The high value of human capital to today’s corporations is clear, and crystallized in one new principle: a skilled workforce is a cash multiplier. That is the first new principle described in this series of articles. The ubiquity of skills demand, the subject of my previous article, is the second principle to understand. The third key new principle of human capital management, detailed in this article, is the automated matching of supply and demand. This is a corollary to the principle of the ubiquity of skills demand, and has been made possible only by developments in technology. The ubiquity of skills demand, brought about by the shift in availability of data, is a great step forward. Nevertheless, it is also a limitation, often creating a great deal of unqualified supply. If the network that created the Internet is the basis of that principle, the computers that are linked by this network are the enablers of the principle discussed here. To explain the automated matching of supply and demand principle, we have to dissect the content of the communication delivered in this transaction. For years, the content holder for such transactions has been the resume. The resume has been the best tool to summarize the competencies and skills a candidate can bring to a new position, by highlighting abilities, certification and experience, and by describing past positions, diplomas, and employers. The resume was the best tool at the time for making a match between a task and an individual. The Mismatch of Unstructured Information The process of finding the best individual to fulfill a given task has been highly manual and paper intensive, with very little automation, because a fit for a position is not reducible to a computer algorithm. But although the final fit of the position with the individual cannot be based on a computer-made decision, the first set of selections based on minimum criteria can be. A final decision should and will always be based on individuals working together and having to meet and know one another. Let’s review and understand what is done when a department of a large company needs additional resources. They fill a request form that is called a requisition, go through the approval process, and create a job description. The job description is what will be used to match the candidates with the tasks to achieve. In fact, it is the job description that will be matched to the resumes of the candidates. This matching of two unstructured documents is done by individuals who most of the time apply highly unsystematic and subjective criteria to make the first selection, called prescreening. This activity has been not only inefficient and time consuming, but also ineffective. The criteria used to select candidates do not ensure systematic results. Yet manual prescreening was the best and only option available at the time. It was better than recommending a candidate for hiring simply because he or she was the first on the pile. Internet Connectivity and Processing Power Today, the Internet combines the connectivity of the phone and the processing power of the computer. The Internet is the common medium of communication between talent supply and demand. To enable automated talent matching, what is required is a common platform for both the job description and the resume. Job descriptions (talent demand) and resumes (talent supply) can be reformulated in terms of a common currency: skills. The corporation defines corporate-wide standard skills, which are then systematically attached to job descriptions. Talent supply then aligns itself to meet the new standards, reaching a new equilibrium. Automation increases the speed and efficiency of the process, matching up talent supply with demand in real time. This new possibility has been created only by the widespread acceptance of the networked computer as a new communication device for job applications externally, and as a portal for redeployment internally. A systematic skills-definition platform is an especially powerful enabler to redeploying human capital in a downturn quickly and efficiently. Economic Benefits The ubiquity of skills demand and the automated matching of supply with demand have an important impact at the macroeconomic level. A more efficient process for matching talent supply with demand will reduce the base level of unemployment called friction unemployment. Friction unemployment is the residual level caused by the inefficiency of communication between corporation and individual. Moreover, real-time access to a pool of candidates not only impacts the economy globally, but it also creates a positive productivity boost in corporations that can identify needs, translate them into a common language, and fill positions in a timely and quality fashion.
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