interview scheduling. Workday, Workday Global Workforce Report. 2024. Ekka, S. Peoplebox. AI in Recruiting: Transforming Hiring with Technology in 2024. 2024.
14. L’Oreal uses AI for advertisement, screening, and assessments 14 Job Advertisement AI Screening Assessment Loreal gained 2 million applicants for 5000 positions using AI to present their job postings to active candidates. Utilized Mya, a chatbot that answers questions such as availability and visa requirements. Tool reduces time to screen by 10x. Seedlink, an AI software, assesses applicants based on answers to interview questions. They now process ~1 million applicants for 15,000 new positions each year. Chen, Z. Collaboration among recruiters and artificial intelligence: removing human prejudices in employment, 2022. 92% of rejected candidates expressed satisfaction with AI-driven process. New system resulting in 25% higher offer rate. In 2017, L’Oreal implemented AI within its application process.
15. Unilever utilizes tech to make recruiting more efficient 15 Job Advertisement Assessment FLEX Experiences: internal job marketplace that helps match employee profiles to opportunities. Partnership with Pymetrics where candidates play logic games that measure reasoning and risk appetite. Partnership with HireVue to conduct video interviews that analyze responses using NLP and body language analysis. AI System reduced candidate pool by 80%. Marr, B. How Unilever Is Using Artificial Intelligence And Machine Learning In Their Recruitment, 2019. Time to Hire decreased by 75% from 4-6 months to 1 month. Increase in candidate completion rate from 50% to 96%. Increased diversity by 16%. Processes 1.8 million job applications for around 30,000 positions annually. The solution saved over £1 million and 100,000 hours of human recruitment annually.
16. AGENDA 01 How AI is used in recruiting 02 Implications for companies 03 Implications for candidates 04 05 Where recruiting is headed Future areas of exploration
17. Visual chart of a job seekers job applications over 6 months. TheMarsRover, Reddit r/recruitinghell, 6 months of job hunting, 2024. 17 Recruiting is a numbers game for many applicants
18. How candidates can leverage AI 01 Finding good fit jobs 18 - Ask a Chat Bot what types of jobs are a good fit given your resume and profile. - See what types of jobs are currently hiring.
19. How candidates can leverage AI 01 Finding good fit jobs 19 - Use genAI to draft and edit resumes and cover letters. - Ask a Chat Bot to identify key skills and qualifications from a job advertisement. 02 Submitting Applications
20. How candidates can leverage AI 01 Finding good fit jobs 02 Submitting Applications 03 Preparing for Interviews 20 - Utilize voice based Chat Bots to simulate interview scenarios. - Ask for sample questions and study guides.
21. Main considerations for candidates 21 - Companies are intentionally creating opaque systems for security. There is no guarantee that online “hacks” will improve your odds. - Leverage your network to stand out and learn more about the company. - Don’t give up! You only need one company to recognize your potential.
22. AGENDA 01 How AI is used in recruiting 02 Implications for companies 03 Implications for candidates 04 Where recruiting is headed 05 Future areas of exploration
23. The future of recruiting 23 04 Workday, Workday Global Workforce Report. 2024. Harvard Business School. Hidden Workers: Untapped Talent. 2024. Present Future 88% of employers claim talent acquisition technology dismissed qualified candidates. An AI arms race between companies and candidates. Heavy influence of network based recruiting. Heavier AI regulations. 70% of company leaders say AI will make hiring more fair. AI has the potential to eliminate subconscious bias.
24. AGENDA 01 How AI is used in recruiting 02 Implications for companies 03 Implications for candidates 04 Where recruiting is headed 05 Future areas of exploration
25. Next steps and research goals 1. How has the ratio of applications to jobs changed, controlling for macro factors? - Using a time fixed effect to eliminate other variables 25 04 Workday, Workday Global Workforce Report. 2024. Harvard Business School. Hidden Workers: Untapped Talent. 2024. 2. What is the rate of Type 2 errors, or “false negatives?” - Controlling an experiment that evaluates candidates at random that “fail” the screening process. 3. How effective are candidates methods of “gaming” the recruiting algorithm? - Controlled experiment submitted two applications for a singular candidate.
26. AI in recruiting is here to stay and rapidly evolving - Companies are using AI and genAI to hire the best candidates and keep up with the influx of applications. This has lead to significant cost savings and increased efficiency. 26 - Best strategies for candidates are quickly evolving, but candidates can take advantage of AI tools and leverage networks for a leg up. - AI has the potential to democratize the application process.
27. Special thank you to Melissa Webster, Kristen Lee, Georgia Severson, Henry Hannon, and Alex Krelin 27