Organizational Wellness

Automated Employment Decision Tools — Definition, Impact & Examples

Last Updated Nov 4, 2024

Time to read: 10 minutes

Hiring is a long process. For candidates, it can take three to six months to hear back about a job. On the HR side, that means you’re spending months looking for a needle in a haystack, shifting through applications to find the right fit for the job. Wouldn’t it be nice if there was software that could do all of that for you?

You’re in luck – some tools can do just that! They’re known as automated employment software. Automated employment tools are becoming more widespread, with 65% of companies using some kind of AI or automation tool in the hiring process. On top of that, more states are passing legislation in support of using these kinds of resources to help amplify your efforts. It’s never been more promising to try out automation for hiring.

Discover how AEDT works and how to use it to successfully reduce your hiring timeline.

What Are Automated Employment Decision Tools (AEDT)?

Automated employment decision tools (AEDTs) use computational processes to assist or replace traditional hiring methods. This might involve using machine learning and artificial intelligence to assign applicants a score, which is often based on keywords used in a resume or how well a cover letter matches the job description.

Typically an AEDT will use multiple factors to provide a score for a candidate. Sometimes a certain factor will be prioritized over all others — like if you need a specific type of education. That’s why these can be such a powerful addition to the HR process. An AEDT has the potential to drastically simplify the hiring process and shorten the time spent filling a role.

Benefits of Using AEDTs in the Hiring Process

With AEDTs at the forefront of hiring discussions, there’s a big question to consider: what are the benefits of using this in the hiring process? Here are a couple of benefits:

Reducing hiring time. Too often, the hiring process can take months. Automation can help cut down the time spent in this waiting space. When simple processes (like scanning a resume) are automated, your team can spend more time interviewing.
Giving you more time to talk to candidates. AEDTs can free up time, allowing you to contact references and ensure you’re selecting a good culture add. That additional one-on-one time can lead to better hiring decisions.
Hiring for multiple roles at once. It takes a lot of bandwidth to hire for one role. The process might involve going through 250 resumes (the average number sent in for a corporate job) and holding four to six interviews. That makes it hard to hire for multiple roles at the same time. With automated hiring, you can simplify the process and hire simultaneously. Doing so can help reduce hiring costs too.
Improving candidate experience. With faster hiring times and better decisions, you’re more likely to improve your candidates’ experience with your organization. Hearing back quickly (whether or not they got the job) can help build a positive reputation. For those who are hired, this experience can be beneficial for your company culture.

Concerns About Using AEDTs in the Hiring Process

While these benefits are extensive, there have been some concerns about automation. This is especially true when it comes to HR compliance and impacts on DEIB in hiring. These are some common worries you might have and how to mitigate them:

Limited amount of human interaction. While automation saves time, it reduces the amount of human interaction during the hiring process. This concern could be combated by adding some human touch to automated elements. For example, you could address candidates by name in emails and make personal phone calls to candidates.
Data privacy concerns. By having an automated hiring process, you’re going to accumulate a lot of private information. This can lead to data privacy concerns. However, you can mitigate this by being transparent about what data you collect and the steps you take to ensure it remains secure. As you explain what info you need, you can also explain your security measures to protect the data.
Risk of bias. Computers are digital devices that follow instructions exactly. If the tool isn’t trained with high-quality and unbiased data, you have a risk of bias.
Over-reliance on Technology: Exclusive reliance on automated tools may lead to neglecting nuanced judgments and human insights that are crucial in hiring decisions.

Pros	Cons
Reducing Hiring Time	Limited Human Interaction
Automation speeds up processes like resume scanning, reducing the time from application to interview.	Reduced human touch in the hiring process; mitigated by adding personal elements such as name use in emails and phone calls.
More Time for Candidate Interaction	Data Privacy Concerns
Frees up time to focus on contacting references and evaluating cultural fit, leading to better hiring decisions.	Accumulation of private information raises privacy issues; mitigated by transparency about data collection and security measures.
Hiring for Multiple Roles Simultaneously	Risk of Bias
Simplifies the hiring process for multiple positions, reducing bandwidth and costs.	Potential for bias if the tool is trained on biased data; requires careful selection and monitoring of training data.
Improving Candidate Experience	Over-reliance on Technology
Faster response times and better decisions enhance the candidate experience, contributing positively to company reputation and culture.	Exclusive on automated tools may lead to neglecting nuanced judgments and human insights that are crucial in hiring decisions.

Real-World Examples of Automated Employment Decision Tools

The most common Automated Employment Decision Tools (AEDTs) used by HR leaders include a variety of platforms designed to streamline recruitment, employee management, and HR processes. Some of the most popular include:

Greenhouse

This platform focuses on data analytics to track progress and make informed hiring decisions. It is widely used for its ability to provide insights into recruitment processes.

SHL

Known for its data-driven approach, SHL provides tools for hiring assessments and people management, helping HR leaders make informed decisions based on comprehensive data.

BambooHR

An all-in-one HR system that automates processes like tracking hours worked, managing benefits enrollment, and running payroll, thereby reducing manual data entry.

Pyn

This tool uses AI and machine learning to automate personalized employee messaging, supporting HR professionals in managing the employee journey effectively.

Effy AI

A people development software that uses AI-generated insights for performance evaluation and employee engagement, providing comprehensive analysis and feedback loops.

Ultimate.ai

Provides AI-powered chatbots to streamline HR support and handle employee inquiries, improving efficiency and employee satisfaction.

By embracing these cutting-edge solutions, HR leaders are not just optimizing current processes but are also paving the way for a more dynamic and responsive future in workforce management.

The New York City AEDT Ruling

New York City recently updated its rules for automated hiring systems, and this change impacts anyone hiring or operating in the city. The new regulations are also considered a precedent for other major hiring hubs to follow, so it’s worth familiarizing yourself with the rules no matter where you operate.

Known as the “Final Rule,” the New York City Department of Consumer and Worker Protection introduced the regulations to address concerns about bias in AI-driven hiring processes. The move came in response to public debate over AI in hiring. Nearly half of Americans believe AI could be better at hiring than humans, according to a 2023 Pew Research Study, while 15% think it might perform worse.

To address these concerns and ensure fairness, the new rules offer guidance on how to use AI in a way that minimizes bias.

The ruling defines three levels of AEDT use:

Full Reliance: Using AI decisions exclusively, which is not recommended.
Equal Consideration: Using AI as one factor among others in hiring decisions is allowed if a bias audit is performed.
Override: Using AI to override human decisions is permitted if accompanied by a bias audit.

It a set clear guidelines for using Automated Employment Decision Tools (AEDTs) at any level in New York City:

Bias Audit: Before using AEDTs, companies must have an independent bias audit conducted within the past year.
Transparency: Companies must post a summary of the audit results on their website.

What Is a Bias Audit?

A bias audit is a mathematical process used to determine the impact of an AEDT on a group of applicants based on specific protected characteristics, such as sex, race, ethnicity, and intersections. The mandated New York bias audits specifically focus on assessing the impact of these characteristics. This process is designed to prevent situations like what happened with Amazon’s automated hiring tool which penalized women and prevented them from being selected.

The bias audit is done by dividing the total number of people in a subcategory of a particular protected characteristic selected for hiring by the total number of applicants. With that percentage, you can determine how many people with protected characteristics were selected for hiring. When you’re finished, the bias audit produces a chart that displays who applied and who was selected — ultimately highlighting if there’s an impact ratio.

To ensure accuracy and impartiality, companies are required to hire an independent auditor to perform all the calculations and present the results to the organization. This independent review helps to maintain transparency and trust in the biased audit process.

Who Is an Independent Auditor?

The NYC legislation defines an independent auditor as “a person or group that is capable of exercising objective and impartial judgment on all issues within the scope of a bias audit of an AEDT.” There are a couple of conditions that have to be met to qualify:

They can’t be involved in using or distributing the AEDT (so the company that made the AI hiring tool can’t be the auditor)
They can’t have an employment relationship with the company seeking the audit (can’t be a client)
They can’t have a direct interest or financial interest in the company or its hiring — or with the company or vendor of the AEDT

Having that independence removes the risk of bias and helps your organization meet the requirements of this Final Rule. It also ensures your hiring process is fair for everyone.

How Do I Provide Notice to Job Applicants and Employees of My Use of an AEDT?

You’re required to give everyone notice that you’re using an AEDT in your hiring process if your business is in New York or your employee. In no less than 10 business days before the use of an AEDT, you must do one of the following:

Publish it on your website very clearly and in the employment section. It should be obvious and easy to find OR
Include it in the job posting itself OR
Send it to applicants via email or mail

Support From Hiring to Retention

The future of hiring is changing, and automating hiring is a big step forward to saving you time and money.

AEDTs ease the burden on your HR department, which frees up your time to focus on programs that can benefit your organization. For example, you can expand your wellness initiatives. Those programs are a way to support your employees and improve your company culture. Investing in these initiatives is worth it. In fact, 95% of companies tracking program ROI see positive wellness returns, according to Wellhub research.

Get started with wellness and talk with a Wellbeing Specialist today!

Company healthcare costs drop by up to 35% with Wellhub! (* Based on proprietary research comparing healthcare costs of active Wellhub users to non-users.) Talk to a Wellbeing Specialist to see how we can help reduce your healthcare spending!