Abstract

Recruiting sucks. It’s time-intensive, inefficient and expensive. Getting hired is just as painful. There’s so much work to do before you can even hope to start work. The existing system for matching good candidates with employers is outdated and poorly incentivised. We want to make that system obsolete.

Higher is a better way. We envision a future without the tedium of sorting through resumes, hiring the wrong people or having to trust recruitment agents. A future where it’s possible to confidently automate recruiting. A future where well-suited people find each other as easily as they call a taxi.

Amazon Web Services made on-demand computing infrastructure a reality. Uber consolidated ride-sharing into a gig economy. Bitcoin changed the way we think about money. Higher provides automatable, on-demand talent sourcing and ranking via a fairly-incentivised gig economy. It costs the employer less money and everyone less time by cutting out the brokers. And it’s fully open source.

The professionals of the future won’t hire, they’ll get Higher. In this document we’ll explain why they’ll want to do that, what it will look like, and how we’re going to make it a reality.

The Problem

There’s a problem with recruiting: we can’t rely on recruitment agents. They’re good at finding potential candidates, but they’re not good at evaluating them.

Smart employers want to base their hiring decisions, at least in part, on recommendations from trusted experts. Qualified candidates want to be presented fairly, with their strengths and experience highlighted clearly. Recruitment agents are not necessarily willing or able to help in either case.

Agents are salespeople. They’re incentivised to get the highest-paid candidate into the most profitable role as quickly as possible. There’s often no financial reason for them to seek out the best person available for the role, or to represent the candidates truthfully if the truth doesn’t suit them.

And the truth often doesn’t suit them.

None of which is to say that recruitment agents have no useful role, or that they’re intrinsically dishonest. Putting together a longlist of potential candidates for a role is critically important, and candidates do benefit from having an agent guiding them through the process and negotiating on their behalf.

But where are the trusted experts in this process?

It’s certainly not the recruiters. Some individual agents may have industrial experience in a role they’re hiring for, and a few specialist recruiters may genuinely be experts in their field. That’s very rare: most recruiters specialise only in sales revenue.

Trust is even harder to come by. How do you trust someone who has almost nothing to lose, who’s providing a service that’s completely opaque? How does an employer know that they’re getting the best candidates the recruiter could find, and not just the most expensive ones?

More often than not, the employer has to find or become their own trusted expert. Some employers are well-placed to evaluate candidates, or can trust their other employees to give useful evaluations.

In-house evaluation takes time. Usually a lot of time. So much time, in fact, that many employers choose to eschew external recruiters completely because the value they add to the process is dwarfed by the mountainous volume of candidate evaluations that have to be done.

15% of the employee’s first-year salary seems like an extortionate fee when you have to do 90% of the work yourself.

Then there’s the other side of the process. How can you be sure, as a candidate, that your resume has been seen by the employer? If there’s someone less qualified than you, but with a higher salary expectation, would a recruiter even pitch you to the employer? If that person presents slightly better on paper, if they’re even easier to sell, will you get a fair shot?

In 2018, recruiters in the UK tech industry alone made a turnover of $4.92 billion. Recruiters across all industries made £35.7 billion, and the market is still growing. Why are we paying these people so much to lie to us?

A Better Way

If we can’t rely on recruitment agents, is it possible to matchmake candidates and employers? Can we include trusted experts in the process? Can we make the whole thing quicker, slicker and less expensive?

Higher Labs believe we can. We can dramatically improve the situation by creating a gig economy that lets employers buy decision-making information from experts at fair market rates.

Taking cues from self-sustaining autonomous systems (most notably blockchains), well-established behavioural economics research and game theory, we can create a new system where everybody can win and no trust is involved. The cost of hiring is still borne by the employer, but it’s a lower, fairer cost.

We don’t even have to put the recruitment agents out of work. Instead, we make it impossible to lie to us while still providing value.

The initial focus of the Higher platform is permanent employment in the technology industry. This restriction allows us to focus on making a well-oiled, flexible product that will expand significantly.

In the technology recruiting industry, and many other industries, the contract market dwarfs the permanent market in terms of revenue. Contract hiring requires a few more moving parts than permanent hiring, but it fits neatly within the Higher model.

That’s because Higher isn’t really a recruitment tool. It’s a highly sophisticated, trustless, peer-to-peer deal-brokering marketplace, based on a framework we’re calling the Confidence Curation Market. For now, it’s being used for recruiting because it’s an easy target that causes significant pain to a lot of people. The Higher Labs team knows this pain as well as anyone.

Software has overhauled the world in recent decades, and Higher will be a significant part of the automation revolution. With a tumultuous future predicted for employment, fast and efficient hiring will become more important than ever. We’re committed to building a fair, properly incentivised, completely open source system that benefits everyone.

The Solution

The easiest way to understand Higher is to run through an example.

An employer, having identified a hiring need, publicises a role they want filled. The role must have a clearly specified set of requirements, and include an expected annual salary.

In order to begin the Higher process, the employer transfers a sum of money called the reward pool into escrow. The exact amount is a percentage of the expected salary (variable, but always lower than a recruiter would charge in the existing market) and it will be returned to the employer if no suitable employee is found.

Recruiters, called broadcasters in the Higher ontology, then set about finding candidates who might be suitable for the role. Recruiters may not generally be trustworthy domain experts, but as broadcasters their natural ability to network and seek out talented potential candidates really shines.

Interested candidates then apply for the role. At this point, the list of candidates is unvetted, and we call it the longlist. Anyone can apply, and we record a link between the applicant and the broadcaster who introduced them, if there was one.

In order to make sense of the long list, the employer needs a set of trusted experts. We call these experts backers, and their job is to provide strong, clear signals of confidence in candidates for this particular role. They do this by evaluating candidates for the role and, if they think them suitable, putting a small but significant sum of their own money, called a stake, into escrow.

Anyone could be a backer, but we anticipate that they will generally be colleagues of candidates at about the same professional level, or the candidates themselves. They’re motivated to back a candidate by a small reward, paid if they provide useful information. The reward is usually the equivalent of about a day’s work: not so much that anyone would be tempted to gamble, but not so little they wouldn’t be interested.

Backers evaluate the candidate’s ability to perform the role outlined in the requirements laid about by the employer, and place a stake if they are completely sure the candidate is up to the task. They will lose their stake if they end up being wrong.

As candidates start to gain backers, a new shortlist is created. This is a reduced and refined set of candidates who have received collateralized endorsements from backers. This list is ranked by the number of backers and the total backing, giving the employer a loose order of priority in which to contact and personally evaluate the shortlisted candidates. However they choose to engage with candidates, employers can be confident that all shortlisted candidates are technically suitable; the selection process becomes a matter of culture, outlook and personal compatibility.

When an employer selects a shortlisted candidate to interview or evaluate, the broadcaster who introduced the candidate is paid a reward from the reward pool. Paying this reward only when a candidate is both endorsed by at least one backer and selected by the employer incentivises broadcasters to select realistic potential candidates, rather than aiming for sheer volume.

Once the employer has selected a candidate and the candidate has accepted a job offer, a probationary period begins. This is a previously agreed-upon (and known to all parties) term during which either the employer or the now-hired candidate may decide that the role isn’t working out. At this point, backers of all the other candidates have their stakes returned to them.

If the candidate passes probation, their backers stakes are returned to them along with their well-deserved reward. The reward is paid out of the reward pool, and the process is now complete.

If the candidate fails probation, their backers stakes are lost. The money will be donated to a charitable cause. Since the system has failed, what remains of the reward pool is returned to the employer.

If, under exceptional circumstances, the candidate doesn’t fail probation but cannot continue with the role for some unexpected reason, the employer may choose to reclaim the reward pool and return the backers’ stakes without a reward.

The Implementation

A useful tool needs to fit easily into the hands of its users. For modern software applications, that’s almost literal: they live on our phones, our laptops, and our smartwatches. Higher is no exception. It will be available on iOS and Android, and there will be an accompanying web application. All of the core products will be completely open source, and available for review by anyone who’s interested.

From the user’s perspective, the whole process should be responsive, gratifying and, above all, frictionless. Change is hard, so we’re going to make it as easy as possible.

Education is a significant focus of the Higher team. Since we have a new class of users (the backer), we must be extremely diligent in explaining the value and necessity of stakes and confidence in a trustless system. We expect to implement a complete media package, communications forums and of course readily available help.

We anticipate that dispute resolution will play some significant role in the Higher system, specifically when an employer chooses to end a candidate’s probation. We’re investing significant time into efficient and equitable methods of ensuring that everyone is fairly treated by the system.

Escrow is a major part of the Higher system, which presents some significant challenges. Much of the work involved in creating Higher is finding efficient, ethical routes through financial, legal and regulatory red tape. We believe it’s possible to hold funds in escrow, and to pay backers and broadcasters their rewards, without enabling money laundering or other nefarious activity.

Significant thought has been given to using a cryptocurrency as the basis of funds transfer and escrow. This would make the whole system far more transparent, cost effective and equitable. At the time of writing, there’s no highly accessible currency that holds a stable enough value for the time periods required for Higher to work. We hope cryptocurrencies continue to gain popularity and market share, and that a stable-value blockchain-based currency becomes available. When that happens, Higher will be able to adopt it immediately.

The Way Forward

Distributed deal-brokering, built on informal collateralized endorsements, will replace traditional brokering models. The current agency system may never completely disappear, but it’s too expensive to be sustainable, and a better system will largely replace it by natural selection. The days of Machiavellian agencies are numbered, and it was the agents themselves who brought about their own demise by hyperinflating the value of trust.

We don’t know if Higher will be the engine of change of trustless brokering, but we know something will. And we believe that thing, whatever it is, will use the basic Higher concepts.

Our path is clear: identify problems, hypothesize solutions, design experiments, build functional systems, solve legal puzzles and get Higher. We’re making progress every day, and we’re seeking funding to move faster. We can’t and won’t do it alone: we’re actively recruiting smart people and seeking feedback.

Our plan is extremely ambitious, and system-change is always hard. But it will happen. And the revolution will be open source.