It’s Getting Harder to Hire Entry-Level Employees
The reasons include grade inflation and the rise of AI. Many employers are trying to fight fire with fire.
Good morning!
Here are today’s highlights:
Yes, AI applications continue to hallucinate, but Gene Marks says some AI applications are good to go.
Hoping to join the 21 Hats Live event in Cincinnati? Participation will be limited to 30 owners.
Small business bankruptcies have been surging since the middle of the year.
And, thanks to the tariffs, so has the price of fake Christmas trees. Even so, their product is unlikely to shift back to the U.S.
HUMAN RESOURCES
What do you do when every cover letter sounds the same? “In the past, companies looking for fresh entry-level talent could rely on a college graduate’s GPA as a mark of their intelligence and work ethic. Hiring managers could assess a candidate’s cover letter and interview performance to get a sense of their writing and communication skills. Now those signals have lost much of their value. Rampant grade inflation has rendered GPAs almost meaningless. The widespread use of AI to write cover letters—and even to assist with job-interview performance—has robbed those assessments of their predictive power.”
“Two recent working papers found that for applicants on Freelancer.com, a job site connecting freelancers with employers, cover-letter quality used to strongly predict who would get a job and how well they would perform. Then ChatGPT became available. ‘We basically find the collapse of this entire signaling mechanism,’ Jesse Silbert, one of the researchers, told me.”
“Julie Bedard, a managing director at Boston Consulting Group, told me that her clients report receiving more and more applications that reach a baseline level of quality, but they all sound the same. At least half of the companies she works with say that cover letters are no longer helpful in hiring.”
“Submitting an application used to require at least some investment of time and effort, automatically screening out people who weren’t committed enough to go through the process. Now AI can complete one in seconds. The result is that companies are inundated with applications.”
“To handle the AI-driven influx of applications, employers have turned to—what else?—AI. LinkedIn recently launched a tool that allows recruiters to search profiles for specific skills and cull the irrelevant ones. Hari Srinivasan, a vice president of product management at LinkedIn, told me that this cuts the number of applications recruiters have to look at by 70 percent.” READ MORE
21 HATS LIVE: CINCINNATI
Those slots are starting to fill up: The fourth annual 21 Hats Live will take place in Cincinnati in May. It’s a rare opportunity to connect with owners who understand what it takes to build a business. If you’ve ever wondered whether other owners wrestle with doubts, dilemmas, and tough calls, these three days are a reminder that we all confront challenges and suffer setbacks. At previous events, we’ve met first-time founders and 30-year veterans, owners building everything from side hustles with a couple hundred thousand dollars in annual revenue to mature companies with more than $200 million in revenue. The common denominator: an eagerness to show up and engage.
“Over three days in Cincinnati, participants decide the topics. We start by building a list of the questions and challenges you most want to discuss. We take a vote, and then we work through those topics together in order of interest. Think of it as an in-person peer group with 30 smart, candid owners willing to talk openly about what’s working and what’s not.”
Plus: behind-the-scenes, VIP tours of iconic Cincinnati businesses, including Q&A sessions with their owners. First up: Triversity Construction, led by my co-host, Mel Gravely—one of the city’s most respected owner-operators and a regular on the podcast.
