Despite massive advances in technology and I/O psychology over the last 20 years, the recruiting process has stubbornly stuck with norms established nearly 100 years ago.
There is a massive body of scientific evidence that debunks the effectiveness of resume-based screening. At the same time, narrow definitions of talent and inflexible thinking make it impossible for many employers to recruit the skills they need for their business. But are we finally about to see things change? Two potential catalysts are mass access to Gen AI, which threatens to break recruitment systems as employers become overwhelmed by automated applications and the rise of skills-based hiring being used to solve talent challenges.
My guest this week is Caitlin MacGregor, CEO of Plum. Caitlin is on a mission to make recruiting fairer and more effective and help companies discover the true potential of their employees. Recruiting is changing, and this is a must-listen interview for anyone wanting to understand the direction the change is going in.
In the interview, we discuss:
• Predicting long-term performance and retention
• How AI is amplifying the ineffectiveness of the recruiting process
• Mobility, retention and alternative pools of talent
• Challenging long-established norms
• Improving productivity by improving screening
• Connecting people to opportunities based on their strengths
• Democratising access to assessment
• Making data transparent and easy to understand
• How can employers accelerate their skills-based evolution?
• Understanding your bench
• The long-term future of recruiting
• How much change can happen in 2024?
Listen to this podcast on Apple Podcasts.
Transcription:
Matt: Support for this podcast comes from Plum. Plum believes that when people flourish, business thrives. With its unmatched scalability, this powerful talent assessment tool uses science backed insights to measure and match human potential to job needs, enhancing talent decisions across the employee journey from hire to retire. To learn more, visit their website at plum.io. That’s Plum dot IO.
[Recruiting Future Podcast theme]
Matt: Hi there. This is Matt Alder. Welcome to Episode 581 of the Recruiting Future podcast. Despite massive advances in technology and I/O psychology over the last 20 years, the recruiting process has stubbornly stuck with norms established nearly 100 years ago.
There is a massive body of scientific evidence that debunks the effectiveness of resume-based screening. At the same time, narrow definitions of talent and inflexible thinking make it impossible for many employers to recruit the skills they need for their business. But are we finally about to see things change? Two potential catalysts are mass access to Gen AI, which threatens to break recruitment systems as employers become overwhelmed by automated applications and the rise of skills-based hiring being used to solve talent challenges.
My guest this week is Caitlin MacGregor, CEO of Plum. Caitlin is on a mission to make recruiting fairer and more effective and help companies discover the true potential of their employees. Recruiting is changing, and this is a must-listen interview for anyone wanting to understand the direction the change is going in.
Hi, Caitlin, and welcome to the podcast.
Caitlin: Thank you for having me. I’m excited to be here.
Matt: An absolute pleasure to have you on the show. Please could you introduce yourself and tell everyone what you do?
Caitlin: So my name is Caitlin McGregor. I’m the CEO and co-founder of Plum. We’re a revolutionary platform that helps ensure that when people flourish, business thrives. So we align people’s internal, innate talents. They’re things that get them up in the morning, excited about the work they’re going to do and make them feel fulfilled. At the end of the day, we align them to jobs that require those behaviors in order to outperform their peers and stay longer.
Matt: Fantastic stuff. And before we get into the detail, just tell us a little bit about your backstory, how you got to do what you do now.
Caitlin: So I started two businesses for other people before starting my own. And at the second business, I was the US president of an educational software company that helps students with learning disabilities. I went to make my first hire. I was told that if I screwed it up, be a loss of $300,000. So I ended up using a psychometric assessment on everybody that applied for the job. And over almost three years, I kept screening in these incredible diamonds in the rough. People I just never would have interviewed, let alone hired, unless I had this data on their behaviors and how well of a fit they would be to what I needed them to do in the role.
I saw an opportunity to really democratize access to this data that’s four times more accurate than a resume at predicting on the job success. And make sure that every single candidate and every single employee, we truly understood the human behind the work and we could match them into roles where they’re going to be happy, fulfilled and thrive. So I spent the last 11 years building this enterprise global platform that understands every person in every role and how well they match together to predict on the job performance and long-term retention. It’s really been about taking best in class industrial organizational psychology and marrying it with technology to get it out of the hands of consultants and get it into every talent decision across the entire employee lifecycle and really benefiting the person. So like I said, I really want to make sure that people are in jobs where they are going to flourish. And then as an outcome of that, companies then can thrive.
Matt: This is an area that I’m absolutely fascinated by, because like you, when I was recruiting for my team in the past, I always looked beyond the resume and managed to get some fantastic people in by using other data sets to do that. So it’s been fascinating to see how the science and the technology developed over the last few years.
One of the things that’s come up a lot in the last six months has been the way that AI, particularly AI in the hands of candidates, meaning, that they can generate their resumes using AI, they can apply to multiple jobs using AI. How that really has showed up what we already knew that the recruiting process is not fit for purpose anymore? What’s your view on that and what’s the solution?
Caitlin: So I don’t know, if you’ve come across this article that Wired had last month talking about a new app called LazyApply, where it can apply for 5,000 jobs in the job seeker’s sleep. So the job seeker goes to bed and wakes up the next day, they’ve been applied to 5,000 different jobs. So it ends up being a scenario where you have bots talking to bots. So on the candidate side, they can upload their cover letter and resume into ChatGPT and say, “This is the job I want to apply to. Give me the perfect cover letter and resume, so that I get through all of the ATS keywords screening.”
And then you’ve got on the employer side, you have this technology where basically it’s scraping a bag of keywords from that resume and comparing it to a bunch of keywords from the job description and then filtering who gets moved forward and ranking them. So it ends up being this gaming system where one bot is trying to out game the other bot. And the problem is that it’s a lose-lose situation and it really has made the current way of screening completely bankrupt, and it’s only going to get worse over time. And so really this is an opportunity to take a step back and really look at what are the bare minimum requirements that we need from somebody to get into that structured interview. Because that’s really where I think across the industry, we can agree that if you do a structured interview really well, that’s where you’re going to ensure that you’re hiring great talent.
So what’s broken is who’s getting into that structured interview. And generative AI is really just amplifying how broken the system already was in terms of deciding who gets into that structured interview. It’s just been accelerated and really shows how bankrupt that system is. So it’s an opportunity for us to relook and reimagine what should that process be, what are those best practices, what actually predicts long term success on the job and long-term performance and long-term retention? Because it’s not the keywords that we’ve been using over the last 20 plus years through resume filters to get people into structured interviews. So it’s an opportunity to go back to what actually matters, what data is predictive, and how to ensure we’re getting the right people into those structured interviews where the humans are taking over and really doing the evaluation in those structured interviews if it’s the right person.
Matt: I think the interesting thing here is just how quickly this is happening. So we already know examples of it happening. This is going to creep up on every company in the world in a matter of months, isn’t it?
Caitlin: It’s happening right now. The companies that we work with, which are often headquartered in North America, but have presence all around the world, they are just drowning in the number of people that are applying. And yet, they feel like they can’t find enough skilled talent to fill all their open jobs. There’s a real business impact. Banks can’t open branches. They may be able to buy the real estate and build the building, but they don’t have the humans to go and open it up. There are 3.5 unfilled cybersecurity jobs that exist in the world, and yet cybersecurity threats are just increasing by the minute. And so there’s real problems where a lot of the traditional pools of talent companies have overfished in those talent supplies. So they just can’t find enough of the right people. But yet at the same time, they’re drowning by all of the spam that they’re getting. So they really feel stuck and lost.
And then at the same time, it’s not just about who’s applying into the company. Most companies are underutilizing the resources they already have. They don’t know how to hold on to the people they already have. They don’t know how to see retention and internal mobility as truly part of talent acquisition and part of the solution of, it’s not just about who you’re bringing in, it’s also how are you holding on to the people that you do have and providing upskilling and internal mobility and succession planning opportunities for the people internally.
And so again, I think it’s just amplifying. It’s putting a magnifying glass on already a broken system, and it gives us the opportunity to finally say, “Hey, it’s a strategic imperative that we fix this and redesign it from scratch.” Why did we put resumes out there in the first place over 100 years ago? Why did we make university and college degrees a requirement for most jobs? A lot of those processes were put in place in a totally different time for different reasons than exist today. So now we have the opportunity to reimagine all of this.
Matt: I couldn’t agree with you more. I think that where we are right now is about challenging things that seem like the norms. But actually, when you look, they’ve been in place for a very long time, the reasons why they exist don’t exist anymore. There’s so much rethinking that needs to go on. Picking up on your point about retention there, so new ways of doing recruiting, new ways of assessing people, you mentioned there the link to retention. What about productivity? Is that something that can be affected directly by thinking about recruiting differently?
Caitlin: Absolutely. So I think it goes back to what are we trying to do when we’re screening somebody into that structured interview, like, what’s the most important thing? Is it that they know that coding language? Is it that they have 10 years of experience? At the end of the day, what are we really looking at? Well, when you look at productivity, employees that are connected to opportunities based on their strengths see a 322% increase in productivity. People that are connected to opportunities based on their strengths stay often three years longer.
So when we’re thinking about performance and productivity, it’s not based on- If you look at the data, if you look at the science, if you look at the entire field of industrial organizational psychology in the last consistent 20, 30 years of research, performance and productivity comes not from education and not from past experience. It’s about, is that person intrinsically motivated to do a good job? If you place somebody that is highly innovative in a job where they get to think outside the box on a daily basis and reimagine how to do things in a new way, they’re going to be motivated to get out of bed in the morning because they’re excited about the work they’re going to do. When they come up with new ideas, it’s going to feel effortless and it’s going to feel enjoyable.
They’re going to want to do a really great job, it’s going to feel easy, they’re going to outperform their peers, and then they’re going to want to stay in that job. They don’t want to go to that job where they’re a cog in a machine, and they don’t get to meaningfully contribute new ideas. So really tapping into as generative AI automates more and more and more of the tasks around us, what’s left that you truly need a human to contribute towards. And that’s not about what they learned in school, that’s not about what they did 10 years ago. It’s not about the Ruby on Rails language that they had six years ago that nobody cares about in today. Nobody wants to hire a Ruby on Rails developer anymore. It’s about what is transferable things like, are they excited to come up with out of the box ideas, or are they the person that loves to create processes and just execute one to do list item after the next, or do they really want to work with a whole bunch of other people and collaborate in a team and get things done as a group?
So it’s really connecting that to the job that allows for you to then have people that are effortlessly outperforming their peers. That’s where productivity comes from. It’s such a different way of thinking about it than what you’re seeing in the corporate world right now, where, according to Forbes, half of all business leaders believe that when employees are working out of sight, they don’t work as hard. And almost 50% of business leaders are installing monitoring software. Like, there is no trust right now that people are even doing the work. So you’ve got to go, “Okay, how can we trust that people are doing the work? Well, put them in jobs where they’re going to naturally excel. That’s how.
Matt: It seems so obvious, doesn’t it?
Caitlin: It’s really amazing, because all of us that have chosen to be in this field, we often chose it because we care about people being happy, fulfilled and thriving in their careers. We care about the people. But somehow, we’ve lost the plot by getting stuck sometimes in the status quo of how things have been done and feeling pressured to toe that party line in terms of how things are going to be done. Like, the number of people that I have been at speaking engagements with, where they’re talking about how important it is to return to the office and then I get them aside privately and go, “Okay, but do you like being back in the office five days a week? Do you feel that you are more productive that way? Is this something you really believe in?” Between the lines, they’re like, “Well—” This is what I have to say. I have to say this because this is what is being told to me that I need to say. It’s not actually reevaluating. What are the motivations? Is there another way of solving this in a better way that is going to set people up for greater success and long-term fulfillment?
Matt: One of the things I love about this whole area of recruiting is it’s probably the only part of what we do that’s actually based on genuine science. You mentioned 20 years of industrial psychology, science and all that stuff. Has the science evolved over the last few years? How does it work? Tell us a little bit more about the science behind all of this.
Caitlin: Yeah. I think the biggest thing is that a lot of people, when they think about industrial organizational psychology, the first thing they think about are things like Myers-Briggs or DiSC and personality assessments. The reality is is that those were developed in the Second World War or a little bit before, a little bit after, but they were designed at a completely different time where we were trying to figure out how to bring the men back into the workforce where women had taken their jobs and how to integrate. That’s a very long time ago with a very different set of purposes and the academic rigor. There was no peer review, there was no panel of third-party people to validate it. Those assessments are incredibly flawed and outdated. And so it’s really hard when a lot of people anchor the criticisms with psychometric assessments to things that were designed in the 40s, give or take.
And so it’s frustrating because most people aren’t up to date with what’s happened in the last 20, 30 years. There’s a huge evolution in the science where across the board, globally, there are gold standards, best practices that have been agreed upon by the scientific community with enormous amount of evidence to demonstrate. For example, that university degrees and college degrees, they are not predictive of on the job performance. If you need a certain credential based on regulatory requirements, absolutely throw that in. That’s a real requirement. But Scotiabank, one of our customers, they completely eliminated resumes for all campus hires, but then at every level in the organization, they no longer require a college or university degree. It’s been completely removed. The VP of talent acquisition doesn’t have a university degree and never would have been given that opportunity if that had been a hard requirement, and yet is in charge of a 300-person talent acquisition team.
So a lot of people haven’t looked at the research and recognized that this is not how most people imagine it. This is not your Myers-Briggs. There’s real, consistent evidence. The problem is that 20 years ago, the only way to access this really up modern way of assessing for personality and cognitive ability was gated through consultants. And so it was very, very expensive and labor intensive. It was meant to be the first black box where it was so convoluted and it was meant to feel like it wasn’t accessible, and that you had to have a PhD to understand it, and therefore, you had to pay consultants to use their special decoder ring to interpret the results.
It was meant to be that way 20, 30 years ago, because the business model was service businesses, pay consultants boatloads of money, so that they can then imbue their knowledge to you. Well, what’s different about 2023 is that in the last decade, it’s all been about how do we democratize access to this data? How do we make sure that people have a positive user experience that candidates and employees really benefit from the process that they own their own data, so that every time that they go and apply somewhere else, they’re not retaking the assessment. There’s a completely way to redesign, making this data usable and transparent and easy to understand, and completely cutting out those consultants that old legacy companies didn’t want to do. That was their bread and butter. But newer companies that are committed to the science, we have found ways of making sure that this is really about the individual benefiting from it, and you don’t need those gating factors. And that there’s, like I said, a lot of evidence throughout the industry to support these best practices.
That’s what people need to recognize is that they need to get up to date because there’s a lot of bias in recruitment against assessments, but they’re not looking at it based on the up-to-date science and the modern ways of providing a positive candidate experience and a positive experience for hiring managers. 93% of hiring managers say that they would rehire their Plum recommended match again. This is a way of actually getting alignment with those hiring managers really bringing objective data into the process and really solving for these really complex problems where we’re now facing that are only getting worse with generative AI.
Matt: Everything we’ve talked about really points towards this evolution towards employers becoming skills-based organizations. Now, it’s something that we’ve talked a lot about on the podcast this year. It’s very difficult to find anyone who actually disagrees with it, [chuckles] although I’m sure there are many people out there. What does come up though is that it takes a very long time. It’s very, very difficult, and people are unsure about what steps to make to move in that direction. How long does it take, and also, but what should employers be doing right now to really shift the way that they think about skills in their organization?
Caitlin: Yeah. I’ve seen three different approaches to becoming skills-based organizations for those that are actually taking the plunge. I would say there’s a fourth approach, which is just wait and see and not move forward. But the three ways that I’m seeing companies move forward is some of them are saying, “Well, we can’t even start this journey unless we rip out and replace our core HR system.” So companies that are making the evolution because they haven’t yet into using workday or success factors or one of the competitors being like, “Well, we just need to do a digital transformation of making sure that we have the technology foundation for whatever we do in the future.” And the problem that I see with that is that, that may be part of the solution, but a lot of the companies are using it as a gating factor. We’re not even going to take the step towards being a skills-based organization until we’ve replaced this core technology.
What happens is that those implementations aren’t 12 months. They end up being 18 months or two years or even sometimes three years. And so what that means is that everything is stalled in the organization until this implementation of their core HRS system is replaced. It’s really demoralizing for the team that’s working on it, it’s really demoralizing for the company because it feels like the world is changing. We’ve seen so much since March, this massive change to the world because of generative AI, and yet the company feels like it’s completely stalled. And so it’s not a great place to get an ROI. Maybe part of the equation, absolutely, but it’s too long of a process to make it the gating factor for everything else.
The second thing that I see is that organizations are over-rotating on skills. In that, they’re thinking about, we need to come up with a complete skills ontology that represents every single role at our organization. We need to have a whole bunch of keywords on every single employee. And the problem is that, in practice, a lot of the times when we were at HR tech walking around on the showroom floor, a lot of vendors would say that they’re seeing about 40% of employees actually filling out those profiles and coming back once a year. So that means you don’t actually have the data on the other 60%. The data is changing. The relevancy of that data is changing so quickly that it’s almost out of date or significantly out of date, even a year later. So it’s all this work with very little ROI, because the shelf life of skills is also diminishing so quickly.
So if you look at the World Economic Forum, they talked about the shelf life of skills is five years. Meaning, that five years from now, 50% of the skills you have are irrelevant. With hard skills, it’s two and a half years. I laugh because six years ago, everybody wanted to hire a Ruby on Rails developer. I mean, everyone. You could not find enough of them. You couldn’t pay them enough money. It was like a really big problem. And now nobody cares because nobody’s using Ruby on Rails. It’s completely extinct as a language unless you’re keeping an old piece of software on life support. And so by the time you get all of these skills in place, so many of them are no longer relevant to the job.
So the third option in what we’re seeing our customers doing is that while they’re working on these other things, because they all are piece of the puzzle, they are getting an ROI within 90 days. They are able to honor their commitment to becoming a skills-based organization and see tangible ROI in just 90 days. It starts with starting to understand your bench, who are your employees, who are your candidates and how can you start to understand how they match to your needs as your organization is evolving? So it may be that we’re seeing all these different starting points where maybe you’ve just acquired a company and you don’t even understand the talent you have. So as you’re building out your open roles, if you’re building out your future strategy, you don’t even know who you have.
So you’re now going to use this to get the data on every employee, or you have a commitment to employee development and you’re wanting to start with your high potential, so that you’re showing them that you’re committed to really supporting them. Well, we have found ever that has 170,000 employees across 40 countries, they rolled out with their first 5,000 high potential employees to complete their plumb profile to help them personalize their employee development and really drive their own employee development as individuals. So there could be Scotiabank that eliminated resumes for all their campus hires, so that they could increase their hiring of underrepresented minorities to 60% and double retention.
So every company has a different starting point, but this one set of data is helping them instantly understand those transferable soft skills that all of their employees and candidates have. And then the key behavioral indicators, the KBIs for every role, which behaviors predict success and retention, they’re able to start quantifying that in just eight minutes per role. And all of a sudden, they now have data they’ve never had, and now they’ve moved to becoming a skills-based organization instantly, while they’re doing all the other pieces of the puzzle too.
Matt: So final question. I’m going to split this into two parts, actually. So the first part of this is let’s look towards the long-term future. So how do you think this is going to evolve? What are things going to look like in five years’ time? Or actually, maybe more accurately, what do you hope things will look like in five years’ time?
Caitlin: I really hope that what we’ve been doing for the last 50 years when it comes to recruitment, I really hope it looks differently. I think a lot of the progress that we’ve made in the last 20 years from a recruitment standpoint has just been making incremental improvements on an existing pattern. It’s just been accelerating a broken process. I hope that the process really looks differently where we’re understanding the human first and how to best set them up for success in an organization. We’re really understanding people, not from the old method of, “Here’s a paycheck, your responsibility to show up 09:00 to 05:00 and do your work in exchange for that paycheck.” But we’re really saying, “How can we maximize people, so that they’re really contributing and really flourishing and wanting to stay and contribute towards the growth of the company?” Because they’re bought into the process and they’re part of it and they’re set up for success, and it truly is more of a win-win relationship.
I think to move to that, it’s going to look very, very different the old processes in place. So I hope five years from now, where really it’s starting with the human, what makes them uniquely human, what do we need them as humans to do that the technology can’t do, and that we’re evaluating them based on the fit to what behaviors we actually need for them, and recognizing that every person has a different role that they will be successful in. And so selecting people and bringing them into that structured interview is about there’s probably a better role somewhere else for them. How are we getting them into the right interviews for their sake as well as ours, and really changing the process to recognize this new power dynamic where people have more choice than ever. They don’t have to just go and work in the factory in their city. They don’t have to move across country to get a job anymore. There’s all of this real change in power dynamics. That means that we need to also change the way that we are evaluating and bringing people in. I hope five years from now, it’s not just an acceleration of broken patterns like we’ve seen in the last 10, 20 years.
Matt: And the second part of the question. How far can we get in a year? What do you think is going to happen next year? How far on this journey can we get in the next 12 months?
Caitlin: I think this is a real opportunity, a real strategic opportunity, for boards and sea level executives to say, what kind of company do you want to be? And to declare that message to the public, to their employees, to their shareholders, to their candidates that they’re trying to attract and differentiate from is that, are they going to try to go backwards, pre-pandemic, and shove everybody back into that model that they thought worked? And so they’re trying to go back to something that worked before, or are they saying, “You know what, we live in a very different world, post-Covid, post generative AI, and we are preparing for being leaders of that world by really capitalizing on what is unique about humans and complementing them with technology to remove the administrative tasks?”
If we don’t need humans to do those administrative tasks and to be able to do some of the repetitive nature of work, then what’s left? What, as an organization, are we going to value from our people? What do we actually need from our people? So I think there’s an opportunity in the next year to put a flag in the sand and say, what kind of employer are you going to be? Are you going to be a leader who is brave and courageous to do things differently and design them with a clean slate to say, how do we best meet our outcomes, or are you going to be scared and try to go back to how things used to be?
Matt: Caitlin, thank you very much for talking to me.
Caitlin: Thank you so much for having me.
Matt: My thanks to Caitlin. You can subscribe to this podcast in Apple Podcasts, on Spotify, or via your podcasting app of choice. Please also follow the show on Instagram. You can find us by searching for @recruitingfuture. You can search all the past episodes at recruitingfuture.com. On that site, you can also subscribe to our monthly newsletter, Recruiting Future Feast, and get the inside track about everything that’s coming up on the show. Thanks very much for listening. I’ll be back next time, and I hope you’ll join me.
