The ‘TalTech’ revolution in graduate recruitment

Tom Davenport

Graduate recruitment, right across the economy, is changing. After decades of minimal disruption, the sector is in the early stages of upheaval. Tom Davenport explains why. 

The winds of change are blowing and as the clouds clear years from now, I predict that we will be able to identify two big currents driving the change. The first of these is a social development, characterised by altering perceptions of what makes for a good career and a good job. The second, unsurprisingly, is technological.

As a graduate in the 1940s, my grandfather joined a company where he remained for his entire career, leaving well into the 21^st century. Such a trajectory is no more conceivable to today’s graduates than would be the idea of using a landline to arrange to see someone for a drink. This is the essence of the first ‘big current’.

Where previously stability and long service were hallmarks of a good career, we see now a predilection for variety that would have appeared capricious to my grandfather’s generation. Critically, just as preferences have changed, so have employer and peer perceptions, meaning that moving between companies, sectors and functions is considered not just acceptable but commendable. Breadth of experience is valued where depth of experience used to be. We see this in the growth of the ‘second jobber’ market, typically kicking in two years into a career.

Accounting firms which used to ‘hire for life’ now see their workforces evaporate on the completion of ACAs. Internships have been at the vanguard of the ‘short stint’ culture, and increasingly people take on consulting or freelance assignments in between longer jobs. 80% of ‘graduate’ hires through TalentPool are of people with between three and 12 months of full-time work experience and in over half of all cases, this has been in a different sector or function to that they are being hired into.

At the same time, there have been developments in what the white collar workforce has considered a ‘good employer’. As corporate Britain emerged and thrived through the 20^th century, so the stature and prestige associated with working at a famous firm grew. This trend persisted right into the last decade – and it was only really with the Recession that the cracks began to emerge.

Before the turn of the century, securing a graduate position with one of the largest firms would have been considered the unassailable stamp of excellence. Anyone who turned down the likes of Solomon Brothers for a role at a startup would have been considered unhinged. Within the last half decade there has emerged a counter-current, reflecting changes in the shape of the economy (50% of GDP and 58% of jobs are now at SMEs).

It is now quite common – and indeed socially applauded – to reject a bulge bracket bank or peer in favour of a smaller, riskier venture. In December 2015, startups overtook all other sectors as the most sought after by graduates for the first time and Q1 2016 data confirms this trend. Forty-eight percent of graduates currently in the market are looking at joining a startup – compared with 18% for investment banking. There is a way to go yet – and we must thank our American friends for much of this opening of minds – but the change is profound and only growing.

So I now come to the second category of change driving the disruption of graduate recruitment: technology. Interestingly, this has been late to the game. Airbnb has fundamentally disrupted holiday making far before anything analogous has happened to recruitment. This may seem surprising given the commercial mandate to reform a space of such massive inefficiency, pain (for business leaders and candidates) and criticality. But then, perhaps the scale and complexity of the problems to be solved are, in part at least, responsible.

However, with the emergence of the TalTech (Talent Technology) sector as a serious force – both across Europe and in the US – potential is becoming reality and the shape of disruption is beginning to emerge. There are plenty of aspects to the impact, from candidate sourcing to job-finding, application, assessment and hiring. At each stage, there are vast inefficiencies to be purged and goldmines of value to be added.

At the heart of it all, predictably, lies both the access to and analysis of data. Whether you are an employer, agency or a candidate, interviewer, recruiter, assessor or administrator, access to large volumes of data – and the lessons that analysis of this data tells us – is redefining what is possible. We are now able to meaningfully assess what constitutes the difference between a good and an excellent employee – across thousands of datapoints. We can therefore work out, a priori, precisely what sort of person we should be looking for and, once they have been engaged, make powerful forecasts about their future behaviour and performance.

Just about the only thing that won’t change fundamentally is that final and crucial human judgement based on an interview. Recruitment is ultimately about people. But it is not all about people; and up until the candidate walks into that interview room (or indeed sits down at the interview coffee table), everything from sourcing to contracting will look very different, very soon. 

Tom Davenport is co-founder of TalentPool