Amid a recent spate of high-profile layoffs and a recognition many companies rushed to hire to fill pandemic-driven business needs, organizations are now refocusing on quality of hiring — and the use of artificial intelligence (AI) to aid in those efforts.

From 35% to 45% of companies are expected to use AI-based talent acquisition software and services to help select and interview job prospects in the coming year, according to two recent studies.

Nearly three in four organizations boosted their purchases of talent acquisition technology in 2022 and 70% plan to continue investing this year — even if a recession arrives — according to a survey by online job recruitment service Modern Hire.

More recently, AI has been applied to the task of creating job requisitions and similar materials shared by the employer that are gender and ethnicity neutral; the goal is to eliminate as much human bias as possible in hiring and increase diversity, equity and inclusion (DEI).

The shift comes as the US unemployment rate dropped to 3.5% last month — and just 1.8% in the tech sector — making it hard for organizations to recruit top talent even as many companies lay off workers hired in haste during the COVID-19 pandemic. Many organizations rushed to bring in employees to address business goals such as digitization projects, distributed work models, and the rollout of data analytics and business intelligence platforms. In some cases, companies lowered hiring standards to find anyone who could meet the minimum job qualifications.

Now there is an increased need to identify high-quality job candidates and make hiring decisions quickly, and that has upped AI adoption, according to Bret Greenstein, a PricewaterhouseCoopers (PwC) partner and Data Analytics and AI researcher.

“There were a lot of factors that drove this need, from the Great Resignation, to the rapid hiring and recovery in 2021, to the recession period now causing a large influx of tech workers into the market,” Greenstein said. “In all cases, recruiters need better tools to be efficient in matching candidates and ensuring interviews are used efficiently by ensuring candidates are well-matched up front. Additionally, they needed ways to do this in highly remote settings, due to the initial lack of travel and the later trend towards roles which are inherently remote.”

A reversal of reactionary hiring

In 2023, the reactionary hiring of recent years is expected to be replaced by a focus on quality, which can include hiring employees without college degrees but with passion and drive to learn on the job.

However, as many as 49% of candidates turn down a job offer because of poor recruiting experiences, according to PwC's Future of Recruiting survey. Along with improving the candidate interview experience, organizations need higher quality candidates who are also more likely to remain, and they're turning to AI to find, cull, and woo job candidates.

AI use in hiring is well entrenched for data manipulation and resume analysis, according to Lisa Rowan, a vice president of human capital management research at IDC.

“If you think about it, recruiting is a data-centric function with a lot of unstructured data found in people's resumes and CVs (curriculum vitae),” Rowan said. “The sophistication in this process of matching has evolved from matching up skills with requirements to include analysis that helps determine candidate fitness for the role.”

According to Modern Hire’s fifth annual Hiring Report, 45% of companies worldwide are using AI to improve recruiting and human resource functions. The survey of 300 senior level talent acquisition and HR professionals also found for the first time in two years that quality of hires (QoH) was considered a top technology investment priority. (A PwC survey conducted last year found 35% of companies plan to use AI to hire and train employees this year.)

"Quality of hires" is a metric used to determine how well a new hire performs, their engagement and promotability, as well as how likely new employees are likely to stay at the company over time.

Hiring right is better for retention

Hiring right the first time is vital to retention and creating value in a well-run organization, Modern Hire said in its report. Additionally, the skills and competencies needed for most jobs are more complex and more urgent than they were even a few years ago, as digital 21st-century skills become table stakes.

Resume matching to job descriptions is the most common use of AI, but Greenstein has also seen a lot of work enabling AI to analyze patterns, including factors affecting retention and segmentation of candidates based on experience, education, and skills to aid in recruiting.

“Chatbots have also become more popular as an aid for candidates to help answer questions about everything from benefits to how the company is organized and operates,” Greenstein said.

In 2023, AI hiring technology will also include intelligent interviewing, according to Modern Hire. Talent acquisition professionals can get a further assist from automated AI-based scoring.

"Now, AI techniques allow us to attach a valid and fair numerical score to the words a candidate speaks during an interview, yielding job-relevant, competency-based scores and rankings that can be used in decision making," Modern Hire reported.

Beyond AI scoring, hiring intelligence is increasingly allowing companies to match candidates to jobs they're likely to fit — before they become formal applicants. Early matching is an indication that organizations recognize the need for a two-way fit — it is no longer enough for companies to “gift” candidates with a job only when they deem them worthy. Candidates also pick the company, and especially the job.

Read the full report here