Nowadays, companies face a more competitive and complex environment than ever before. To respond successfully to the challenges of the market, their most valuable resource is their human capital, understood as their collaborators’ cumulative knowledge, skills, experience, competences and talent.
Because the truth is that the value of an organization is based not only on its physical assets, but also—and especially—on the capabilities and potential of its personnel. It is the employees who, through their training, development, commitment and initiative, drive a company’s long-term growth and success.
The idea that a company’s biggest asset is its people is fairly recent, and constitutes a radical departure from the concepts of value and competitive advantage that were the norm only a few decades ago. From the beginning of the 20th century and up to the early 1980s, between 70% and 90% of a company’s value was associated with tangible assets like real estate and equipment. In the year 2000 there was a change: the value of intangible assets climbed to 65% and employees, formerly seen as mere cogs, became the drivers of corporate success.
In fact, the term “human resources”—which for a long time was used to refer to a company’s collaborators and, by extension, to the department in charge of managing personnel—has fallen into disuse, as it was deemed to objectify people, reducing them to mere material assets harnessed to achieve the company’s goals. As an alternative, terms like “talent management” and “human capital” have been proposed to underscore the importance of acknowledging and valuing employees as individuals, with unique skills, talents and contributions.
In this new scenario, it’s understandable that having the best collaborators is a key concern for any organization. As a result, the hiring process, once an important activity, has become a strategic consideration within companies.
Technology and Human Capital
Until the mid to late 1990s, the hiring process required candidates to appear in person at the offices of the company that offered the position. In the early 2000s, there was a major breakthrough with the arrival of digital platforms and social networks aimed at corporate use, business and employment. These tools made it possible to post full job descriptions and share them with thousands of potential employees on the Internet. One of the oldest and most successful is LinkedIn.
Between 2010 and 2015, artificial intelligence (AI) reached the talent management sector. These new instruments can carry out tasks and make decisions that normally require human intelligence. Some of its potential advantages include the capacity to identify, attract, select, evaluate and interview potential candidates, together with the ability to coordinate interviews more effectively.
Why is AI so important? Because this is fundamentally a big-data problem. AI has the ability to process large volumes of information and make decisions far more quickly than humans can. Moreover, with the correct programming and data entry, many of these recruitment tools and systems can avoid the most common cognitive biases that affect the reliability and validity of human judgment in the hiring process.
How to Choose the Best Talent
Personnel selection is a field where AI-based tools can be very useful: they simplify the search for candidates, assess and manage applications and identify profiles that meet the selection criteria for a given post. They are mainly designed for companies that must process large numbers of applications.
Broadly speaking, the recruitment process consists of four stages, although the boundaries between them are not rigid. AI-powered systems can help at every stage:
→ Search. Modern organizations must fill available positions on a regular basis. Using AI can enhance their ability to find the right talent at the right time. How does it achieve this? The system advertises job opportunities through various channels (posts on social media, emails, text messages, etcetera) to achieve optimal reach and response according to the desired profile. In time, it learns to fine-tune not just the means of publication, but also the exact job description and writing style. In this way, the system adjusts the target audience for the job offer and helps to increase the number of applicants.
→ Interviews. One big advantage of AI at the interview stage is the use of digital assistants. These chatbots facilitate and improve the experience of the interview process by answering candidates’ questions or supplying information whenever it is requested.
→ Selection and offer. AI applications can help recruiters to make better hiring decisions by enabling them to compare applicants with the top-performing employees, create customized job offers and anticipate candidates’ behavior to predict how likely they are to accept the offer and remain in the role.
→ Onboarding. The onboarding process is fundamental to achieve permanence. According to one study, 40% of new employees resigns within the first year after being hired, but 75% of these contingencies could have been avoided if their onboarding had been handled more effectively. AI helps to minimize these risks by automating the delivery and receipt of the necessary documentation and tracking what information was actually read, with no need for human intervention. In addition, chatbots can recommend learning resources for new joiners, such as books and news articles or other content relevant to their position.
Highlights and Challenges of AI-Driven Technology
As we have seen, the use of AI-driven technologies in recruitment results in a competitive advantage, enabling a more efficient candidate search, informed decision-making and more seamless communication with applicants. However, as exciting as these new technologies might be, we should keep in mind that these are technological projects, and that their complexities must be understood in order to harness their full potential. Also, like any new technology, especially in its early days, AI can have both positive and negative outcomes. Here are some of its main features:
→ It increases processing speed. The biggest advantage of AI is its capacity to analyze and classify information much faster than human beings, which reduces the time spent manually assessing CVs.
→ It helps to eliminate biases and prejudice. As it is impossible to eliminate unconscious biases in human beings, AI-based tools for personnel selection can help us to overcome prejudice instead of perpetuating it.
One great advantage of algorithms is that they can be designed to be auditable. In this way, the source of the biases present in the data set used to train the system can be timely identified and corrected. To this end, those who work with this technology must input the correct data and train the systems with an awareness of diversity and equity.
Because while AI programs learn by finding patterns in data, they need human guidance to guarantee that the software does not draw erroneous conclusions. This could eventually lead to a more diverse and inclusive workplace.
→ It improves corporate image. By using AI systems in recruitment, companies can help candidates to perceive their brand as cutting edge. This results in more positive perceptions and also a higher likelihood that candidates will finish the application process.
→ High costs. Unless a company hires a large number of employees each year, which would make up for the cost of developing and implementing AI-based recruitment tools, hiring third-party recruiters is still more convenient.
→ It may endanger privacy. As AI systems gradually collect and process large amounts of applicants’ data, the risk of potential privacy violations or misuse increases. To avoid these contingencies, organizations must clearly disclose how they will use data during the hiring process and obtain candidates’ explicit consent. And, of course, data itself must be protected by means of security measures such as encryption, to avoid unauthorized access.
