Conflicts of interest are present in all types of business transactions and are bound to happen thanks to the complexity of modern organizations. But where other sectors have strict protocols for managing financial and other relationships, talent acquisition has some catching up to do.
Giving a job to your brother-in-law because your spouse asked you to is a clear conflict of interest. No one is going to argue that.
Offering a referral bonus to all staff, including those who make hiring decisions, is another fairly obvious conflict area that could result in money talking louder than talent.
But what about:
- The consultants and analysts who offer technology recommendations to talent acquisition leaders – but don’t mention that they own a stake in the company they’re suggesting?
- The recruiter who pushes a candidate – but doesn’t mention they’re from her alma mater?
- The thought leader who speaks at events and publishes articles on best practices – but doesn’t tell you about the $3,000 kickback he gets for mentioning a certain software in his content?
- The job board that buys candidate traffic on mysterious commission structures – so you can’t figure out if they’re making decisions for your benefit or decisions influenced by payoffs?
This is where talent acquisition gets murky and uncomfortable. Everyone knows that conflicts of interest are a problem in our industry, even if we’re bad at talking about them.
JobSync is trying to change that.
Alongside our friends at CareerXroads, we recently convened a panel of dozens of TA leaders and canvassed opinions from hundreds of CareerXroads community members to understand attitudes and perceptions around conflicts of interest in our industry. Zero participants said that transparency around conflicts of interest was “not at all a problem” when building trust with stakeholders.
Rather, a resounding 82% of respondents reported that openness around conflicts is “extremely important”—yet, we are far from achieving that level of transparency in our field.
But why are conflicts of interest such a big problem? Why should we, both collectively and individually, care about them? And what can be done to address this issue?
In this article, the first of a two-part series, we share key insights from our research to demonstrate why transparency is so rare in our business and how it hurts us, our ecosystems, and job seekers alike.
What is a Conflict of Interest in Talent Acquisition?
In just a few years, the recruiting industry has gone from putting ads in newspapers to spending incredible amounts of money on tools, technologies, and services that help TA teams fill their positions. The USD 10 billion global online recruitment technology market is projected to grow threefold by 2030. Vendors are very aware of how valuable this market is—and they’re fighting fiercely to be the platform that enables TA professionals to do their jobs.
And where there’s competition, there can be conflicts of interest.
In simple terms, a conflict of interest occurs whenever an individual or organization has multiple interests—financial or otherwise—that could compromise their ability to act impartially. That’s a big bucket. It potentially includes a lot of scenarios:
- Experts giving advice on products or services without disclosing the consulting fees, kickbacks, retainers, stock options or other incentives they receive from the vendor.
- Referrals made by senior executives and important stakeholders that, because of the referrer’s position, may carry undue weight in the hiring process and blur the line between a referral, a recommendation, and an endorsement.
- Speaking engagements and industry partnerships that promote certain practices or tools without full transparency on the underlying financial relationship.
- Complex job board ecosystems with blind markups, arbitrage, and variable commissions muddy decisions around where your candidates are sourced from and how much you are paying for each candidate.
- Biased job postings present a company or role in an overly positive light because they were written by the very same agency that’s charging a commission on every candidate sourced through the ad.
These are just a few examples, but there are countless others. But unlike good art or charismatic leadership—you may not know it when you see it.
“While I don’t expect speakers to be covered in logos like NASCAR drivers, I do value it when they openly disclose any paid relationships they have with products they mention on stage. This transparency significantly boosts credibility in my eyes.” – Joanna Clark, Head of Strategy & Global TA Transformation, Wells Fargo
It’s Not About Impartiality; It’s About Transparency
Financial relationships in all their forms are not inherently bad and can be an entirely normal part of business. No one has a problem with vendors selling products and creating whatever partnerships they need to make sales. Nor is it wrong for experts to provide guidance and recommendations on how companies might address their talent challenges; after all, our industry requires a lot of specialized knowledge.
It just needs to be clear when those relationships and opinions intersect so everyone can make informed decisions.
The problem comes when people don’t know what they don’t know. If you had full disclosure about the sponsorship behind a research study, would that change your perception and decision-making process? Most likely, yes. But at the moment, we don’t routinely see mentions of paid relationships in bios or asterisks pointing readers to a statement of financial interests.
And that is a problem.
“Regardless of the role in the industry – as a seller, buyer or influencer – reducing and addressing conflicts of interest always comes down to the underlying core belief of whether to be transparent or to maintain a secret.” – Alex Murphy, CEO, JobSync
What’s the Impact of Conflicts of Interest?
The simple answer is that conflicts of interest erode trust, and lack of trust can undermine your efficiency. This principle applies across every measure of success, from candidate experience to budget optimization:
Cost escalation—Making a buying decision based on weighted advice can cost you money, either because you’ve overlooked more cost-effective solutions (often from smaller suppliers) or because the undisclosed incentives have been built into the pricing.
Redundant tooling—Selecting and adding tools based on their perceived value rather than their genuine ability to solve your particular problem can lead to clutter in the tech stack. At best, the tool is redundant; at worst, it becomes a drag on the whole tech ecosystem.
Wasted time— Talent teams are pressured to recruit faster, faster, faster. In the end, optimization comes down to you versus the clock. When you trust the advice, tools, and services you’re buying, you can make confident, fast decisions without worrying about the provenance and neutrality of the information you’re getting. When you can’t trust the information, things often slow down.
Not getting the best candidates— During our research, several scenarios emerged in which conflicts of interest can directly impact your ability to get the best candidates. For example, programs that prioritize certain candidates, such as referrals from diversity recruiters, can introduce bias and limit the pool of candidates from which you can select. Recruiter incentives that are tied to placement fees can see external candidates prioritized over internal candidates. Ask yourself, What are the ramifications for the company culture or the long-term retention of employees?
Reputational damage: Failing to manage conflicts of interest will harm the employer brand. Candidates are not shy about sharing their experiences—allegations of unfairness could tarnish your reputation and it’s an uphill climb to win it back.
“It is crucial for employers to be transparent about their recruitment practices and ensure fairness throughout the candidate journey to avoid any conflicts of interest that may arise.” – Ernest Ng, VP Strategy & Research, Workday
What’s the solution?
All our panelists agreed that conflicts of interest are a problem. Clearly, there needs to be some industry-wide accountability and standards on the topic.
In Part 2 of our series, we’ll explore plausible solutions for bringing transparency, disclosure and fairness to the talent acquisition industry, with some key recommendations for every organization to consider as they build and audit their talent and HR processes. Stay tuned!
