Recruitment in Australia: Will History Repeat Itself?

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 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.

Come on, be social :)

Seek’s price hike – A (contrarian’s?) view

You must have also been following the thread re. Seek raising their prices and how unfair that is in the context of the recruitment industry being in uncertain times, etc.

The main charge: Seek is making a ton of money!

The bastards!

Well, there are a few reasons why Seek’s destiny (read profitability) is not the same as that of the recruitment agencies:

1/. Most, if not all, of Seek advertisers are in the recruitment business. But Seek is not; Seek is in the online advertising vertical. And because of their business model, they’re now driving an NPAT that is 10 times that of the commercially viable agencies (don’t quote me to the cent; I am not running an analyst briefing). There are drastically different economics driving each industry.

2/. Seek’s goods are price-inelastic, which means that changes in price levels will not dramatically change customers’ demand for it. Recruiters as well as hiring companies that need people cannot do anything else other than continue posting jobs. Conversely, companies that are not hiring will not advertise for roles no matter how affordable a job posting is. So why not up the price? If I were a shareholder I would have cheering for a 19% rise, not 9%.

The assumption here is that there is either a belief or hard data that indicates that Seek still gives placeable candidates to its advertisers. Knowing that you’re keen on price-inelastic goods, you better be damn sure that they return to you what is expected of them.

3/. I reckon demonizing Seek is significantly less effective than voting with your feet. Perhaps now (better late than never) is the time to think about what else do you do as an agency or employer to get the talent you need and reduce your dependence on a single source of people.

What if you invest half of you what you spend on Seek on building other sourcing channels? This is what we did when we swapped newspapers for jobs, right?

My clients are all recruitment agencies; none of the guys and gals I have spoken to are overly worried about Seek’s price increase. What they are thinking is: how do continue ensuring my business model works? How do I keep my profitability intact, or how can I better it? Do I need to diversify? Move out of Aus?

Which are the right questions to ask.

Come on, be social :)

Recruitment off the back of a truck

This sign is usually parked near the intersection of River and Shirley roads in Crows Nest; during peak traffic hours, the area is a nightmare to drive through, if you can drive through. I live half a mile down from where this ad is.

I am not sure when you last time paid attention to a You-Haul advertisement pushing a jobs website, let alone remembering to check it out once you got home. Seriously, I am just glad to get out of the bumper-to-bumper nightmare without getting too stuck.

Pretty dumb to spend money on this, huh?

Well, the ad is parked in a spot that is pretty much equidistant to The Royal North Shore and Mater Hospitals; surruounding them there is an entire ecosystem of labs, surgeries, private practices, physio centers, you name it.

My neighbour is a nurse. At the small primary school my kids go to, there are at least 1/2 dozen midwives who live in the area. They surely drive around River Rd all-the-time.

I’ve a had look at the advertised website. It is a bit of a substandard online experience, compared to best/better practice. It does what it needs to do as a jobs site, however.

Question is: What would you say is the candidate response due to the ad by the side of the road? I am not expecting huge flows of CV’s, but possibly high relevance levels and material volumes of applicants, given their geo hyper-targeting.

I will aim to get in touch with the agency guys and see if I can complete the picture. Just remember: you can have a niche campaign on wheels if you want to, outside Uni’s (graduates), coming out of Pyrmont (digital, IT), etc.

Have a good evening.

Come on, be social :)

You can post a job ad, but it will cost you

It’s the beginning of the year and I am already disappointed.

I thought 2010 was going to be the year where significantly less job ads, print or online, were going to include phrases like:

– ‘leading multinational’ to refer to the hiring company
– ‘high calibre individual’ to refer to the candidate they want to attract
– ‘challenging and dynamic environment’ to describe work conditions

What’s the real chance to get who you really want for this role with ‘details’ like those above?

I understand the anonymity has been used to protect clients from ambulance chasers, unsolicited CV’s etc. Those protection costs though are extremely high. It will cost real money to process unsuitable applicants – for example.

You might find the right individual in that hay stack you are generating. But just in case, get your calculator out and do your numbers; your job ads might be making your advertising/sourcing process more expensive than what you imagine.

Come on, be social :)

shooting the (job) messenger

A few days back @gapingvoid twitted a link to a WJS article series describing the experience of recently made-unemployed US-based MBAs. In it, there was a sort of side-piece written by one of the individuals profiled, which touched on online job boards.. He says:

External job boards have certainly helped me with the search process, no doubt. They are great sources of information for discovering which companies are hiring for what. But when it comes to actually securing a position, my efforts in this area have been completely fruitless. In my conscious recollection, any resume that I have sent off into the oblivion of the Internet has never garnered a response of interest. In fact, a very small percentage returned any response whatsoever.

He then moves onto saying the following about vertical search engines (aggregators)

The job search sites that have been most beneficial are SimplyHired and Indeed, which aggregate job content from all around the web. These aggregator sites don’t necessarily provide the answers, they simply strengthen the cornerstone of daily searches by providing breadth and depth that other external boards don’t. I’ve also found that most of these job listings are linked to internal career Web sites so I can apply directly and even see other opportunities of interest. Best of all, these sites don’t require job seekers to have an account, or post their resume.

Apples to oranges, isn’t it

People use job boards and job search engines differently, driving significantly different expectations. A response is expected for a job application sent through a job board. From an aggregator, visitors expect depth/coverage (more job ads sources, better data slicing).

On the job board, people are job seekers, on the aggregator they turn into job researchers.

You will know that job boards are not the ones who are ignoring applications. It’s the consultant or the hiring manager – that is, advertisers – who would decide that there’s no point in getting in touch with unsuitable applicants, at least on a timely basis.

Meantime, you as a job board owner/manager and your brand are taking the heat.

So, how do you make the job board experience better for a job seeker?

– Do you follow up the advertiser and then ‘get in the middle’ and let applicants know of your efforts to ensure they get some sort of response?

– Do you let job seekers know that there is nothing you can do?

I reckon that job board owners/managers will be more inclined to do nothing if they think they are in the advertising industry. Conversely, if they see their organisation inscribed in the recruitment industry, they might be prone to make something to contribute to the recruitment experience.

Either way, it will come back to them.

Have a great week

Come on, be social :)

Prices are up, costs might be down

Recently, Geoff Jennings reported a price increase in the C1 product which, correction notwithstanding, still took home the message that noone likes a price hike. Fair enough.

Even though nominal prices per ad were to go up for advertisers can I suggest the acquisition cost of acquiring candidates/job applicants may be going down?

This would be the obvious result of having more applications per ad (in turn due to more people looking for work altogether and, to a lesser extent, reduced ad re-posting). This argument assumes similar ‘quality’ of applicants, which is a can of worms I will open for the next inauguration, if ok with you.

Last time I checked, at 185 USD, a LinkedIn ad looked pretty unaffordable, in the words of a few recruiters I spoke to. But, what if that ad delivers more ‘quality’ candidates, or even the candidate that ends up being placed, earning the fees to the consultant?

I made this point in a previous post, Advertisers pay for an ad, but expect more than posting; they expect distribution and targeting. So if C1 is nominally more expensive than Seek for some of its ad packages. they might want to get ready to justify it in terms of application volumes (post note: turns out they’re not more expensive than Seek which puts the universe in balance again).

This tight period may prompt advertisers to pick up a pencil and review the source of their candidates; nominal per-ad prices might be misleading.

Come on, be social :)

What’s the Web good for?

At the beginning, it was good mainly for Posting. You could plaster and ad, a marketing brochure, etc. All there was left to do was to stick in a link on an email, print ad, etc. this is the ‘canvas’ era.

Then the web enabled Aggregating. For job ads, this meant shoving classifieds in one central point, that would help with exposure/effectiveness; this is the ‘eyeballs’ era.

Subsequently, the web got good at Distributing. (the ‘social’ era – not just 2.0 social web stuff; I mean search, syndication, ad networks, etc. I guess it also includes 2pointoh)

Publishers (say job boards) that leveraged of what the web had to offer during these eras, are finding market players that ultimately challenge them at the highest/current point of the ‘value of the web’ continuum. Example: job search engines competing on the basis of its distribution prowess (if/when available), without offering Posting.

It would be great if you accept that this ‘era’ model can help build a simple strategy framework for organisations that want to succeed in the online recruitment advertising space. If that’s the case, it might be worthwhile sketching a few ideas on the following fronts:

– What’s the next / upcoming web era after distribution? That is, from where is the incremental value to be offered to your market going to come from? If you answer ‘mobile’ or ‘networks’ i think you’re kidding yourself.

– Do you need to redefine who your customer is? Or do you just need to change/increase the markets you serve?

– Do you need to redefine which business you’re in? Do you sell ad distribution or are you in the job seeker/career management services bizo?

I reckon those have a dozen sub-questions. Any takers?

Stay well

Come on, be social :)

A car going for a song: consumer behavior in six acts

Act 1: Thursday evening. Jorge is reluctantly watching Law and Order on FTA TV

Act 2: Commercial break. The latest VW EOS ad screens. The song for the ad reminds Jorge of the song that Julia Delpy’s character in ‘before sunset’ sings to Ethan Hawke’s whilst they are in her Paris apartment

Act 3: Jorge looks for the name and artist for the ad song online. Yahoo answers and Answer Bank yield old results – looks like the EOS has a bit of a reputation re. using catchy songs

Act 4: YouTube’s EOS ad clip comments provide the song and singer names

Act 5: Jorge goes to iTunes and buys/downloads the song. Jorge is definitely not going to buy an EOS in the foreseeable future

Act 6: Jorge goes back to the couch secretly hoping that Basia Bulat is paying VW for advertising/royalties, not the other way around

Have a great long weekend

Come on, be social :)