Why economic growth depends on closing the interview gap

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. Author: Mohit Bhende, Co-founder, Karat & Jeffrey Spector, Co-founder, Karat

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In 2011, Marc Andreessen proclaimed that software is eating the world. The idea that most companies would become software-driven was a prediction. Today, it is an imperative.

Lowes and Siemens are just two firms that were formed years before Andreessen made this assertion. Today they have plans to hire more than 3,000 software engineers in the coming year. Firms undergoing digital transformations are competing for the same talent as venture capital-backed tech-centric firms. In 2018, venture capital (VC) funds invested more than $130 billion, propelling R&D growth to support massive revenue goals.

The vast majority of companies will become software-driven, as consumer preferences have shifted towards digital engagement. Agility and scale have become requirements and cost efficiencies are driven by technological innovation. Yet where capital to fuel these initiatives is plentiful, software engineering talent is notoriously lacking and difficult to hire.

In a 2018 survey by Stripe and Harris Poll, 61% of C-level executives reported that they felt the biggest threat to their business was lack of technical talent. Meanwhile, 71% reported that developers would help bring products to market faster, and 70% believed they would help increase sales.

At Karat, we conduct first-round technical interviews on behalf of companies who need to hire software engineers, but are failing to reach their hiring goals because they lack the expertise or infrastructure required to interview with predictiveness at scale. Rarely, if ever, do software-driven organizations have the resources to conduct the volume of interviews required to achieve those hiring targets while at the same time building new products that drive revenue.

This leads to a very painful choice tech leaders must make: do I spend my team’s time on interviewing so I can reach my hiring goals? Or should we focus on product development so my company can reach revenue goals?

But it’s not a choice. Technology leaders have to invest in hiring and development to stay relevant and reach their goals.

The interview is a required step in the hiring process. It should be accessible, fair and capable of eliminating false negatives – filtering strong candidates in, not out. Yet most software engineers given the task of interviewing aren’t trained (or skilled) in interviewing, and even more feel that conducting interviews is a tax on their productivity.

Through our engagements we’ve observed that companies often leverage only 10 to 20% of their software engineering team in interviewing candidates — at the same time they achieve less than 64% of their hiring target.

This chasm between the number of software engineers able to interview today and the number needed to interview engineers of the future is what’s known as the “interview gap”.

The interview gap shows itself in a lack of capacity, consistency and access to interviewing. This leads to three broad social and economic implications:

1. Not enough tech talent getting a shot at a great job.

2. Engineering productivity being hamstrung by interviewing.

3. Software engineering teams fail to reach their hiring goals.

Given the universal need for technical talent, the interview gap is a grave threat to economic growth.

Technical interviewing is the gateway to some of the best jobs in today’s world economy. Job candidates need access to interviews to obtain those jobs and companies need access to interviewing in order to build world-class teams. However, when companies treat their interviewing capacity as a scarce resource, they are limiting access on both sides – and widening the interview gap.

Moreover, lack of access to interviewing creates a vicious cycle in which candidates are unable to get jobs or obtain the practice they need to improve their performance for the next opportunity. Lack of access to the right experiences disproportionately affects early career candidates who are underrepresented minorities, women and those from poorer communities.

We recently partnered with the Chan Zuckerberg Initiative to conduct a technical interviewing workshop at Morehouse College in Atlanta, Georgia. Reflecting on the event, the Initiative’s Diversity, Equity, and Inclusion Lead, Maurice Wilkins, wrote about why he felt it was so important to address interviewing skills in addition to job-searching skills with computer science students at his alma mater: “More often than not, what we’re talking about is a gap in access – not only to skills development but to the ‘right’ experiences.”

Increasing access to interviewing is, at its core, an inclusive policy. It can lead to more diverse teams, which have proven to be a catalyst for innovation and growth. Through our partnerships, we’ve seen organizations dramatically increase the number of candidates they can interview.

Gaps in interviewing capacity occur when there simply aren’t enough skilled software engineers, with appropriate interviewing experience, to interview job-seekers. I frequently speak to technology leaders who are pressured to reach aggressive hiring targets while also charged with meeting ambitious product development goals. All too often, I hear them say something like, “My engineers are exhausted from interviewing.” When this happens, morale suffers. Candidates have negative experiences. Teams aren’t built. Product isn’t shipped.

This is especially pronounced in teams experiencing rapid growth. Ross Mason, founder of MuleSoft (acquired by Salesforce for $6.5 billion), reflected that when the company was growing rapidly, it relied on a small leadership team to evaluate all talent: “Three of us were on the interview panel for every hire up until employee 1,000. We were miserable.”

Through our partnership with MuleSoft, we’ve directly observed that closing the Interview Gap can materially improve the productivity of engineering teams. This drives the development of exceptional products and builds morale.

As companies grow, each site has a natural tendency to develop its own hiring criteria and processes, diluting the integrity of the overall hiring process. This is largely due to the fact that the process isn’t informed by best practices, but whatever approach the interviewer feels works.

This problem is particularly acute when companies establish new offices in order to tap into additional talent pools. Tech leaders may also be tasked to create new teams with new skill sets in new locations. For example, a team looking to build a brand new development team in Seattle, when the majority of engineers are based in San Francisco or Singapore, may not have the team members with comparable knowledge to interview potential hires.

Organizations with engineering teams at multiple locations benefit from a centralized, structured and consistent interview process.

Across the tens of thousands of technical interviews conducted by Karat, we’ve observed that centralized interviewing practices and the infrastructure that supports it reinforces fairness in the interview and consistent hiring outcomes at scale.

The interview gap is a global phenomenon that threatens economic growth for teams and individuals. Closing it is the next competitive advantage software-driven companies will be able to realize. Increasing access to consistent, structured and fair interviewing will level the playing field, increase software engineering productivity, and make sure growing teams can reach their hiring goals.

By closing the interview gap, companies will create a bridge between their team and future software engineers that haven’t yet had the chance to shine.