Category: recruitment

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 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.

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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.

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Is Recruitment an Inferior Product?

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Happy 2012!

This got prompted by Peter Martin’s post in relation to inferior goods.

Inferior goods are defined as those for which demand decreases as their users’ disposable income increases. He mentions cask wine and International Roast coffee as a couple of retail/consumer examples.

Is your recruitment product an inferior good, based on the definition above?

When our clients are better off financially, do they seek out your services or do they seek to replace you with what they perceive is a superior product (DIY recruitment, a more reputable agency, employer branding consultants)?

Yes, there are many moving parts to offer a one true answer. This is an intrinsic limitation of the neoclassical economic model which relies a lot on the Ceteris Paribus (all other variables remaining equal) which never happens in real life.

However is it worthwhile asking this question as recruitment service providers, don’t you think?

inferior_goods
Looking forward to being in touch during 2012

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LinkedIn, Facebook and the Chinese Market Fallacy

Over the past few months I have seen Facebook based apps/platforms (BranchOut, Talent.me, Monster’s BeKnown to name the ones I have signed up for and been using/testing) being touted as serious competition to LinkedIn.

The core reasons these and other Facebook-based services are being given a good chance of success against LinkedIn is not their technology prowess or unique business-commercial model; rather they are positively viewed by pundits due to the fact that they are hosted on Facebook, the largest social network at 750 million users (plus).

It is certainly possible that these FB-based systems do have great systems or unique value propositions for its users. These however seem to only come second to the “fishing on the biggest pond” advantage.

There are a number of reasons as to why I am sceptic as to this argument. Mainly, I am reminded of how China was viewed as a market a decade (or perhaps more) ago. I clearly recall many sales, marketing and business development presentations introducing China as a market with 1.3 billion “consumers” (which is as you know their entire population, more or less).

Closer inspection, of course, showed the fallacy of counting every Chinese national as a consumer without recognising their purchasing power, whether they lived in rural areas, etc. The rise of the middle class in China is certainly bridging the gap but it is still necessary to look deeper to understand they real size of the market for specific products or services.

The Chinese Market (size) fallacy reminds me of the volume advantage of the Facebook-based applications better-than-LinkedIn chances of succeeding. Even if these platforms were to grow large, recruiters know well that volume does not automatically imply quality (which drives candidate place-ability).

I am certainly not prepared to write off LinkedIn on the basis on the volumes argument. I’d love for other companies to continue innovating and making it easier for people to find jobs and for recruitment professionals to add more value to their employers/customers. I think this battle will be fought on the basis of benefits and value. I certainly hope so.

Come on, be social :)

Second Degree Land

InMapsWith Google, I found like I never had before
With Blogger, I published like I never had before;
With LinkedIn, I networked like I had never before;
With Twitter I discovered like I never had before;
With Facebook I played like I never had before;
I am not sure what I am doing on G+ yet…

I posted more or less the same lines to G+ a few weeks back; fact is I am not using it regularly and there is no immediate or apparent reason to go to it in a hurry.

But this is not about Plus; it’s about me reaching 1000 connections on LinkedIn which, as you well know, has no intrinsic value. It is also about a couple of articles on the rise of LinkedIn and its impact on human/real connections:

– Rick Bookstaber’s “Ultimately LinkedIn Will Make Your ‘Weak Links’ Less Valuable”
“The continuing devaluation of LinkedIn connections” by Ross Dawson

These pieces are not comparable straight away in as much as they are not addressing the same issue. Bookstaber’s post centers around network theory and how weak links need to remain ‘weak’ in order for societies to flourish and develop (whilst LinkedIn might be doing totally the opposite).

Ross’ article is about the bastardisation of the LinkedIn connection as more “strangers” approach you to link-in simply because -as per the system’s features- this is the only way to get in contact with a member. As a contrast, he references Facebook, where strangers can message you and you can “sus-out” people without a prior connection commitment.

The point of convergence for the articles was reaching the 1K connections mark, which prompted me to reflect on what happened to my way of doing business since joining LinkedIn. Some insights and personal experiences follow:

– I think I have done well in not connecting with every man and his dog just for the sake of increasing reach. Weak first degree connections that have no opportunity to strengthen are very much like those conference attendees whose business cards we hoard but whose face or pitch you cannot recall. You cannot help them and they cannot help you.

– Strong first degree connections off the system as well as those nourished in it after the initial contact have been extremely positive for repeat business. LinkedIn has proven to be an effective CRM; then again I don’t have thousands of clients or lots of staff that demand highly coordinated relationship processes.

– Almost every new customer I signed up is (or was at the time) a second degree connection linked to a strong first degree connection. At the same time, there is a huge chunk of second degree connections which are, to-date, strangers; however, more often than not, I have enough information to work out what their business needs and priorities might be. So, you know where my marketing efforts go.

– Third degree connections is uncharted territory; every now and then, I see little archipelagos (members who I know or can connect off the system) but they are rare. LinkedIn Signal might change that, but I am not a heavy user yet.

– Throughout the five 1/2 years of going with the biz, my marketing expenditure has been negligible. You might say I could be more/really successful if I had spent money. I think that if I had decided to have marketed more, I would have done more of the same (e.g. blogging more, increased participation on Groups, more presentations, videos, etc.) which is a resource with a cost but still imply no material disbursements of dollars.

– My cold calls on LinkedIn – inMails, connection requests via Groups – have had about a 30% success rate at the most. Success here is understood as having the chance at strengthening a relationship, so that 30% is looking not too hot, is it. I don’t believe the conduit was the culprit; rather, it was my inability to sell the connection request well enough.

About 10 years ago, a recruitment ‘big-wig’ told me something along the lines of “Jorge, you will never be able to accumulate the amount of business cards I have on my Rolodex”.

I am not exactly sure how he did business, but one thing LinkedIn has enabled me to do is to check thousands of ever-changing Rolodexes of people that I am not even directly related to. My future clients, employers, colleagues, employees are – more likely than not – living right now in second degree land.

Come on, be social :)

Why Facebook will not destroy LinkedIn

Facebook-LinkedIn
Just read the article ‘Why Facebook will destroy LinkedIn’ on ERE .

This is argued on the basis of four core reasons:

– Larger volumes of people on Facebook
– Similar demographic groups
– Recruitment tools showing up on Facebook already
– Better ‘social marketing’ at Facebook

I think the article should have been better titled ‘Why Facebook can be used as another platform to recruit’. Less attention-grabbing for sure, but perhaps more balanced.

This piece, IMHO, assumes that LinkedIn will sit on its hands and let all the wealth of profiles, companies and relationships information logged over the years go to waste. I don’t see it happening

Along these lines, the ‘Facebook is huge’ argument echoes the pitch of job boards sales reps of yesteryear selling eyeballs and traffic. Organisations never needed Unique Browsers; they always needed placeable candidates that allowed agencies to earn a fee, or corporations fill a role. Bits of functionality like LinkedIn Skills which enables self-skills-coding has the looks of a powerful offering to do things like ‘get me 15 developers with android games experience in Sydney’

Similarly, demographic similarities have to be complemented with intention of presence – I go to LinkedIn to generate leads, connect with professionals, and hopefully grown my personal brand. I go to facebook to chat to my sister in Peru, look at pictures of friends and fam, mostly.

I joined Branchout early in their life and was trying to use BeKnown. Kindly, and – this might go for Australia only – we’re at very very early and immature stages of seeing candidate attraction and retention happening on FB. I am not saying it will never happen; rather I am arguing that the social links – which can nurture professional links (e.g. I want to work at Adidas ‘cause I love the brand, and my cousing tells me training for salespeople is great) – are at this stage a huge haystack to look for needles.

I am looking forward to seeing a network, environment, app, etc. giving LinkedIn a run for its money; this will be very beneficial for the market as it will accelerate the pace of offerings. I just don’t see LinkedIn destroyed anytime soon.

Have a good rest of the week.

Come on, be social :)

Recruitment and Virtual Goods

I was pretty sure I had not bought any virtual goods; I’d rather give a real bunch to the missus instead of getting her a one-dimensional rose on Facebook. Heck I might lose my face if I show with my byte-based present.

I caught a bit of the first day of @leweb a couple of days ago. During the time I watched it was all about games, mobile, social and payments. I won’t be surprised if that’s how it went for the rest of the sessions.

Fact is, I might be the only old-f@art not buying virtual goods. Billions of dollars have exchanged hands, and many companies have become hugely profitable off the back of these ethereal goods. And they all seem to get even stronger sale/expansion outlooks.

Thing is, I think there is a more comprehensive of virtual goods when I said I had not bought any yet.

If you think of software as a virtual good – whether it is a spreadsheet, a smartphone game, or an iTunes track – I guess this means we’re in this virtual commerce exchange for a long time now. The distinctive feature of these goods is that they have intellectual inputs that ‘impact’ the purchaser or recipient. The problem with my earlier definition was that I did not see intellectual inputs on electronic cows (which are totally different to electric sheep, but I digress).

Hopefully, you have agreed with this revised definition of virtual goods and with the fact that you and I have been supporting this economy for yonks. Let me put something else on top of that:

Physical goods – computers, jeans, coffee – have virtual goods in their make up that appeases or satisfy us emotionally, over and above the fact that the computer is fast, that those jeans hold your butt beautifully, or that the coffee is going to wake you up.

I put to you that those virtual goods are encapsulated in what we call ‘brand’. The implicit assumption is that, perhaps over time, you can find the physical features of branded (and great) goods in other white label products. Manufacturing technology, design progress and Japan seem to indicate this is rather plausible.

That was a bit of a long road to assert that the virtual elements of your product/service have the potential to be the source of customer engagement with them.

Where are our virtual goods in recruitment? How do agencies and hiring organisations build in virtual goods that make clients and job seekers react emotionally in their favour?

I guess as an industry we don’t invest sufficiently in these virtual goods. It might be worthwhile considering investing in them as these could be a tangible part of what you call your differentiators.

What will it take for you to consider investment in your virtual goods? Money? Better understanding?

If you leave an insightful comment I will send you recommendation to be an honorary member of Pet Society.

Have a good weekend

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Young or Older, we need you Bolder

I am always a bit sceptical about news of studies regarding perceptions and attitudes about the mature workforce like the one that got published recently.

Don’t get me wrong; if the findings indicate a true change of practice regarding older workers, that’s great.

I mean it’s in everyone’s best interest, right? Sooner or later – if we’re lucky – we’re moving up the age bracket whilst staying functional.

Whether we’re bosses or employees, we’re always selling our professionalism, experience and potential. Fact remains, the perception of our effectiveness as salespeople is impacted by how wrinkled we look.

How do we change these perceptions? How do we become grey hair impervious?

All of us have a to-do. Owners, managers and workers young and old need to nremain ‘responsible’.

1. employees, ensure you’re not mis-cast. There will be a temptation to take on a job that may not be a strength to you, but your potential employer is going to say ‘come on mate, you’re experienced, you can do this job’. if you know that is not the case, don’t accept it. It will come back to haunt you.

2. employers, just because some people have been on the workforce for thirty years, it guarantees you nothin’. There are people who are shit workers in their 20’s and they don’t learn, skill up or gain insights, and in their 50’s they remain shit workers. Leave the affirmative action stuff, don’t hire off the back of the wise-older worker preconception, and interview and test as if you want the job done the best possible way.

3. employees stay hungry. No-one wants lazy fat cats in their teams, however young or old. Show that you want the job, that you want to do well, that you want to become a linchpin of the organisation (here goes Seth Godin again). Stamina changes should not impact on your attitude.

4. employers, situational leadership won’t go astray across all your teams.There are certainly different motivators per staff member; don’t manage generational groups. Manage individuals.

Bye

12-10-2010 Update: Good stats and thoughts from Ross Clennett

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