Finalist: Modern Hire

INNOVATION FINALIST

MODERN HIRE

Hiring a new employee is an important decision that can affect a company well into the future, and it’s a choice that hiring managers and HR professionals strive to make without imposing their own unconscious biases.

Yet as much as a hiring manager may try to be fair, it’s hard to leave behind their past experiences, background, upbringing and other factors entirely.

Modern Hire, a hiring platform headquartered in Cleveland and Delafield, Wisconsin, is tackling that challenge head on with innovative technology that promises to improve hiring managers’ ability to make consistent and fair decisions when evaluating job candidates.

Last September, Modern Hire unveiled AIS, an on-demand interview feature that uses artificial intelligence to evaluate a candidate’s interview responses. The tool provides recruiters and hiring managers with recommended scores to ensure unbiased hiring.

The costs of unconscious bias during hiring can be very high. A company accused of unfairly eliminating qualified job candidates based on race, age or other protected categories may face harmful consequences, including lawsuits and reputational damage. On top of that, it will miss out on the advantages of having a diverse workforce.

Modern Hire’s new product offers a way to cut down on biased decision-making.

“AIS works because it presents a standardized method to score only the job-relevant content of an answer,” says Modern Hire CEO Karin Borchert. “It does not evaluate facial expressions or audio properties, which avoids the potential for bias.”

Modern Hire utilized an internal team of professionally trained experts who developed artificial intelligence models used by AIS.

Those models considered competencies that predict success on the job, and incorporated ratings of candidate responses to questions related to those competencies.

The team used tens of thousands of ratings to train the natural language and deep learning models used in AIS to replicate the human hiring process.

AIS has been shown to reliably replicate the judgment of professional trained experts, according to Borchert, who says other models demonstrate extremely strong correlations with expert raters, far exceeding the professional standard of 0.60 that has been recommended by authorities in the field.

AIS is the culmination of years of research and work for Modern Hire, which has 250 employees. The company’s Science-Labs, Technology, Professional Services and Product teams form the core of the company’s innovation engine, and played crucial roles in developing the tool.

Development of AIS was aided by The Riverside Company, a global investment firm headquartered in Cleveland, which invested in Modern Hire in 2017.

“We made the initial investments in Shaker and Montage—now Modern Hire—because we saw that the human capital management market was, and still is, ripe for the type of innovation that Modern Hire has to offer,” says John Kish, senior operating partner at Riverside.

“The application of science and the importance of ethical AI are forever changing how organizations find and add the right talent to their teams,” he adds.

AIS touched every department within the company before it launched, making the innovation a true Modern Hire team effort, adds Borchert, who believes AIS can transform the hiring process.

“AIS provides interviewers with a tool that enables more consistent, accurate, efficient and fair hiring decisions, making it a game-changing, science-driven technology for the hiring field,” she says. //

Q&A with Cambridge Global Payments

How to Avoid Currency Risk When Investing Abroad

Sean Coakley of Cambridge Global Payments, the MMG Innovation Award sponsor, describes how to address foreign exchange risk during cross-border deals.

What is your outlook for crossborder deal volume in 2021?

Since 2018 and especially true in 2020, the trend has been toward a lower level of cross-border deal flow both in number of transactions and dollar value. Starting in the second half of 2021, I expect this trend to begin to reverse.

For several years, the United States has dominated inbound and outbound deal flow and should maintain its preeminent spot in both categories. Fiscal largesse, reopening of businesses and a substantially diminished U.S. dollar make the United States an especially compelling target for inbound investment.

In fact, the U.S. is expected to significantly outpace other developed market economies, recording yearover-year GDP growth of 6.5%. This will provide a substantial tailwind.

What are some of the foreign exchange (FX) considerations that deal-makers should consider when investing or expanding abroad?

Investing abroad introduces complexity both at the deal and portfolio company level that can have a material impact on investment returns. The challenges presented and their potential solutions vary depending on where the FX exposure originates.

At the deal level, FX markets trade continuously such that their variation can significantly impact acquisition costs and ultimately IRR. This exposure is present throughout the deal process but can largely be managed in due diligence. Where we find acute challenges is during execution, especially if there are earn-out provisions in a foreign currency post-close.

The portfolio company level is where we find the largest ongoing challenges. FX variations can have a very material impact on cash flow volatility, operating margins and working capital management. These have downstream impacts on long-term profitability, growth and valuation that can be substantial. Additionally, capital structure choices and sources of financing add additional challenges, as translational FX exposures have been known to trigger covenant breaches.

How can technology mitigate currency risk?

Within the U.S. market, there is a wide variation in the quality of international banking capabilities and offerings. Often the solutions needed to address challenges emanating from cross-border activities are unavailable, difficult to access or expensive. Financial technology has been a great equalizer in terms of granting access to hedging, cash management and disbursement tools while also driving down their costs. // SEAN

COAKLEY

Title: National Account Manager and Market Strategist

Company: Cambridge Global Payments

Expertise: Based in Vancouver, British Columbia, Sean Coakley is national account manager and market strategist for Cambridge Global Payments, where he helps North American corporates and institutions deploy FX risk management, treasury and payment solutions.