Employers frequently complain that new hires lack the right skills and require supplementary training. Companies also regularly lament the lack of diverse candidates. These realities raise two distinct possibilities: (1) there's an absolute shortage of capable workers; or (2) companies are leaving too many stones unturned in their search for talent.
My recent research on a long-neglected segment of the workforce—people I call "hidden workers"—suggests that the second possibility is much closer to the truth. Hidden workers come from diverse backgrounds, from veterans to people with disabilities to individuals with criminal records to relocating spouses. What they have in common is that something in their past leads them to be eliminated early in the recruiting process, "hiding" them from potential employers' consideration.
Hidden-Worker Myths
Several misconceptions about hidden workers cause them to be routinely overlooked. Employers and recruiters, for instance, frequently assume that hidden workers represent only a tiny fraction of the workforce. In fact, there are 27 million hidden workers in the U.S. alone, equal to about 17% of the country's labor force.
Another common misconception is that hidden workers are more expensive to hire and are less effective on the job. In fact, companies that do hire a substantial number of hidden workers report both that such workers are no more costly to recruit than traditional sources of talent and that hidden workers tend to perform better on metrics that matter most to employers: attitude and work ethic, productivity, quality of work, employee engagement, attendance and innovation (see Figure 1).
Figure 1: Employers rate hidden worker performance higher than traditional talent.
Perhaps the biggest misconception that causes hidden workers to be overlooked surrounds the use of automated applicant tracking systems (ATS). ATS are highly efficient at winnowing down the field of applicants to the manageable four to six candidates that most firms were generally willing to interview prior to COVID-19. And when the average American corporation receives 250 applications for each job opening, such efficiency matters greatly. That's why most businesses now use ATS, including 99% of Fortune 500 companies.
But in their quest for efficient hiring, employers and recruiters unwittingly undermine something that matters even more: effective hiring. This happens because the filters that ATS use are set so narrowly that they eliminate many qualified applicants, however marginal their deficiencies may be. In such situations, otherwise capable workers who lack, say, a "nice-to-have" secondary qualification, who fail to meet some inferential proxy the employer relies on to weigh the relative merits of candidates, or who describe some skills or experience using language that differs from that utilized in the job description, are excluded from consideration.
In short, the assumptions and processes that companies deploy to maximize their access to qualified talent often make both groups worse off. Little wonder that nearly 90% of employers believe that qualified, high-skills candidates are frequently vetted out of their hiring process because they don't perfectly match the job-description criteria.
Hire Effectively, Hire Efficiently
As increased competition for workers sourced through traditional channels raises the cost of hiring and retaining employees, companies should embrace ways to expand their access to talent. A good place to start is to rethink the overall approach to recruiting—such as by creating job descriptions that emphasize "must-have" skills that closely correlate to actual performance in the role; and by adopting more relevant metrics to evaluate recruiters, such as new hires' productivity, advancement rates and attrition.
Such actions will help companies recruit all kinds of workers more effectively, at little cost to efficiency. However, to get the most out of hidden workers, companies need to develop more customized approaches to hiring and onboarding—approaches that account for the varied circumstances of those workers, such as their occasional need for additional training, or extra guidance when applying. (Once needed accommodations are made, hidden workers should, of course, be held to the same standards as their fellow employees.)
Fortunately, we can learn from companies that have established substantial, successful programs designed to access one or more hidden worker population. Such companies report much higher levels of confidence in their ability to fill skills needs than firms that haven't yet embraced hidden workers. And if businesses as diverse as Gap, General Motors and Google can implement successful programs, it seems plausible that any firm willing to apply itself can do likewise.
One lesson from such companies is the need to shift the justification for hiring hidden workers from corporate social responsibility (CSR) to return on investment. While the benefits of hiring hidden workers do include many of those that companies seek when implementing CSR initiatives, the decision to hire hidden workers should rest primarily on direct, tangible benefits that can be realized at scale, like addressing skills shortages and reducing turnover.
Another lesson is to target certain types of hidden workers. Because hidden workers are not a monolith of the underemployed or unemployed, companies should segment the hidden worker population, much as they do customers; doing this will allow firms to understand the specific needs of subgroups, in order to identify those they can most effectively engage. For this reason, nearly three-quarters of employers who actively hire hidden workers say they engage no more than five types of hidden workers.
Another essential way to engage hidden workers is to make the process of applying for a position less onerous. Companies should apply the same "user experience" (UX) lens they use to improve their customers' experience to improve applicants' experience. For instance, skills and credentials requirements should be stated clearly from the start, as should the timetable and criteria for decision-making. (If ATS can evaluate applicants autonomously, they can also be equipped to provide applicants with both an acknowledgement of a submission and a prompt notification of a decision.) Applying a UX lens also means making a greater effort to reach hidden workers through the channels they tend to favor, such as job centers.
Engaging hidden workers requires not only opening the aperture on a company's hiring processes, but also integrating such workers into the organization. Myths surrounding hidden workers—such as that they're fundamentally different from employees recruited through traditional sources or that they're held to lower standards on important measures like productivity—need to be debunked. Other critical actions to integrate hidden workers include: lending such recruits a "name and a face" (by sharing their stories with existing employees); involving the future colleagues of hidden-worker recruits in the latter's onboarding (to help the former better understand how such recruits can contribute, as well as how any accommodations will affect work processes); and enlisting a senior company leader to champion hidden-worker recruitment (to help overcome impediments, evaluate results and ensure recruitment objectives are fulfilled).
Finally, helping hidden workers gain a secure foothold in employment requires expertise and credibility. Businesses should therefore seek to collaborate widely—with not-for-profits, social entrepreneurs, technology providers, regulators and other businesses—to help implement and refine their hiring strategies.
The pandemic has exacerbated talent shortages in certain areas, by creating a surge in demand for skills ranging from transportation and logistics to digital marketing and cloud engineering. In the years ahead, shrinking populations will make it even harder to find workers with relevant skills. By lowering barriers to hiring hidden workers, companies can turn such individuals into the vital human assets that businesses need to thrive, now and in the future.
Joseph B. Fuller is a Professor of Management Practice at Harvard Business School, where he co-leads the school's Managing the Future of Work project. He is also co-author of the recent report, Hidden Workers: Untapped Talent.