The Five Things Recruiters Need To Know About Upcoming AI Regulation
As a recruiter, you may be using recruitment software to assist with the sourcing of talent. You may or may not be aware that some of the software you use is powered by AI (Artificial Intelligence). Up until now, AI technologies have been left unregulated, but that is about to change.
This document will explain what you need to know and what actions you may need to take.
What is aia?
AIA is the first regulation of its kind for Artificial Intelligence. Much like GDPR, it was created in the EU and is expected to be adopted globally. While GDPR addressed privacy, AIA addresses ethics. Currently in the final proposal phase, it is planned to come into effect in the first quarter of 2023, with a transitional period of 2 years after which suppliers of AI systems must conform or face severe penalties.
AIA addresses the human and ethical implications of AI recruitment software
Why is AIA necessary?
AIA seeks to guarantee the safety and fundamental rights of people and businesses when it comes to AI.
While most AI systems contribute to solving challenges, certain AI systems may lead to undesirable outcomes by creating risks through the very solutions they offer. In recruitment, this may result in unintended bias against minorities. We may or may not be aware that a piece of AI software has made a decision about us or our careers. We may not know how a certain result was generated. Nevertheless, it is important that that decision or result is fair. This is why there is a need for regulation
like AIA.
To make it easier to understand how AIA will affect the recruitment industry, we have summarised the
5 things recruiters need to know.
ai systems will be categorised into 4 risk profiles
When analysing compliance, AIA proposes a risk–based approach by reference to four levels:
As a UK based recruiter, you still need to be concerned about the impact of AIA
The UK is no longer part of the EU so you may be asking what EU regulation has to do with UK businesses. Firstly, AIA has extra-territorial effect. This means that it will apply to non-EU providers and users of AI systems if the content, predictions and recommendations they generate, or decisions they influence, are used in the EU.
Secondly, the EU is an influential player on the world stage and has adopted some of the highest regulatory standards in the world. If a piece of software is compliant with AIA, it will likely be compliant with most, if not all, forthcoming AI regulation internationally. For instance, GDPR, the EU’s data protection regulation, is widely accepted as a global standard and has influenced and how personal data is stored and processed worldwide. The software service you use, which probably is obtained from a global supplier, will likely be GDPR-compliant.
With AIA, the EU are leading the change in the global software environment. Global software providers must evolve and adapt their software to meet the standards in order to survive in the new environment. You may be using US-based software in the UK, but that software was probably built for a global market and may fundamentally change as regulatory standards evolve.
To ensure business continuity you may need to act before AIA comes into effect
As a result of the changes, HR technology providers have several choices. Here’s how we see the most likely scenarios playing out:
The supplier declares compliance without needing to change their software service.
This is only available to providers who are absolutely certain (and by certain we mean verified by a third party) that their software in its current form complies with AIA. It is the best-case scenario reserved for HR software products which are fair and ethical across the people the tool is intended to evaluate and is expected to pose no harm to any individual.
The supplier changes the software by removing anything deemed too high risk before declaring compliance.
We believe most HR tech providers will run a risk analysis on their product(s) and then adapt their software in order to put themselves in a position to declare compliance. However, if there is a reasonable chance of being in breach of AIA, they could face severe penalties. The impact on you as their client will vary depending on how critical the removed functionality is to your business.
The supplier sunsets the software completely
For AI tools which are deemed unacceptable risk, providers will issue a notice of termination to their clients in advance of AIA enforcement.
The supplier does nothing (red flag)
If your provider takes this option and does not make a declaration of conformity, they will not be listed as an approved provider on the EU website. As a consequence, they will carry the risk of being in breach of AIA. They may be audited by a national competent authority and if found in breach of AIA, they may face fines and blacklisting from all EU member states and their clients may have the least amount of termination notice. If your provider takes this approach, bear in mind you both carry the risk. Foreward-thinging clients should demand third-party verification prior to renewing their software agreements.
Ethics-based recruitment software will protect your reputation
Your reputation, image, and integrity in the ethical sourcing of talent is paramount. Recruiters who comply with the new regulations will be at the forefront of providing a fair and ethical service in the supply of talent.
Here are the benefits of using ethics-based recruitment software
Improve your capability to deliver diverse talent.
It is now a candidate’s market. People look for commitment to diversity and inclusion from their future employers. If your business is actively working towards improving diversity and inclusion, you can attract more top talent. Ethics-based software will enhance your capabilities to attract diverse talent.
You can continue to build your brand
You’ve worked hard to build your business and it should not be devalued or lose credibility because of the software you use.
Continue winning new clients.
Companies that use approved HR tech software will have a far better chance to remain competitive in the industry because clients will have peace of mind that their talent is being sourced ethically.
Retain your existing client base.
Some businesses may require proof that their methods of talent sourcing are ethical. If you cannot prove that your talent is sourced ethically, you may lose some clients to the competition.
Avoid costly business disruption.
If your software is deemed unacceptable or high risk by the AIA it will necessitate software changes and critical systems could be lost unexpectedly. Imagine the impact on productivity & revenue if this happened to you.
It's the right thing to do.
Ethics-based software is fairer for everyone and using it will make you a more attractive talent partner because you can ensure that every candidate is given the best chance of success. And don't be shy to go public with your commitment to 'ethically sourced talent'.
You have your own choice of action to take to protect your business
Ask yourself, “how would my business be impacted if the recruitment tools we use are switched off at short notice?”
Now that you know the top 5 things about AIA, we encourage you to take action so that you can future-proof your business and get a jump on the competition.
