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

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Symptoms of the Change (From the Vault)
(April 06, 2000) When Monster launched its SuperBowl campaign, driving traffic north, it simultaneously launched an upgrade to its interface and back end system. Any smart advertising person would tell you that the best time to launch an upgrade is during the blitz. We're sure that many marketing people would agree.

Experienced web product developers, however, would run and hide in terror.

Customers, of course, would complain if it wasn't executed well.

The excursion into the new offering was a disaster from all that we hear. To date, we've received about 150 notes from frustrated customers. Some, we forwarded on to Monster (no response). Most, we acknowledged briefly and then waited. Giving Monster the benefit of the doubt, we assumed that they'd hop right on the problem. We assumed that bad timing and traffic growth would conspire to produce a quick fix.

You know what they say about makes an ass out of Uma Thurman.

These days, the torrent of complaints have slowed to thoughtful notes like this snippet:

....first an update on Monster...their service is still not completely back to the level we enjoyed prior to the SuperBowl...we still get daily searching glitches and some of their agent/email systems are still erratic. And, they've induced some new problems...some of the candidate/applicants are struggling to learn how to use the profile/submission form...we get incomplete info or "confidential" info so that we are not able to contact possibly workable people. Oh well....if they screw up their proposed recruiter interface in a couple months like they have this....we're rapidly researching alternatives to be prepared.
Something has changed.

These days, customers depend on their vendors to provide candidates. That's significantly different from a couple of years ago when customers were excited to get a supplemental supply. The industry has matured to the point that it is the dominant recruitment advertising method and is rapidly becoming the dominant recruiting method. We've migrated from toy to tool. We supply critical data to customers who depend on it.

That implies a requirement for much more professional management. Really understanding the web and its dynamics is at the heart of what makes a competent manager in the business. A capable player balances traffic development and product development like Yin and Yang. The rhythm should go: develop, test, release, debug, wait, wait some more, build the traffic. Unlike the traditional software business, the web demands product development and sales/marketing that are complementary cycles.

Its no accident that the high flying big time successes release upgrades in August and build traffic in January.

As in the traditional software industry, screwups result in losing customers who never come back. Good management would suggest that Monster ought to address the problem publicly, talk about the systemic changes that will prevent a recurrence and hang the scapegoats in a public square. That's how the big boys do it.

- John Sumser © TwoColorHat. All Rights Reserved.

Complexity (From the Vault)

(April 05, 2000) Market complexity is the normal condition of the Recruiting Industry. With warring factions, cultural differences, regional biases, profession-driven sales techniques and 20 Million annual customized transactions, it is not surprising that no company has ever owned more than 4% of the domestic American marketplace.

It is difficult to explain the recurring expectation that the Internet will somehow change the historical foundations of an industry. In all of the successful Internet plays to date, the roots of industries remain unchanged. For the most part, the Internet has been a revolution in distribution, not production. Inventory is more accessible and choice broadens, as in or Yahoo.

The Recruiting marketplace is huge and expanding rapidly. As the value of employees increases, driven by labor shortages, the amount of money budgeted for Recruiting transactions increases. It really is that straightforward.

While the hiring tactics of Silicon Valley (and other high tech regions) dominate the news, there are profound changes at work in even the most non-technical companies. In order to meet labor demands in rural Virginia, staffing companies are operating bus lines. Stodgy specialized regional employers are expanding education benefits beyond the traditional boundaries of the company. Some technology firms are building what are essentially company towns in order to control the output of the local education system.

The poorly covered immigration wave (which we imagine to be larger numerically than any historical precedent) demands in-house language and literacy development training. Only a sustained immigration and absorption program will begin to solve the draconian shortages we face in the pure number of bodies available for work.

- John Sumser, © TwoColorHat. All Rights Reserved.

Typical Bonehead Thinking

(April 04, 2000) Anyone reading this newsletter will be familiar with the ongoing debates about "cost per hire". Somehow, the unique history of the Human Resources function and the nearly complete absence of basic business education in the industry has conspired to create a narrow view of the relative importance of Recruiting.
  • The sage Saratoga Institute, often seen as the ultimate source of HR thinking, typically describes "cost per hire" as the sum of administrative costs and expenses.
  • Infomart-USA, a hiring practices auditing company, estimates the national average at about $4,400. They consider the following elements of cost per hire.
    • Advertising
    • Agency fees
    • Employment fairs
    • Employment office salary expense
    • Employment office facility expense
    • Estimate of time spent in training
    • Recruiter travel expense
    • Internal recruiter expenses
    • Internal recruiter labor expense
    • Referral Bonus
    • Recruiting & Training Expense
    • Uniforms
  • HRLive (which isn't very) offers five year old data that suggests an average cost per hire nearer to $8,000.
  • American Incite, an odd online Executive Search operation makes a lengthy argument that the base salaries used to calculate the administrative cost per hire is deeply understated. Yawn.
While these overly complex approaches may well capture the number of dollars spent on an average hire, they hardly begin to capture the cost of a hire. Hiring managers, insulated from the nonsense measurements of the HR folks, have a clearer picture. The cost of a hire is the money lost because the hire wasn't made. Well recognized in MBA programs and broadly understood throughout the rest of the organization, the simple concept is "opportunity costs".

At its most basic, the opportunity cost associated with a particular hire is the productive revenue lost because the hire wasn't made. Ask an IT manager with 20% of her desks unfilled whether she cares about the administrative costs in the Recruiting department. Of course she doesn't. She's working weekends and late evenings while continuing to miss deadlines. She is experiencing the real cost per hire: revenue lost from employees who weren't hired.

Here's an easy way to get your arms around the real cost per hire in your organization:

  1. Take the annual sales of your company (or division) and divide it by the number of employees. This is the annual revenue per employee.
  2. Divide that number by 250 to get the daily revenue per employee.
  3. Multiply daily revenue per employee by the number of days it takes to hire an employee.
  4. If you want, add the dollars spent by the Recruiting Department (it's a minor fraction).
  5. This is the real cost per hire, generally it's 5 to 10 times the administrative costs.
This view of "cost per hire" points out the importance of reaching real global standards for reductions in the hiring cycle. Current "state of the art" approaches try to reduce the cycle to under a month. We believe that the real answer is to target a recruiting cycle time of minus 30 days.

- John Sumser © TwoColorHat. All Rights Reserved.

Career Engine

(April 03, 2000) Have you been watching CareerEngine? While the operation has a great deal of improvement to make, CareerEngine is beginning to emerge as a real contender. Focusing on infrastructure development (partnerships and business networks), the company has stayed away from the limelight while it readies itself for serious competition.

This morning, we've tried to capture a number of the facets of the company as a profile. While the best grade you could give CareerEngine in its current configuration is a C+, it is clear that the company is steadily improving its performance. We won't be surprised to see the company gain ground as a market leader by year's end.

  • Tagline: "Stop Wasting Time, Be Specific." Close, but no cigar.
  • Affiliate Program: Head and Shoulders above the industry standards while vague enough to make a potential affiliate wonder. The company appears to be somewhat committed to spreading the wealth.
  • Partnership Development: The firm is hitting all of the right buttons.
  • Traffic: Our research shows CareerEngine is at the back of the pack with roughly 65,000 more trafficked websites to be discovered around the web. It will need a traffic cash infusion to raise its visibility.
  • Inbound Links: Roughly 60, most of which are affiliated sites. Inbound links really do indicate a company's credibility.
  • Stock Price: Just under $3 (today) and hanging in close to $3 very consistently. Likely to be a good investment over the next 18 months.
  • Name Change: Formally, from Helmstar to Career Engine Networks as of Monday, March 27. New stock symbol: CNE
  • Headlines: The company has been in a stealth mode, building partnerships and market momentum. A quick review of their massive press release pile will show a ton of momentum building under the radar.
  • Site Quality: Yechh, but could be fixed.
  • Roots: Originally, the company was a Real Estate Trust (REIT). With extensive financing experience, the pockets are probably deeper than you'd guess. It makes the venture look like the opposite of most equity plays in the industry.
  • Management Team: Career Engine has been hiring reasonably high end talent to run the company.
  • Most Uninteresting Piece of Hype: "The network's 24 individual sites are interactive virtual communities that offer a personal approach to online career search." Yep, sure.
  • Easiest Improvement To Make: Hiring a website editor. Embarrassing typos and grammatical errors dot the materials.
  • Easiest Marketing Claim To Disprove: Quality and Freshness; many of the jobs we perused were over 90 days old.
  • Site Navigation: Trite and burdensome. The company should take a close look at FlipDog's interface.
- John Sumser © TwoColorHat. All Rights Reserved.

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© 2013 interbiznet.
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Materials written
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© TwoColorHat.
All Rights Reserved.

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