This Week, In Recruiting - Issue 144

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Open Kitchen: What Happened In Recruiting in 2023 - Part Three

The final of a 3 part essay series reviewing the main trends in our industry in 2023. I've obviously missed a lot and inevitably mis-weighted what was included but these were the themes which resonated most with me when reviewing the discussions and content shared in the various brainfood channels. If you want to review Part One and Part Two, please do so in the links provided.

11. Legislation Comes to AI

European Union Artificial Intelligence Act and China's Interim Measures on the Management of Generative Artificial Intelligence Services, along with a diffuse set of AI governance laws at state level in the United States - including the most relevant to us, the Automated Employment Decision Tools act from New York - all became legally binding in 2023.

Obviously providers and operators of software deemed 'in scope' will need to scrutinise the minutiae of the law as it is locally interpreted but what is striking is generally how similar they are rather than distinct. Whilst we can be sure that each major jurisdiction is not directly referencing the other, it is clear that legislators are generally working from the same conventional positions and producing similar conventional guidances. All of this will be crystallised in case law but in the main we can already see the emerging contours of the AI governance landscape.

• (Overly?) Broad scope with wide and loose definitions over what constitutes 'artificial intelligence'. Given that software will progressing become more intelligent, scope of legislation today will widen as AI spreads across software tomorrow.
• Concern for AI Bias - no jurisdiction thinks that AI will 'solve' bias, but in fact is concerned that AI may exacerbate it. As such algorithms are likely to be audited, either by independent companies certified by authorities or via central government.
• Transparency in use of AI - communication to candidates where AI will be or has been used is already becoming default as vendors and operators anticipate legal obligations. Candidate consent for interview meta data is already in place for most interview intelligence software products.
• Recording and storage of anti-bias measures by operators of AI software, in anticipation of potential future audit; again another smart move employers should be undertaking today with a view of the inevitable legislative outcomes.
• Less clear - scoring or ranking of human candidates by AI, or AI as ultimate decision maker for yes / no, hire or fire.

For recruiters and HR professionals, we are going to need to invest more energy into AI compliance in 2024. This will be a drag on productivity / efficiency but it will also be essential work which TA can expand into - important to be important to your business in 2024.

12. Indeed Cost Per Application

2023 was bookended by two huge decisions by one of the big market movers in the industry, Indeed.com. At the beginning of the year, Indeed announced its major initiative, a change of pricing model from CPC to CPA - employers would now only pay based on number of applications rather than number of clicks on advert. Ostensibly, this meant further progression toward performance based model - employers would only pay for applications rather than duration or clicks - but it turned out to be a disastrously handled, with poor communication and an overly pushy mandatory shift, which forced advertisers to the new model.

Taking place in a year when job applicants surged across the board, this meant that advertisers were hit by unexpectedly large charges for jobs which previously cost a lot less. It was a PR disaster which resulted in mea culpa, a slowdown in roll out and lots of C-level messaging to the customer base

I interviewed GM Raj Mukherjee earlier this year and we covered some of the move to CPA midway through this interview.

Unfortunately, for Indeed, the year did not get better as advertisers did not like the increased and unpredictable costs of application, which did not always result in better outcomes. After all, too many applications that don't result in a hire is actually worse that few applications which produce the same outcome. 'AI Apply' also posed a theoretical threat to CPA which could be potentially ruinous, leading to Indeed to make the inevitable decision of rolling the idea back entirely, ending a year with a reversing of course on a disastrous and damaging experiment.

Where does this put CPA in general? It certainly sets the idea back, as advertisers now come to fear the volume of applicants rather than welcome it. It advances programmatic, which gives advertisers a chance to control budget and moderate applicant flow by simply setting an application limit before shut down.

13. European Pay Transparency Directive

It's been a big year for EU legislation ??

The EU Pay Transparency Directive became enforceable in 2023 and - subject to national interpretation - employers within the EU will have to do the following

• Disclose Salary Ranges internally to employees and externally to job candidates prior to or during interview. No more 'market rate' type conversations where candidates do not know the pay scale until the offer is made.
• Reporting obligation for employers with 100 employees of more. The legal requirement to produce these annual reports will no doubt trigger internal review of compensation practices to ensure gender pay gap is ameliorated. This is very good news for women employees in the EU, who can expect compensation uplift in 2024.
• Provide clear pathway for employees to seek restorative justice if compensation was found to be unequal due to gender. In other words, no longer possible for employers to obsfucate their way out of equalising compensation.
• Recruiters no longer able to ask about historical compensation from job candidates, this information cannot be collected as a method of calculating the compensation rate of the job. This will be a major cultural shift in recruiters behaviour.

The move toward salary transparency will be accelerated with this act and we can expect the trend to bleed into publication of salary on advert also. On a company level this also means that hiring manager discretion will soon become an anachronism - the pay for the job will be clear in advance of any candidate entering the funnel.

It's not all good news though.

Pay transparency will produce greater pay equity outcomes, but I should also lead to an overall suppressant effect on wage inflation, which is often dragged up by the competition to hire the top talent, who often have the greatest confidence and market leverage to negotiate a better deal. When individual negotiation disappears and hiring manager discretion is eliminated, pay will simply be calculated on the published benchmarks, which will prove more stable once they become transparent. More effort to EB, job design and company culture as USP, as pay becomes more equalised across industry and regions.

14. First Evidence of AI Impact on Jobs and Job Wages

When GAI first burst onto the scene, skeptics were quick to dismiss the potential impact of the technology, as a 'robot will never replace a human'. These skeptics proved right but wrong at the same time. Robots or AI did not directly replace individual workers, but they did reduce demand for workers at the level of the industry. In some sectors, AI generated options proved more efficient, with good-enough quality outputs (often times much better quality) and obviously cheaper, sometimes effectively free.

In 2023 we saw the first evidence of this effect from the gig working platforms, where graphic designers, copywriters and translators were the first to see a drop in requests for work, and then a strong downward pressure on rate, as competition between the human workers grew more intense. As this downward pressure in rate was also occurring in a high inflation environment, we can be sure that it is significant and likely permanent.

It is tough to see a long term future for knowledge work of this type, as AI progressively rolls out across every day platforms like Microsoft Office and Google Workspace. Moving up the value chain is the obvious move but this will not be possible for all, and even those who do make to design leaders, will see opportunities shrink as AI continues to eat the work.

Worth reviewing the two seminal pieces of research on which knowledge tasks are most highly exposed to AI - because this trend will not stop at designers and copywriters, it is merely the first category of knowledge work to be breached by the machine.

Obviously this is not fabulous news for us recruiters. We need growing teams and growing companies in order to supply our services, and as employers become increasingly familiar with ever improving AI, so the demand for human workers will become less urgent. We are heading for a future of smaller organisations, less recruitment and therefore, less recruiters. Our urgency is now to expand our scope - talent development, employee experience, internal mobility. If these are not part of your remit in 2023, you might want to make your way toward them in 2024.

15. Rise of AI-enabled Candidates

The very first demonstrations of the possibilities of generative AI were jocular experiments by software engineers targeted at getting through job interviews. It was inevitable that as these technologies improved that they would actually be used for real.

The surge of job applicants in 2023 might be mainly down to uncertain market conditions, but we would be wise not to under estimate the impact of artificial intelligence in increasing the 'apply rate' of individual job seekers. An entire eco-system of job candidate centred apps have emerged which variously help candidates customise resumes, answer application form questions, automate job applications and even optimise interview performance.

You know things get serious when aggregators emerge to improve the search of AI Apply tools ??.

We can dispute the significance of the issue today but surely we cannot deny the rate of the innovation in AI, the appetite for AI use by job candidates and the likelihood that AI-enabled candidates will out-apply and out-complete human only job applicants. Awareness is increasing but few of us have policy on this, much less any attempt to re-engineer the hiring process to better accommodate the AI-enabled reality of today.

We have three broad options:

• Deter - explicitly state to candidates that use of AI is not allowed in application, at the risk of damage to employer branding, as well as being vulnerable to accusations of incoherence, if AI use in job is actually allowed.
• Detect - no explicit communication but the quiet elimination of job applications which are determined to be using AI.
• Design - redesign of hiring process to be 'AI proof' or redesign of process to be 'AI-aware'.

I suspect the only viable option is the latter, but it will involve the most work. Good news then for us recruiters, as we may wish to embrace the fact that there is an important internal job for us to do.

OK, that's it for 2023 Year in Review. Hope you enjoyed this essay series. What did I miss? Let me know in comments below

Now, for the last time this year, out of the kitchen, onto the lounge...??

What's in the News?

K2 Partnering Solutions acquire Prompt Recruit

Congratulations to Chris Collins for exit here, and for being appointed CTO of K2. 2023 has been the year of HR tech M&A and I suspect we will see more of the same in 2024. Read more about this deal here.

If you have any news which you think the wider market needs to know about, put into comments below on this thread.

What's Going On?

Big List of Recruiter Events to Attend in 2024

I have updated the Big List of Recruiting and HR Events to Attend in 2024 - there are 60 events up there, so make sure you check it out and figure out which ones you want to attend. In the meantime, I notice the events are super Anglo-centric (no surprise since everything I do is in English!) but it would be great to globalise this and have a full view of what is happening for 2024. Add any events that are missing to the bottom of this list folks!

Brainfood Live On Air - Ep238 - 2023 Year in Review: Labour Market, Economics and Jobs, Friday 22nd Dec, 2pm GMT

We're with Emma Mirrington, Founder (The Firm), Neil Carberry, MD (Recruitment and Employers Confederation), Dr Sarah Ali, VP of Economic Forecasting (Indiana Economic Development Corporation), Doeke Geertsma, CEO (WeAreKeen) & Paul Daley, Partner (Oconic). Friday 22nd Dec, 2pm GMT - register here

The SME Advantage: Mastering Onboarding for Growth, Jan 16th, 2pm GMT

Delighted to start Season 2 with TribePad Gro - our series where we refocus the conversation in the SMB market, where the vast majority of recruiters actually work as solo recruiters. This week we kick off with a master class on onboarding - how to do this when you are only one recruiter responsibilities for everything else? With Nikki Tarr, Head of Talent (ex-ClearCourse), Sofia Broberger, Recruiter (ex-Toca Boca) and Arielle Kilroy, CEO of DadoHR. Register here

5 Talent Acquisition Trends That Will Define 2024, Jan 16th 5pm GMT

Change of pace for me as I join our friends Pillar on this kick off webinar for 2024. Lets talk about the 5 defining trends for TA / HR - register here

How to Recruit a Python Developer, Thu 25th Jan, 10am GMT

This is one of the best ideas I've been involved with for a long time - getting engineer + tech recruiter into the same conversation in an attempt to demystify the behaviours from either side. Delighted to be hosting this next episode with my friend Rudi Bauer (MD, WeAreDevelopers), with experts Steve Coochin, (Engineer, Lumigo) and Alexandra Gyetvai (Talent Acquisition Consultant, CODE). Register here

If you have an event, webinar or podcast going on next week and want it featured on next week's newsletter,?comment below?with the link and event details. Don't forget to at mention me so that I see it

Who's Hiring?

Talent Associate, Zinc, London, UK

Talent Acquisition Manager (Business), Qonto, Germany Remote

People Operations Specialist, Blinkist, Berlin, Germany

Senior Recruiter, Western Union, Vienna, Austria

If you are hiring for recruiters or HR people, you are welcome to post jobs FOR FREE on the Brainfood Jobs Job Board. Use coupon code: BTCFREE for 100% discount.

Whose Available?

That's 400 members of the community. If you are a recruiter or HR person that is looking for work, join the Brainfood Talent Collective here. If you are an employer hiring recruiters, apply for a company account here, and use the code: BTCFREE to freely post jobs and search the db.

Who's Moving?

Shannon Harrington joins Balderton Capital as Portfolio Network and Talent Advisor. The rise of the portfolio recruiter in VC was one of the most welcome developments over the past decade - not only a sign of VC understanding the importance of talent to the success of their investments, but also of significant investment actually taking place. The number of recruiters doing this work - I think is a good signal of the investment posture of the VC markets.

Promotions to celebrate - Rob Long continues is peripatetic journey across the functions at Workable by moving to Chief Revenue Officer. Fantastic move Rob, look forward to seeing what you get up to here! Lucie Royal goes up Associate People Partner at Heathrow Airports, and Esther Kang is promoted is HRBP at LivsMed - congratulations all!

If you have made a senior exec appointment to your business, and feel the wider community needs to know about it, comment below with the details and see it featured in next weeks issue.

What Are You Doing?

Hopefully you have completed your Xmas shopping by now!

If you have made a senior exec appointment to your business, and feel the wider community needs to know about it, comment below with the details and see it featured in next weeks issue.

End Notes

Last TWIR of the year, because I doubt anyone is going to read anything next week, when we should all be away from computers, or at least, away from LinkedIn!

I want to take this opportunity to thank you all for reading along on this Monday notes - I've enjoyed writing them and will continue to do so if everyone is keen for me to keep doing so. Have a great holiday break and see you in the New Year

Hung

Hung Lee is the curator of Recruiting Brainfood, and now This Week In Recruiting. Subscribe to both if you are into recruiting or HR or just interested in world of work.