Originally posted on Linkedin in August 2015
These are the reasons why I believe there will be no such thing as an Uber (or Airbnb) for recruitment:
.1 There is no pent up supply of talent: Uber and ABnB have made privately owned cars and properties available for a purpose they had not been utilised before. Supply of cars for rides and apartments to holiday in have exponentially grown when these apps made all of us potential taxi drivers and Basil Fawltys.
Whilst there is certainly under and unemployment to account for, there is really no hidden talent supply that can be unleashed by the disintermediation of the recruitment industry. Apps will not increase per se the availability of IT or Finance talent just because the recruitment industry is – well – uberised.
.2 Talent is not owned/managed by monopolies. The disruptive power of Uber and Airbnb stems from their ability to break the barriers to entry of the verticals they operate in. We can certainly do with process reinvention in recruitment but – again – there is no mega cartel that directs people when to work, where to work, and for which price.
.3 There is no extraordinary economic surplus extracted from the placement of talent as it currently exists. Taxis have their meters, dollars per mile cost and surcharges. Hotels have their daily rates, check out times and penalties for ruining the carpet. You could not negotiate or opt for a substitute service – until the apps ruined the cartels’ show, that is.
With the additional supply, incumbents’ margins have eroded and redistributed to the new entrants.
Meantime, talk to recruitment agencies and ask them how much price pressure they can exert on their clients (hint: not much, until they change their value proposition at least). Bottom line: there are no fat margins to be rejigged to the dis-intermediaries.
Have a good weekend.
PS Subsequent to this clumsy write-up, I’ve had the opportunity to read Barbara Gray’s economy of abundance / copianomics paper. Her solid framework is extremely useful to understand the industries where there ‘could’ be ubers and airbnb’s. Do yourself a favor and read the paper
The recent acquisition of Peoplebank by Recruit Holdings brought a few memories from the days I joined the recruitment industry in 1999.
You see, around that time, Andrew Banks – being the consummate recruiter he still is – disarrayed me from my cushy job at IBM and fuelled my interest and – dare I say foresight – about the impact of the internet on the staffing and talent management verticals.
It was kinda my doing too. I remember reading in the Fin Review circa 1998 about how this company called TMP Worldwide, from which I had never heard of before, was romancing Morgan & Banks. After reading that article, I found myself writing to Andrew and Geoff sketching a business strategy plan, which in hindsight was effectively my job application for what would be my first gig at M&B.
In ’99 as part of a whole stream of acquisitions around the world, M&B joined the TMPW family of which Monster.com was the crown jewel. Even though the TMPW agencies never stopped from offering recruitment services, the implicit strategy was to ‘feed the monster’ and ensure that it became the largest provider of online recruitment products (resume search, ATS).
If memory serves me right, Monster launched in Australia in late ’99, supported by a large CV bounty exacted from the acquired agencies. All the TMPW businesses in Sydney went to live happily together at Angel Place around that time.
The conviviality did not last for long. If you are too young to know or too old to care to remember, Monster closed shop in Australia after a fairly aggressive and long marketing campaign. A few reporting periods later, the recruitment agencies were spun out of TMP eventually creating the Hudson Federation.
Don’t get me wrong: Monster’s platform was pretty good at the time. But the market killed its potential via three different ways:
– Seek was already strong and very much on the up and up
– The internal TMPW offering conflicts (e.g. tell me again why do I want to liaise with an agency if Monster has all the candidates I need?),
– The fact that no agency wanted to buy Monster because of its close relationship with M&B and the other acquired agencies
I think the last reason above was the critical factor to bring about Monster’s demise the first time around. As you know, Monster co-owns CareerOne, which is already a longer-lasting, better-traction exercise in Oz compared to the first attempt.
Bring the clock forward to 2015. Recruit Holdings, owner of Indeed has Peoplebank on the portfolio and on the way to acquiring Chandler Mcleod. The press release expectedly guarantees independence and autonomy for the group’s companies moving forward, etc.
There seems to be little downside for Recruit Holdings at first sight. Peoplebank and CMG are two professionally run businesses, with significant market and brand share, poised to capitalise on a market upturn.
However I see a few risks, especially for Indeed, based on what I saw happening with Monster. True, the market has changed, matured even. Nevertheless, let me outline how I think things can get difficult:
So far, I am only hearing good vibes from Indeed; Their intent to dominate the market is palpable; from the marketing, through to their hiring, to the ever-improving search engine and dedication to SEO.
The risk for them is that now that Peoplebank and CMG are part of the Recruit stable, it will become harder for them to acquire/keep customers like Hays, Page, Hudson or Talent International. At least for now, agencies are the customers that matter.
In all likelihood, agencies will look for direct replacement products (e.g. other search engines like Adzuna) or other sourcing tools like LinkedIn, CareerOne or Seek. For the latter, this would continue to solidify their market leadership position.
If history repeats itself, Peoplebank and CMG may also come across hurdles:
– Indeed clouding their own value proposition to customers
– PB and CMG being “cordially invited” to use Indeed as their preferred source of candidates.
– Technology being deployed “on” them in order to generate ‘synergies’ with Indeed and across the group
– Seek, LinkedIn or other important sources of candidates changing their “commercial attitude” given these companies’ connection with Indeed.
Again, I agree the market has changed. Recruit might be culturally and strategically a totally different organisation compared to TMPW in the noughties and it may run a very different ship. Similarly, Peoplebank and CMD have the potential to be serious innovators in terms of redefining talent services with a strong services, supply-chain philosophy IF they are left to do their thing.
Last Friday’s announcement made this year so much more interesting for the recruitment industry. Can’t wait to seeing things unfold.
Hope you all had an amazing start of the year.
Brought to you by Marketing Automation Software by Marketo
Australia Post has prompted an imminent increase in the price of mail delivery services, as it looks at mounting losses incurred in this business division. In contrast, the parcel business is booming thanks to e-commerce.
Understanding the mail delivery business as a distribution category is to my view the source of the problem. To amplify the commercial crisis we, as individuals and businesses, are all trying to hand-write less and use less paper. We don’t perceive high enough value (or low enough cost) in the physical delivery of mail.
I think this is because mail is rather an information and communications endeavor. The value of mail does not reside on the physical mail unit delivery but as conduit that triggers subsequent actions (a contract is signed; a bill is paid, etc.).
This is the thinking that would be supporting the launch behind initiatives like Australia Post’s own Digital Mailbox and a private company called Digital Post which closed earlier in the year, given the low levels of clients’ take up. Easier said than done, huh?
The parcel division certainly has the wind on their backs, but I would speculate that Aus Post is making a mozza delivering our shoes, dresses, headsets, etc.; because it has unrivalled distribution / delivery expertise. Whether it is fully unlocked is another issue.
This comparative advantage cannot be used in the mail delivery business; hence the huge gap in performance.
So what is Australia Post to do?
– Divest from businesses on which it does not have a comparative advantage. Mail delivery is one of them (counterintuitive I know but trust me on that one )
– Going even deeper into parcel delivery, investing in logistics tech, exploring crowdsourced delivery, etc.
– Sell mail delivery to a specialist in data, communications and workflow; yep even the physical part. They will be in the best position to migrate mail online faster that Aust Post trying to upskill.
Come to think of it, I reckon Telstra could be in a good spot to transform mail. Dropbox also comes to mind.
One of the shortfalls of email is that once what we need to communicate gets shipped out, then we’ll tend to forget about it (out of sight, out of mind – right?)
I certainly need help to follow up unanswered emails, at the right time. I am also keen to increase my email open rates.
If you are in a similar predicament, you can’t go past Boomerang for Gmail. I love every bit of it. Boomerang will schedule emails to ‘send later’ and will let emails come back to you when unanswered (or any other type of action trigger)
So, if you receive something from me on the weekend, don’t think I am not enjoying the Sydney weather when you are reading it.
Have a happy and safe weekend