Welcome to this special AI edition of Recruitment Watch, where we explore the AI legal issues that are currently impacting the recruitment services sector.
There is a difference of opinion as to whether AI is over-hyped when it comes to its transformative abilities in the recruitment sector. What is clear is that every organisation in this sector is on its own unique AI journey. Some companies have no current use for AI solutions within their business, while others are dipping their toes in the water and a smaller group has invested heavily in AI rollout.
There are clear benefits that AI can bring to the recruitment sector. AI can be used as a tool within the business to streamline processes by automating repetitive tasks and allowing recruiters to focus on more strategic activities, such as building relationships with candidates and understanding the market better. AI can efficiently sift through large volumes of applications, identify the most suitable candidates, and even assist in scheduling interviews, saving both time and resources. It can aid decision-making by helping organisations forecast hiring needs and identify potential talent gaps, ensuring they remain competitive in the market.
AI can also be used as a core product offering. For example, an end-to-end AI solution that automatically matches employers with talent on a best-fit basis while enhancing the candidate experience by providing personalised communication and feedback, making the recruitment process more engaging and transparent.
While AI offers significant advantages, it also presents certain commercial challenges in this sector:
- It challenges the revenue model. Subscription-based AI recruitment solutions challenge the more traditional revenue model and will have an impact on how the sector thinks about incentives and reward packages for recruiters.
- It adds line items to the P&L sheet. Beyond the obvious costs of purchasing and implementing AI solutions, as regulation increases so will compliance spend from both initial AI projects and ongoing training of staff.
- It challenges the status quo. We are likely to see an increase in corporate activity in this space as more traditional players look to acquisitions and acqui-hires to add on AI capability to their business in a more meaningful way which raises interesting due diligence questions and where to place focus when considering potential targets.
Topping the legal risk list is regulatory compliance, data protection risks, bias, transparency and explainability issues, which we explore in this Recruitment Watch. As we see more recruitment focused AI solutions rolled out, we will see an increase in litigation where these risks are played out, particularly from individuals impacted by AI decision-making. The ongoing Workday Inc case is a perfect example of this where an individual has filed a claim against Workday Inc alleging that the company's AI driven applicant screening tools systematically discriminated against him on the basis of age, race and disability as he applied for over 100 positions with companies using the platform and was rejected each time.
You can visit our AI Hub for additional resources including our AI case tracker and generative AI risk mitigation toolkit.
If you would like to discuss any of the issues raised, or there is a topic you would like us to cover in one of our future editions, please get in touch with a member of the Recruitment Services team or by contacting us.