As the global staffing shortage grinds on, corporate recruiters everywhere are relying on their online hiring platforms and automated systems to deliver the candidates they need. Too often, these tools will fail them, sidelining many qualified workers in the process.
The current labor market has exposed flaws in the hiring model that many employers have relied on for years. Where there were a near-record 10.4 million job openings in the United States in August, there were at the same time 8.4 million people unemployed and actively seeking work, according to government data.
There are numerous reasons for this labor market imbalance, which the COVID-19 pandemic has exacerbated, but several decades of misapplied HR automation have undoubtedly contributed. Hiring systems put in place to attract high volumes of applications have inadvertently created a blind spot that “hides” millions of capable and motivated workers.
Behind the statistics are the individual stories of the caregivers, veterans, older workers, previously incarcerated people, and others who determinedly look for work despite repeated (and often unexplained) rejections. Employers wind up missing out on needed skills and the bottom-line benefits of a workforce with diverse talents and life experiences. For those looking to get back into the workforce, the process can be distressing and discouraging, affecting their sense of self-worth and optimism. And, the longer an individual is out of work, the longer the odds of their getting back into a good job.
Harvard Business School’s Project on Managing the Future of Work, in collaboration with Accenture, surveyed “hidden workers” and business leaders in an effort to understand how such a broad range of individuals has been systematically excluded from consideration by conventional approaches to recruiting and tracking job applicants. In the US, this represents a substantial portion of the working-age population—more than 27 million people in 2020.
Our report, Hidden Workers: Untapped Talent (pdf), is the product of a two-year study involving a survey of 8,720 hidden workers (with “middle” and “high” skills) and 2,275 executives in the US, UK, and Germany.
Hidden workers have faced mounting challenges for decades, and the pandemic has made those obstacles even harder to overcome for the majority. Nonetheless, four in 10 told us their experience during the pandemic was on a par with their pre-COVID struggles.
Automating the hiring process allows firms to rapidly sort the large number of applications they receive for a typical job opening, but this efficiency comes at a cost. In filtering out all but those candidates who match exacting and expanding requirements, companies reject many experienced, reliable, and creative individuals. There may be gaps on their resumes or their years of experience may not precisely match the position they seek. Or they may lack a post-secondary degree or are not currently employed, studying, or training.
The use of automated hiring systems is pervasive. In 2019, 99 percent of Fortune 500 firms used applicant tracking software, according to job seeker platform Jobscan. More than half of firms with 50 to 999 employees also make heavy use of this type of filtering software, according to our research. Overall, roughly two-thirds of employers we surveyed in the US, UK, and Germany (63 percent) reported that they used a recruitment management system (RMS). A higher proportion (69 percent) of larger enterprises, with more than 1,000 workers, reported using an RMS. Crucially, more than 90 percent of employers we surveyed that used an RMS relied on it to make a first cut or rank potential middle-skills (94 percent) and high-skills (92 percent) applicants.
The talent risk to companies
Among the hidden workers we studied, only one in five made the first cut, but not for a lack of effort. The average person we surveyed:
- applied for 25 jobs over the previous five years;
- received one job offer and applied to 44 positions if they were unemployed long term;
- got fewer than two job offers for every 20 positions they sought if they lacked a four-year college degree or relevant experience.
Companies can ill afford to narrow their pool of legitimate candidates, given the persistence of critical skills gaps and the increasingly complex nature of work. The high rejection rate also discourages many individuals in their efforts to rejoin the workforce.
The majority of employers acknowledged that their hiring systems rejected potentially productive applicants, but change may be in the offing. Companies as varied as Amazon, Bank of America, Centrica, CVS, General Motors, Google, Ikea, McDonald’s, Microsoft, Siemens, Slack, UPS, and Verizon have had measures of success in thinking more broadly about who they hire and how they hire.
Overlooking hidden workers forces employers to leave positions open longer or choose from a smaller pool. Conversely, firms in our survey that hire from untapped talent pools were 36 percent less likely to experience shortages of talent and skills than companies that don’t hire from this population. Further, those firms that hire formerly hidden workers rated their performance “better or significantly better” in terms of attitude and work ethic, productivity, quality of work, employee engagement, attendance, and innovation. They also saw lower rates of voluntary turnover.
The bottom-line benefits are clear, but how can employers recalibrate to tap the talents of this varied group, and what are some common pitfalls? To connect with workers they’ve systematically overlooked, companies must:
• Rethink unrealistic, outmoded job descriptions. For middle-skills openings, 72 percent of employers surveyed acknowledged that they recycled existing descriptions. For high-skills positions, 38 percent said they used existing or slightly altered descriptions. Updating job descriptions more regularly to reflect the essential skills and experiences required to succeed in a position, while eliminating superfluous “nice to have” or dated qualifications, would help prevent otherwise competitive candidates being eliminated from consideration prematurely.
• Set filters with inclusivity in mind. ATS systems rely heavily on “negative” filters, such as “exclude candidates without college degrees” or “rank candidates who have not been employed for a six-month period,” to winnow the applicant pool. If they employed “affirmative” filters that identified applicants with the essential skills and experiences known to correlate with success in the role, employers would broaden their applicant pools.
• Highlight the value of hidden workers. Companies would also benefit from reframing their approach to hidden workers in terms of bottom-line business strategy, rather than corporate social responsibility. Employers can engage with their existing workforce to explain the rationale and business case.
• Target a subset of hidden workers with complementary experience. Given the variety of hidden workers, companies may choose to focus on those most compatible with their work. Health care organizations might consider recruiting caregivers, for example. This allows them to identify and address skills gaps common to a particular group and partner with nonprofits and social entrepreneurs that support those hidden workers.
After a company hires a hidden worker, they raise their odds of success if they:
• Tailor onboarding procedures and upskilling opportunities. The post-hiring transition is critical, and companies must keep hidden workers’ unique needs front of mind. By involving colleagues and managers of the new hires in the onboarding process, companies can ease the transition and increase the likelihood of success.
• Reconsider the “success” measures of hiring. The common practice is to focus on comparatively short-term metrics like the time and cost involved in filling job openings. More long-term—and arguably substantial—metrics include how long it takes new employees to get up to speed, how long they stay with the company, and their rates of promotion.
All of the foregoing is easier to achieve with the endorsement and active participation of senior leadership. Such sponsorship not only signals the organization’s commitment to hiring hidden workers, but also comes into play as challenges arise, as performance is measured, and ultimately, in seeing that the effort succeeds.
While the Hidden Worker study focused on workers and employers, the role of government is essential, from providing incentives for companies and skills providers to collaborate to adopting policies that encourage discouraged hidden workers to reengage with the labor market.
Since the report’s release, we have been encouraged by the response from employers, industry groups, policymakers, and other stakeholders. In particular, employers and providers of recruitment management and applicant tracking systems have expressed a remarkable willingness to adapt their systems to consider more applicants and address the tight labor market. There are also signs of a greater appreciation of the need to transition from credentials-based to skills-based hiring.
Employers that take steps to reach a broader spectrum of potential workers will alleviate their skills shortages, diversify their workforces, and become more competitive. Businesses also stand to boost productivity and good will with employees, customers, and policymakers. For hidden workers, the opportunity to reenter the workforce represents not only a path to economic security, but a greater measure of personal dignity.
For previously hidden workers, the opportunity to re-enter the workforce represents financial and personal progress. Instead of the stress and anxiety of navigating a hiring system that often fails to recognize their experience and circumstances, they can benefit from a process that focuses on their capabilities and potential.