Posted by: Michael Hennessy | March 15, 2009

How the recruitment industry could learn from the Newspaper crisis

Everyone is aware of the crisis the Newspaper industry is going through…just as everyone knows about how the music industry has been going through a similar crisis….technology is shifting the ground beneath their feet and rendering their traditional business models obsolete, with no clear answer how to re-invent themselves.

I came across this blog entry by Clay Shirky entitled Newspapers and Thnking the Unthinkable . Clay does a great job in explaining how, even though the Newspapers saw the Internet coming way ahead of time, their internal mindset was unable or unwilling to acknowledge the transformation that was going to take place,  destroying the publishing industry as they knew it. As he says, it was the “unthinkable”.  And so they spent their time trying to think through how their business model, as it existed could get a “internet” facelift…but still fundamentally have the same busines. Yet, it’s clear now, even with Newspapers still around, that the model is forevever going to be changed, and what will emerge to fill the void is still an unknown. We don’t know exactly what the publishing industry will look like 10 years from now, but we have some good ideas, and it’s radically different than what exists today.

When looking at the recruiting space, I have the same sense, albeit not as dramatic as the Newspaper business, of the shifting ground beneath the feet of companies and how they recruit and which business models will become obsolete in the coming years.

The industry went through a major revolution  with the emergence of the internet.  How and where companies advertised their openings shifted from newspapers to on line job boards like Monster.  For the next 5-10 years, job boards and online recruiting has become, for most companies, the single most effective way of recruiting new talent. Staffing firms have continued to provide value-added services, but for savvy companies who understood technology and how to recruit using the new online tools, they could save a tremendous amount of money tapping directly into these new resources.

But, it now seems like their is another shift occurring, more subtle than the first, but potentially with the same overall impact in the long run.  As was true with the Newspaper business…it’s the small shifts which, at first glance, don’t seem to pose any real threat to the established players that end up fundamentally changing the game . For example, when craigslist was first launched, no-one could have  guessed the eventual impact it would have on newspapers and newspaper ads.

In the recruiting space, these same small shifts have been occurring for a while. For example, the introduction of SimplyHired and Indeed as vertical job search engines a few years back was not seen as any real threat to the major job boards. But as we’ve been measuring the traffic and effectiveness of these sites versus the major job boards, I can tell you they are making serious inroads. And the business model here changes the game.  Companies can get ALL their job ads on these sites for FREE…as opposed to that single job posted for $400 to a job board. As these sites grow in popularity, and companies can measure the traffic they get from a free listing versus their Monster listing…recruitment dollars will be adjusted, and it’s inevitable, those job boards will need to re-invent themselves.

But those vertical search engines were just the first cracks in the dominance of job boards. You now have companies like Jobs2Web and OptiJob who offer companies SEO (Search Engine Optimization) solutions so that candidates using search engines like Google & Yahoo can easily find their jobs direclty. These SEO companies are in the early stages, but they represent yet another shift in what’s happening.

And of course we can’t forget to mention the impact social network sites like Facebook or LinkedIn have on the recruiting space…in addition to tools like Twitter.  A new level of connectedness and the ability for companies to freely and much more easily reach those people they are looking to recruit is bringing down the walled gardens. Without a doubt, job boards, like Newspapers, are going to be around for the forseeable future, but their influence and impact in a companies recruiting strategy is  going to decline over the coming years, giving way to the new recruitment business models that technology is helping to launch at a faster and faster clip.

The companies who recognize the “Unthinkable” will be well positioned for the future.

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