Proceptual is a company that provides compliance solutions for emerging regulations of automated hiring systems and AI. Pulse 2.0 interviewed Proceptual founder and CEO John Rood to learn more.
John Rood’s Background
Rood was previously the founder of Next Step Test Preparation, a leader in pre-health and pre-medical test prep solutions, which sold to private equity. And he is a graduate of Michigan State University and the University of Chicago. Rood said:
“Before Proceptual, I spent ten years in the standardized testing industry. I founded a company specializing in pre-medical test prep, which we later sold. As part of that role, I spent a lot of time studying assessment and psychometrics, which laid the groundwork for what I’m doing now at Proceptual. Beyond that, I learned what it’s like to run a business–including dealing with new compliance obligations!”
Formation Of Proceptual
How did the idea for the company come together? Rood shared:
“I’ve been an AI hobbyist for a few years. Last year, there started to be more talk about regulating AI, specifically in the HR context. Working with my advisors, I knew that this would create a need for compliance solutions, so we jumped in.”
Solving Challenges
What are some of the challenges you are trying to solve with Proceptual? Rood pointed out:
“We are very focused on providing compliance solutions for the emerging wave of regulation of HR tools. I’ve led HR before, and I know how many new obligations HR leaders have to deal with (along with their leadership and legal teams). We have built a tech-enabled, streamlined solution for these new laws that helps companies get compliant as efficiently as possible.”
How much internal lift is needed from companies leveraging Proceptual?
Rood noted:
“Very little; we conduct a few management interviews and have a data request that is quite straightforward. We handle as much data cleaning on our end as we can, and we’ve built a software platform that minimizes the need for a lot of manual work.”
NYC Becoming First City To Pass Laws About Compliance With Tools Used For Hiring
NYC just became the first city to pass laws regarding compliance with tools used for hiring so Rood was asked about whether he thinks other states will follow:
“Yes, several other states are actively considering laws similar to NYC. In HR compliance, California is usually a leader, and indeed, it has a similar bill moving through legislative committees. We will also see very similar bills in New Jersey, Washington, DC, Connecticut, and NY (state as opposed to city). We should see a few of these laws pass this year and go into action in 2024. Most importantly, the federal EEOC has made it clear that existing regulations apply to HR tools, and that it’s the employer, not the vendor, who is responsible for their tools.”
Bias In AI Hiring Tools
How common is bias when it comes to AI hiring tools? Rood replied:
“It’s a tricky issue. Clearly, bias in hiring was present before AI. One big opportunity of AI in hiring is the ability of algorithms to screen candidates for job-relevant skills and explicitly not consider factors like an applicant’s name, age, or address. So, many of the tools have the best of intentions. That said, we as HR leaders, regulators, and auditors need to make sure that the reality matches the promise.”
Selling Points For Customers
Why should customers use Proceptual? Rood answered:
“Regulation of AI is brand new. As such, there are a lot of gray areas and ambiguities in the laws; many leaders don’t know whether the NYC law applies to them or how to comply. We are one of the very few organizations that are actively conducting and publishing compliance audits. Our customers come to us to get clarity on how to comply and to get said compliance done quickly. We typically complete these services in under two weeks.”
Tapping Into AI For Hiring
Do many companies use AI tools to hire? Rood told me:
“One of the most common responses we get from HR leaders is some form of ‘we don’t use AI.’ That may or may not be true, but the new laws don’t really draw that distinction. Instead, the NYC law talks about ‘automated employment decision tools.’ So set the ambiguity of the definition of AI aside–most companies medium-size and larger do use automated, algorithmically-driven processes in their hiring. Common examples are applicant tracking systems (ATS), resume scanners, and pre-hire assessments.”
Customer Success Story
Can you share any specific customer success stories? Rood highlighted:
“We just completed an audit from a large national staffing company. They have offices in NYC, and use pre-hire assessments to evaluate candidates. Their head of legal contacted us to get compliant as the July 5 deadline approached. We were able to complete the entire audit and compliance process in under two weeks.”
Differentiation From The Competition
What differentiates Proceptual from its competition? Rood concluded:
“We see the NYC laws and upcoming regulations as an HR compliance obligation–one of perhaps a dozen new regulations that HR has to deal with in a given year. Therefore, we make the process as quick and easy as possible so that managers can check AI Compliance off their list. I have seen competitors offer elaborate 50+ page reports suggesting that client companies take all sorts of actions (like hiring an entire AI ethics department) that simply aren’t required by the regulation. That’s not what we do.”
