A.I. will change agency recruitment but in an unexpected way

The Australasian Talent Conference, held in Sydney last month, was another fascinating and stimulating couple of days. I immersed myself in conversations about talent with a wide range of people across the worlds of agency recruitment, corporate recruitment and recruitment technology vendors.

The theme of the conference was Thriving with A.I. and having read a number of articles over the past year or so on this topic I was keen to immerse myself in the views of the various speakers.

This ten minute video from Aaron Matos is a helpful introduction to the evolution of A.I. in recruitment. In the latter half of the video Matos discusses how Olivia, the virtual recruiting assistant created by his company Paradox, is effortlessly outperforming human recruiter productivity in the basics of screening and booking in appointments (24/7!).

During his session on the conference’s second day the Co-founder and Chief Products Officer of LiveHire, Antonluigi (Gigi) Gozzi raised a number of ethical considerations with respect to A.I. and its capacity to identify the best candidates for any given role.

As Gozzi explains, A.I. is best at understanding is what is known about a candidate and is less effective at discovering or revealing what is unknown, yet relevant, about the candidate.

A simple hypothetical example of this would be a candidate who states in her application that her desired annual salary is $140,000 per annum. If the role is paying $130,000 maximum then A.I. would not select, or highly rank, that candidate. A recruiter viewing that candidate’s resume, and seeing the right skills and that the candidate lives close to the location of the job, calls the candidate and discovers that she is flexible to $130,000 because there’s likely to be a saving of at least $10,000 p.a. in travel costs, plus the added benefit of more time at home due to a significantly shorter commute.

A.I. will have the edge in areas that are black and white (e.g. the candidate either has the relevant skills or not, because their resume or LinkedIn profile makes that obvious through job title and job responsibilities).

Recruiters will, potentially, have the edge in the grey areas because through asking the right questions at the right time they will uncover relevant information about a candidate’s, for example, availability and flexibility on remuneration.

Of course that’s what very good recruiters do already: they ask relevant questions, listen to the answers and use their influencing skills to deliver win/win outcomes for both candidates and clients.

This ‘grey area edge’ that recruiters potentially have is just as relevant on the client side when there’s a job to be filled.

Using the hypothetical example of a client submitting a job description for a permanent role, A.I. selects and ranks candidates, either discovered or submitted, on the black and white selection criteria. The ‘grey area’ that the recruiter utilises here, to their and their client’s advantage, is that they know an excellent candidate who is only interested in home-based contract work. The recruiter talks to the client about flexing the job to make it a predominantly work-from-home contract and then talks to the contractor who then agrees to work onsite one day per week for collaboration purposes.

This is a win/win/win outcome that the recruiter has facilitated; one that A.I. almost certainly would not have delivered.

The agency recruiter’s competitive advantage comes from knowing their talent pool extremely well.

You can only do this if you are a deep specialist – a recruiter who has deep sector specialisation accompanied by the constant curation and development of pools of specialist talent, talent that is valuable and in-demand.

Of course it is easy to argue, and largely true, that the advantage of possessing this type of specialisation is nothing new. In fact, Hays, the world’s most profitable recruitment agency (on a Gross Profit to Net Profit ratio basis) was founded on this basis.

What is very different about the A.I. era of specialisation is the accompanying transparency that recruiters are now just starting to be both exposed to, understand and deal with the consequences of.

The information about a recruiter’s specialisation and accompanying success rate in placing high quality candidates into important roles, compared to their industry peers, has not been easily obtained, robust or meaningful.

This is about to rapidly change.

Three Australia companies (that I know of) now provide a window into this new world of transparent specialisation and objective performance.

Justin Hillier’s Recruiter Insider, Justin Falk’s TalentVine and James Jennings’s Sourcr are all products that feature ratings of individual recruiters. Whether the ratings are coming from clients and/or candidates, and in what form, context and level of visibility, varies across the three offerings.

The ultimate consequence of this level of transparency is that the performance of all individual agency recruiters will very soon be easily available and the rankings will be seen as robust and credible, to audiences both inside and outside recruitment agencies.

Attractions, hotels, cafes and restaurants have been living with this world, initially uncomfortably and now successfully, for years through the impact of Trip Advisor.

An instructive industry parallel to consider is the way stock analysts on Wall Street have been ranked for decades.

These rankings have led to an analyst’s personal brand becoming relatively more important than the company brand of the analyst’s employer. You can be sure that this is going to happen in agency recruitment as well, it’s just as matter of when.

The ratings that companies such as Recruiter Insider et al collect and publish will become more meaningful the more specialised the recruiter becomes.

For example, knowing that Sarah Brown is the #1 rated accounting recruiter in Australia is not as relevant as knowing that David Smith is the #1 ranked recruiter of tax accountants in Sydney if you are an employer wanting to hire an excellent tax accountant in Sydney or if you’re a very good tax accountant wanting to partner with a recruiter to have them find your ideal career move.

The niche you deliver great results in will make you the go-to recruiter for both candidates and clients.

This can only happen if you have a consistently positive impact on both candidates and clients.

You can only have this impact if you have time to deliver excellent service to both clients and candidates.

You can only have this time if you work on fewer jobs at once and work with fewer candidates at a time.

You can only work on fewer jobs and work with fewer candidates if you fill all the jobs you work on and place a high percentage of candidates you represent.

The recruiters who will make a comfortable living working low volumes are the deep niche specialists. Their deep specialisation ensures that they make high probability choices with respect to the jobs they work on and the candidates they represent.

These high probability choices (ie both the clients and the candidates) publicly rate the recruiter very highly in all the variables that matter.

These rating are published, credible and ranked.

The high rating recruiters attract more high quality clients and candidates and so the cycle perpetuates itself.

A.I. has the potential to free up recruiters to become deep niche specialists who dominate objective recruiter rankings.

But….it all depends on two things that I have little confidence most agency owners will encourage (or invest to have happen) and most agency recruiters will actually do: agency recruiters giving up their many manual tasks and also giving up their reluctance to say no to some jobs and many candidates in order to deliver a far higher quality of service to a smaller base of customers.

It will be a fascinating next phase of the recruitment industry to witness.

Recommendation: Greg Savage has been writing and speaking about the impact of A.I. on agency recruitment for about four years. If you want to explore this topic in more detail I highly recommend you access Greg’s excellent resources (both free and available for purchase) found on his website.

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1 Comment

  1. Ben Batten on 24/07/2018 at 10:45 pm

    Great article Ross, thank you for sharing!

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