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It is better
to not be on
the web than
to be on and
not know why

John Sumser

is more
it seems.
John Gall

It's better to
do a few things
really well than
than to do
a lot of things
If you can't
make the necessary
commitments of
time and energy
to your
scale back
your plan.
John Sumser

© 2013 interbiznet.
All Rights Reserved.

Materials written
by John Sumser
© TwoColorHat.
All Rights Reserved.

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The Electronic Recruiting News is a Free Daily Newsletter For Recruiters, HR Managers, Advertising Agencies and Clasified Advertising Operations

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Technology Haters Support Group Forming
(From the Vault)
(March 10, 2000) Somehow, marketing and technical excellence rarely coexist in the same body. In spite of its bad reputation, the Marketing mind (excluding those that run on pure fiction and treachery) is focused on the customer's perception of the universe. The technical mind, on the other hand, is centered on self-satisfaction.

Blending the two in a way that produces happy customers is the essence of any great technical company. Unfortunately, the gene-splicing required for success is a tricky and failure-prone operation. The teensy-weensy engineering problem tends to be the straw that breaks the customer's back. Often, damages from minor technical glitches are so out of proportion to their engineering cost that the good engineer just can't grasp them. These days, we're wondering if engineering management isn't a sport best reserved for masochists.

Across the industry, HR, HRIS and Recruiting managers are wrestling with a range of competing claims and services, trying to figure out how to solve their internal problems. Often framed as engineering questions, the real issue is handling an HR Budget that is exploding because of labor shortages. Decisions that used to resolve to a single supplier are now best executed by a team of specialized players. Unfortunately, they are all busy claiming broad marketing messages even though their technical excellence is quite focused on a small area. Currently, there is little in the way of "integration support" for a company that simply wants to solve its particular problems.

Here's an example of the kinds of quickie advice we're offering. The note responded to a reader with a short list of vendors who is trying to settle in on one.

First of all, it's not clear to us that a single vendor will satisfy your needs. The vendors are in a great deal of turmoil and quite busy figuring out who they are. That means that your ability to clearly articulate your priorities is paramount. In the earlier era, vendors were willing to promise to solve all of your problems, from screening and sorting to measurement for regulatory purposes. Because all of the players are brand new, even the ones with older name brands, they tend to optimize their efforts on a single issue.

Our take is that there are five or ten requirements that are all the top priority and no one vendor can satisfy them all simultaneously.

If you are forced to make the decision in the next 18 months, your best bet will be to establish a portfolio of suppliers and to try to nurse the group into compliance with your objectives. Obviously, this method requires a good deal more hands on supervision.

The labor shortage is underneath the problem. Frankly, good sorting and searching is not as necessary today as it was yesterday. Getting the candidates to apply is the largest single problem. That means that the trench level recruiters need a constant stream of new "resumes" or "resume equivalents". None of the vendors on your list make that an easy proposition.

The best answer, in today's environment, is to pick the stable of providers who give you the best shot at changing horses in midstream. The thing you can count on is that next year's decision point will be somewhat clearer. That makes the process of administering the system very labor intensive in the short run. It's quite cost effective over a five year cycle.

At the bottom line, a comprehensive strategy that blends advertising, marketing, sourcing, technical training and a systems solution is the best way to approach the question. By merging all of the Recruiting budget issues into a seamless approach, you get a better view of bang for the buck. That said, any solution is going to be somewhat klugey in the short term (1 or 2 years). From a traditional HRIS perspective, it's hard to grasp that administrative systems and advertising have merged in a single, hard to name discipline.

The other approach, which makes look like a real winner, is to scale back your expectations to the bare minimum. It may be that your stable of suppliers are each very task focused.

Whatever your decision, you have the good fortune of wrestling with a key decision at an inflection point. Well, maybe it's not such good fortune.

The old Chinese curse went: "May you live in times of great significance."

- John Sumser, © TwoColorHat. All Rights Reserved.

Recruiting Is Advertising
(From the Vault)

(March 09, 2000) Recruiting Is Advertising. It's really that simple....and that complex. The skills of the traditional Staffing industry, refined with sophisticated data-mining techniques and communicated interactively through the web boil down to the next generation of advertising.

In the rush to proclaim a revolutionary market, prices were artificially lowered for the first wave of Web Recruiting. Low prices created an odd set of expectations in the marketplace. Even today, we are undergoing a revitalized Resume Database giveaway trend.

We think there should be a plaque handed out to all web entrepreneurs that says: "It's easier to lower prices than it is to raise them."

Really, how could this process be less expensive? It has lower "friction", for certain. The distance between the candidate and the opportunity is being squeezed, every second of every day. But, the cost of tailored communications, as everyone knows, is higher than the cost of bulk communications. The cost of having a relationship hasn't changed. The cost of acquiring one is going up rapidly. The available number of relationships to be had is in an aggressive decline.

While Recruiting IS Advertising, the conditions for both have changed. Today's Recruiter works in an environment where candidates are scarce and inventory management is everything. That's the exact opposite of historical conditions. The financial fundamentals of Recruiting have changed in profound ways as a result.

Advertising is also undergoing a radical change. In an earlier time, it was funny to quote Ogilvy, who said "I know that half of my advertising dollars are wasted. I just don't know which half." In today's universe, advertising can be quantified. Major, non-recruiting advertisers are shifting to a skin-in-the-game, pay for performance model. Web advertising requires authentic one to one communications (and therefore more people on the response end).

So, when we say Recruiting Is Advertising, we mean the new Recruiting is the same as the new Advertising. It's more expensive, more direct, more prone to failure and more proactive on the Recruiter's end. The burden of adding value to the Recruiting relationship has shifted from the Candidate to the Recruiter.

We're amazed at the resilience of old outmoded ideas. The labor shortage is permanent and can only be solved with radical improvements in productivity accompanied by a massive wave of immigration. Candidates are not going to flock to use new screening tools. When we say the Resume is dead, we mean that the idea that a candidate has to market him or herself to get a job is dead. Good 21st Century advertising is proactive and identifies targets rather than depending on them to identify themselves.

Recruiting is advertising if you understand that today's advertiser is 100% accountable for results.

- John Sumser, © TwoColorHat. All Rights Reserved.

Performance Insurance

(March 08, 2000) The difference between a novelty and an idea with lasting impact is a nuance at first glance. Usually, powerful ideas look incredibly obvious in retrospect. Often, they involve a simple reframing of a nagging question. Brilliance, you might say, is a nuanced move from common sense to an enlightened perspective. The most significant shifts in thinking and doing are often modest adjustments in the point of view.

We talk frequently these days with people who are absolutely certain that the Recruiting Market requires a revolutionary change to really take off. Every time we hear the word 'revolution', we conjure images of mobs carrying torches through the night. Few revolutions have been bloodless. The status quo, an easy target for frustrated citizens, takes the heat in a way that is usually out of proportion to the problem.

Do we need to tear down the current structure? Should Recruiting be pulled from the loving arms of its long term home in HR to a universe more suited to manage the problem? Are Recruiters and HR Managers really the nincompoops behind the problem? Is it really true that the green grass on the other side of the fence is the promised land in which tortured marketing claims are easily understood by thoughtful customers who are instantly ready to trust and buy? Will it all be better once the need for a Chief Talent Officer is broadly understood and accepted?

As usual, the problems aren't as polarized as the rhetoric suggests. True, the labor shortage has changed the skills required for successful Recruiting. Certainly, the management of Human Resources as a 'no-shucks', really valuable asset needs to be rooted in the asset acquisition process (Recruiting). There is no question that cheapskate CFOs put their companies at risk when they eliminate solutions for shortsighted reasons. Obviously HR, slow to change by design, is going to have a tough time becoming a profit center. No CEO in his/her right mind is going to give real 'make or break the business' authority to someone who happens to be sitting in the right chair at the right time.

But, burning down the house is a bit of overkill.

It's much more likely that the right, simple, obvious-in-retrospect answer has not yet been articulated.

We think it will be something along the lines of 'Workforce Insurance'. The idea, which has been bubbling in our cauldrons for a while now, is easy to understand. Since successful navigation of company growth objectives requires a well executed staffing and retention program, the process can be highlighted and managed in a way that can be priced as insurance of the performance objectives. Assuming that workforce projections are sensibly articulated, that organizational development issues are managed effectively, that compensation and benefits are somehow pegged to the market and that recruiting is executed with a results bias, it ought to be easy to build an insuring operation that manages the integrated problem. By design, an approach like this would have to integrate the obvious components: Workforce Analytics, Fit Assessment, Continuing Education, Targeted Attraction Programs, Leveraged Referral Operations, Quick Hire Recruiting, Just In Time Management of Human Inventory and so on. Once the first policy is written and executed successfully, Wall Street would demand that any CEO making big commitments buy one for their company.

We raise the issue of 'Growth Insurance' as a way of pointing the way to a real market improvement. The innovative reframing of the Electronic Recruiting question, which is the key to the future, has yet to emerge. While we can hear the grumbles from the well-intentioned risk averse managers who worry out the details of an integrated reframed approach, one thing is clear.

No one yet has marketed their Electronic Recruiting Solutions as risk management tools with performance guarantees. At the very best, we've seen clones of the staffing industry and its contingency placement approaches. Real players, with skin in the game, willing to bet heavily on themselves, their consequences and their customers have yet to emerge. Like old time merchants, we see lots of people who are willing to bet all the way to the end of the money that their customers might spend. None are betting all the way out to the consequences of the transaction.

While the answer almost certainly won't be growth insurance or revolution, the need for a simple, easy to understand, innovative idea still plagues the industry. We're unlikely to see the full potential of our universe until that simple idea is uncovered.

- John Sumser © TwoColorHat. All Rights Reserved.

Soft Where

(March 07, 2000) On the web, software is transparent, with revenues from sales or licensing approaching zero at all times! It's hard for most of us to remember that the old school software business is simply a short term convenient analogy (like 'horseless carriage'). There is almost no question that software will behave like a medium (disks, film, video cassettes, TVs, paper, radio, the stage) and not like a product (shrink wrapped retail) over the medium term. In all cases, the media is free or nearly free. Software is a media for dynamic content.

From our perspective, software is a giveaway and results are where the value is. Any producer of services for the web will have to eat the software development cost while figuring out how to guarantee results. The notion that software without content and value-specific results will be anything more than inexpensive infrastructure is pretty outdated. We're extremely tempted to see Enterprise Software companies (SAP, ORACLE, PeopleSoft) as the early indicators of the change. While software licenses and development were important to these companies, the bulk of revenue associated with them was always in the "customization" (or enterprise services) component of their sales process.

After all, tools are a modest component of the sale price of any product.

We still hold the notion that the ultimate Electronic Recruiting Tool will behave like a radar. It will identify potential candidates at long range and get clearer about them as the combination of need and proximity increases. The billing model, however, will be based on usage, at first, and results, ultimately. In the 21st Century, selling a tool without a results stream will be considered irresponsible.

Most of the current players in the ASP market (many more are coming) are really Application Providers. That is, they rent software on something resembling a monthly fee. The approach is no more than a modest revision to car leasing as a business model. The "Service" component of the equation is, at most, an afterthought. Where we come from, the most important part of the equation is "service", not applications. Unfortunately, most of the ASPs are thinly disguised software operations aggressively pursuing yesterday's tired and unworkable business model.

In the ASP market, the bet is whether or not software pricing will hold. Given the number of competitors, we'd say "not for long". We can assure you, however, that all of their business plans make the assumption that the unique technical ability they deliver will make that the fate of all of the other competitors. Everyone agrees with the scenario. But, they all think that they are the one exception.

So, if you are confronted with a vendor who tells you that the business is an "ASP play", ask them about their service guarantees. If they tell you about server reliability and instant software upgrades, run. If they tell you that their job is to make you a success and that they bill in increments that are directly tied to your success, you've found a service provider.

Let us know if you find one.

- John Sumser © TwoColorHat. All Rights Reserved.

It's Here (Reprise)

(March 06, 2000) After a long, painful birthing process, the 2000 Electronic Recruiting Index is shipping. Careful readers might have noticed the changed link at the top of this page. The Executive Summary, describing the contents of the book, is available for download.

This year's book builds on the material contained in the 1999 ERI; there is little in the way of overlap (although we did update the market volume and growth statistics). While the 1999 ERI focused on the internal mechanics of operating an employment website (or the employment section of a corporate website), the 2000 ERI takes a larger view of the marketplace, evaluating customer and vendor types, the range of available functionality, stock market performance and 250 company reviews (including an assessment of their contribution to an 'end to end' solution').

We refined last year's vendor survey to focus the results on business level characteristics of 50 Job Boards. Covering Customer Satisfaction, Brand Awareness, Sales Force Effectiveness, Acquisition Desirability, Short and Long Term Growth Prospects, the consolidated results of 3,000 recruiters' responses are included with an eye towards IPO prospects.

The key items in the study include:

  • A detailed analysis of 29 different categories of participants in the markets, from hiring managers to candidates and all of the intermediaries in between.
  • A comprehensive description of all of the functions required to execute an end to end solution.
  • A thorough review of all 62 Publicly traded companies with an interest in the Electronic Recruiting Market including comparative stock performance and the correlation between web investment and price.
  • A detailed analysis of the web offerings of over 250 companies providing products and services in the electronic Recruiting Market. Each company analysis includes a "functional map" that allows the design and integration of an end to end solution from a variety of vendors.
  • The results of a survey of over 3,000 professional Recruiters. The survey covers brand awareness, customer satisfaction and acquisition desirability for 50 key players in the electronic Recruiting Industry.
  • A generic white paper describing the strategy considerations for a staffing firm that desires to preserve or expand its market share in the next five years.
  • A guide to valuing the Resumes in a Resume Database.
  • Forecasts and predictions for the Industry's next five years
  • Detailed market valuation, segmentation and sales volume assessments and forecasts.
  • Evaluations of 250 current vendors including a description of their functional contribution to an end to end solution.
The Executive Summary is intended to give a flavor of the depth and focus of the 2000 ERI.

- John Sumser © TwoColorHat. All Rights Reserved.

© 2013 interbiznet.
All Rights Reserved.

Materials written
by John Sumser
© TwoColorHat.
All Rights Reserved.

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