What is the Value of an AI-Generated Cover Letter?

Source: https://chatmaxima.com/

Cover letters used to provide insight to hiring managers and helped them identify which candidates to select for an interview. A well-written cover letter signaled something about the quality of a candidate. Moreover, a well-tailored letter also could signal that a candidate was serious about the particular job opening. Do cover letters still have signaling value in the age of AI?

Several months ago, Jingyi Cui, Gabriel Dias, and Justin Ye published a working paper titled "Signaling in the Age of AI: Evidence from Cover Letters." They studied over 5 million cover letters submitted to 100,000 jobs on freelancer.com platform.  The examined the impact of a new feature on the platform that uses AI to generate cover letters for job candidates.  Perhaps not surprisingly, "Access to the tool increased textual alignment between cover letters and job posts and raised callback rates."  

However, that is not the end of the story.  The key finding pertained to a substantial drop in the correlation between cover-letter tailoring and invitations to interview, as well as a significant drop in the correlation with job offers.  On the other hand, workers' review scores (a metric developed by the platform to evaluate past work experiences) became more meaningful.  The authors conclude "These patterns suggest that as AI adoption increases, employers substitute away from easily manipulated signals like cover letters toward harder-to-fake indicators of quality."  

Finally, the scholars examined whether people spent time revising or editing the AI-generated cover letter.  Many people did not.  Yet, those people who did edit the letters increased their probability of landing the job!   

Interestingly, another study by Galdin and Silbert also studied job candidates on the freelancer.com platform.  They found that the length of applications increased after the introduction of AI tools to help candidates.  At the same time, "employers had a high willingness to pay for workers with more customized applications in the period before LLMs were introduced, but not after."  In short, they discovered a drop in the value of the well-crafted application as a signal of quality.  That drop had important implications.  They write, "Without costly signaling, employers are less able to identify high-ability workers, causing the market to become significantly less meritocratic: compared to the pre-LLM equilibrium, workers in the top quintile of the ability distribution are hired 19% less often, workers in the bottom quintile are hired 14% more often." 

Résumé Mistakes

What are some the classic mistakes that job hunters make on résumés?  Laszlo Bock, SVP of People Operations at Google, has posted a good article on LinkedIn with the top five common mistakes that he has seen.  It's a good list.  Here are Bock's top five, with some commentary from me:

1. Typos

I would expand his point to include grammatical errors, particularly on the cover letters that accompany résumés.  Poor writing plagues many cover letters.   Examples of writing deficiencies include:  overly complex sentences, improper use of commas and conjunctions, far too much use of the passive voice, and poor paragraph construction.  The list could go on! 

2.  Length

As Bock says, you should be aiming to land a first round interview, not to tell your life story.  You can expand the story during the interviews.  Focus on getting your foot in the door.

3.  Formatting

Bock recommends saving the document as a PDF since other formats can become troublesome as they are passed electronically across various platforms and devices.  Good advice!  He also argues that it should be a clean, easy-to-read document.  I would emphasize the need for plenty of white space.    You do not to jam every inch of the page with words.

4.  Confidential Information

Bock uses the example of a consultant who clearly reveals the names of clients.   Many consulting firms have confidentiality policies.  If an applicant breaks their current or past employer's confidentiality policy, that's a major problem.  

5.  Lying

Lying on résumés appears to occur quite often.  We have just seen a senior executive at Wal-Mart who lost his job due to a lie about his educational background.  We've seen CEOs lose their jobs over these types of lies.  I think the harder-to-detect lies are even more common, specifically exaggerating job responsibilities and accomplishments.  I also think that résumés sometimes fail to give proper credit to those who helped an individual achieve certain goals at a prior employer.  Was it a team effort?  Does the résumé reflect the fact that a team achieved the goal, not just that individual?  Not giving others proper credit seems to be a major issue in the job application process.