Tap the Talent Your Hiring Algorithms Are Missing

It’s been dubbed the Great Resignation: Nearly 20 million Americans left their jobs in 2021, and the trend is spreading to Western Europe, Asia, and beyond. Yet even as employers scramble to fill open positions, millions of capable candidates struggle merely to be considered. Why such a disconnect—and how can companies bridge it? A study by Harvard Business School and Accenture finds a major reason for the gap: the near-ubiquitous use of automated hiring platforms, which systematically screen out large numbers of job seekers who might well fit the bill were their résumés ever to reach hiring managers’ desks. Applicants with unconventional backgrounds—such as caregivers, veterans, immigrants, people with physical and mental challenges, and the previously incarcerated—are especially prone to being “hidden” from prospective employers by the platforms. The report estimates that there are more than 27 million hidden workers in the United States alone. “These are people who want to work,” says HBS professor and study coauthor Joseph B. Fuller. Some may be underemployed or working on a very part-time basis, while others have been locked out of the labor market altogether. The researchers came to these conclusions after surveying 8,720 hidden workers and 2,275 executives in the United States, the UK, and Germany in 2020. The technology-fueled exclusion of such a large pool of talent is a tale of unintended consequences, Fuller says. The advent of online recruiting in the 1990s promised employers access to a broader array of applicants than traditional approaches could muster. But the result was an unmanageable deluge. By the early 2010s, each job posting yielded 120 applicants, on average, and the figure continued to rise. So employers turned to applicant-tracking and recruiting-management systems to help winnow the crowds, typically using filters meant to capture those who most closely matched the requirements of the role. And winnow they did: By 2020, employers typically interviewed four to six applicants for each listing out of an average pool of 250. Many of those excluded could be highly productive workers, the researchers argue, including in middle- and high-skilled positions. An algorithm might weed out anyone lacking a college degree, having a criminal record or a gap in employment, or deficient in just one of several very specific skills—but “none of those are particularly good proxies for measuring aptitude, work ethic, and self-efficacy,” says HBS’s Manjari Raman, another coauthor of the study. She adds that “credential creep” exacerbates the problem, as firms pile on requirements over time. The hidden workers she and her colleagues surveyed had applied to an average of 25 jobs each in the previous five years, often without a single response. “Is it any surprise they eventually give up?” she asks. Today’s tight labor market gives employers a once-in-a-generation chance to rethink their recruiting strategies, Fuller says. Recruiting from previously unexploited talent pools is a major undertaking, to be sure, but he believes that it lies within reach. “Companies regularly make extraordinary efforts to revamp commercial supply chains in response to changes in market conditions,” the researchers point out. “But few have extended fundamental principles of supply chain management—ranging from gathering data on supplier quality control to working with [suppliers] to address persistent problems—to hiring talent.” “Employers May Not Be Looking in the Right Places” As the longtime senior director of workforce initiatives at CVS Health, Ernie DuPont has built a career finding talent in unconventional places. His team partners with local governments, community groups, and nonprofit organizations to recruit workers typically overlooked by corporate America. He recently spoke with HBR about his efforts to bring “hidden workers” on board at CVS Health. Edited excerpts follow. Bryan Derballa CEOs complain about a hiring crunch, yet millions of people are unemployed. What’s your take on the situation? Employers may not be looking in the right places. Twenty years ago we made the business decision to tap pools of workers who were otherwise overlooked. One of our first projects was in Washington, DC. Working with the mayor, we identified a district that was economically depressed. We set up a career center that included a mock pharmacy so that community members could see shelves with products, see the registers, understand what working at CVS would entail. We now have similar centers all over the country. We’ve hired more than 120,000 people who were previously on some type of public assistance. We have initiatives to recruit veterans and mature workers. We also have 50 simulated sites around the country aimed at attracting and training people with disabilities. Since 2012 we’ve recruited 4,000 workers through these programs. Has it paid off? Yes. Retention among people from those initiatives is often higher than that among workers who come through typical channels. What are the keys to your success? The key element is our strategic partnerships with organizations that can help us access these workers. When we’re vetting a potential partner, we try to find common goals so that we can deliver results that matter to all the stakeholders. That might mean that CVS Health invests in the community. We have a career center in Pittsburgh, where we work to address food insecurity and provide on-site health, dental, and eye care clinics. We were able to expand our initiatives through a partnership with a local church. We believe that a healthy, thriving community delivers a better workforce, and that fits with our mission as a health care company. The Harvard Business School/Accenture study says that résumé-screening algorithms weed out strong candidates. Has that been your experience? They can. We’ve made some changes over the past year to remove some educational requirements from some of the roles in our company. What’s stopping other companies from doing the same? We’ve worked with other companies to help them set up nontraditional hiring programs. T.J. Maxx is an example. What I say to leaders up front is that you must accept that you won’t get immediate results. I see companies try initiatives like these with a traditional “experimental” mindset: If they don’t get results right away, they shrug and move on. My advice is to commit to two or three years. And you can’t apply metrics such as cost and time to fill positions to measure success. That’s not how our initiatives are judged. What metrics do you use? We emphasize the quality of programming, the relationships, and the long-term outcomes. We define success as building and maintaining a pipeline of talent that is steady regardless of what’s going on in the wider labor market. So as you can imagine, we’re proving the value of our approach at the moment. The potential rewards of doing so are considerable. The surveys showed that companies that intentionally seek out hidden workers are 36% less likely than others to face talent and skills shortages. What’s more, those workers outperform their peers on six key criteria: attitude and work ethic, productivity, quality of work, engagement, attendance, and innovation. Because they are so eager to work, they’re less likely than others to quit, so costs associated with turnover may decline. And because many are women or members of underrepresented groups, hiring them can movea company closer to its DEI goals. Many large companies have begun thinking more expansively about how and whom they hire. IBM has eliminated college degree requirements for many roles, and JPMorgan Chase no longer asks if applicants have a criminal record. CVS Health hires neurodiverse individuals to stock store shelves. The fast-casual chain Hot Chicken Takeover employs people recovering from substance abuse in its kitchens. And carmakers VW, Daimler, and Porsche have recruited refugees to work on their assembly lines. The research team offers several recommendations for employers: Change metrics. Companies should scrap short-term measures of hiring success, such as cost and time to fill vacancies, in favor of longer-term ones, such as how long it takes new employees to get up to speed, how long they stay, and their rates of promotion. That’s harder than it sounds, Fuller says, because many firms have siloed recruiting and operations departments and are not accustomed to sharing performance management and other data. Analyze data and rewrite job descriptions. Employers should analyze this longitudinal data to determine the must-have attributes for long-term success in each position. They should rewrite job descriptions accordingly, being especially vigilant about eliminating extraneous skills and ones that can be taught on the job. Armed with that information, employers can work with their technology vendors to ensure that candidates are screened and ranked according to the new criteria. Employers should then form hypotheses about which segments of hidden workers are most likely to possess the must-have attributes. For instance, call centers have benefited from recruiting older workers, while aerospace and defense contractors successfully tap out-of-work veterans. Companies will often need help connecting with the identified segments. For some groups, such as veterans, immigrants, and previously incarcerated people, companies might turn to relevant nonprofits and social entrepreneurs for insights. In all instances, job listings should be as inclusive as possible. That means stripping out daunting jargon, excessive superlatives such as “world-class” and “expert” (which have been shown to deter female and minority applicants), and gender-biased language that appeals to men (no more ads seeking “rock stars” or “ninjas”). Focus on onboarding. Finally, employers of hidden workers should accept slightly higher onboarding costs, given that a typical “one size fits all” approach is often ineffective for hidden workers, who have their own needs, strengths, and experience gaps. Employers must also ensure that such workers are not ostracized, perhaps by involving more colleagues than just the hiring manager in onboarding, or by enlisting a senior leader to debunk myths that surround hidden workers. “The practices that help pave the way for re-entry for hidden workers [are] neither exorbitantly expensive nor extraordinary,” the researchers conclude. “They are commonsense practices that help attract any worker.” By improving practices, they argue, companies are better able to attract all types of talent quickly and intelligently. About the research: “ Hidden Workers: Untapped Talent ,” by Joseph B. Fuller et al. (Harvard Business School and Accenture, 2021)

Tap the Talent Your Hiring Algorithms Are Missing

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