Why companies hunt for talent on digital platforms, not in resume Piles

When it comes to the job hunt, many of us have a traditional view of what it takes to find a new position: A worker searches for available openings, sends in a resume, and waits for an interview.

Much of academic research assumes that’s the way people find jobs, too. From mathematical models to field studies, researchers tend to think that workers submit resumes to open positions. In fact, scholars have learned a lot about discrimination in labor markets by sending resumes to job postings to see who gets called back and who doesn’t.

As Harvard Business School Assistant Professor Rembrand Koning was talking about such studies with colleagues Ines Black and Sharique Hasan from Duke University’s Fuqua School of Business, however, something about that model didn’t seem right.

“It really didn’t jibe with how a lot of people seem to be getting jobs today,” says Koning, a member of the Strategy Unit. “They’re not sending resumes in. They’re being recruited, often through online platforms like LinkedIn.”

Indeed, the rise of digital platforms now enables firms and recruiters to source potential candidates anywhere in the world in a matter of minutes. Instead of waiting for a worker to apply, firms can now hop on a platform and pick out talent they think would be an especially good fit for their needs.

When Koning and his colleagues set out to learn how many workers were being recruited versus applying for jobs directly, statistics from the 1991 General Social Survey were the best they could find. The data showed only 4 percent of workers were recruited to their current jobs, while another third found jobs through referrals, and the lion’s share—some 60 percent—applied directly. Those figures seemed wildly out of date.

“We said, ‘Hey, no one’s measured this recently, so why don’t we do our own nationally representative survey?” The result is a new working paper, Hunting for Talent: Firm-Driven Labor Market Search in America, that quantifies the steep increase in outbound recruiting by firms largely at the expense of incoming resumes.

The rise of recruiting
The researchers contracted the national polling company CivicScience to survey more than 13,000 workers from a variety of industries across the country. They found that nearly 18 percent of workers were recruited to their positions by a firm or an independent headhunter working on its behalf—more than a fourfold increase over the last 30 years. That number topped 20 percent in some industries, such as in technology, and more than 25 percent in some locations, such as Silicon Valley.

“We were expecting it to go up, but not by that much,” Koning says. What’s more, the number of workers finding their jobs through referrals stayed constant at about a third, meaning these recruited workers were coming at the expense of direct applicants. “People are still using their personal networks to find jobs, but now the firm is doing much more of the searching.”

Koning and his co-authors attribute this change to the rise in digital labor platforms over the past decades, starting with Monster.com in the 1990s, and progressing through LinkedIn in the 2000s, and CareerBuilder and ZipRecruiter in the 2010s. “It’s really taken 30 years to see these effects,” he says.

The advantages are obvious for companies, which previously relied on their local networks to find viable candidates. Now, with a few online searches, they can identify ideal potential employees around the world.

“If I’m a company, I can just say, ‘Show me everybody who knows how to program Python, has five years of experience, and went to these colleges,’ and you have a set of everybody you could potentially hire,” Koning says.

Recruiting can be particularly useful, he adds, for smaller companies and startups that might not see the same flood of resumes as Google or Facebook but nevertheless have very specific qualifications in the workers they are seeking to hire.

“If I’m a small data science startup, I may need someone who knows a particular type of artificial intelligence framework, and now I can go out and find everyone who has the skill listed on a platform like GitHub,” Koning says.

Workers can also benefit from the rise in recruiting. They might receive requests from companies that weren’t on their radars but might provide them with the perfect job fit. On the other hand, candidates, particularly less experienced ones, may be competing with a whole set of workers beyond those who applied directly. And, just like the resume studies that showed discrimination, this approach might cause firms to overlook female or Black candidates.

Sharpening the talent search
Koning and his colleagues also find that companies are becoming more sophisticated about identifying talent. By analyzing the skills that US firms want from prospective human resource workers, the researchers discovered that companies are increasingly hiring HR professionals who have recruiting experience and know how to use social media platforms to proactively seek out talent. This is especially true for technology-focused firms.

This trend doesn’t seem to be slowing. Digital employment platforms have emerged that allow companies to pinpoint potential recruits in specific industries, such as construction and retail. Despite the allure of these filtering and targeting features, Koning advises companies to initially keep searches “broad and fuzzy” and avoid fixating too quickly on specific attributes.

“If you are saying, we only want to look at MBAs from Harvard or Duke, you are suddenly excluding promising talent from your search who may have sent in resumes and been exciting candidates,” Koning says. “I would recommend firms cast a really wide net and be willing to reach out to candidates who look different in terms of what you think might be important factors. Especially with the rise of remote work, firms should consider ‘hunting for talent’ with backgrounds and in locations they might have never considered even just a few years ago.”

[This article was provided with permission from Harvard Business School Working Knowledge.]