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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


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

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(January 05, 2001) The sustainability of our market involves the development of longer term relationship management approaches. Another way of saying this is "Traditional Recruiting is a deadline driven event while 21st Century Recruiting is an inventory supply management process that produces new employees." The differences in mind set are profound.

We got to thinking about this conundrum after reading Monster's latest press release: closed 2000 with record December sales in three critical channels: U.S. field sales, U.S. telesales and European sales.'s dramatic growth with employers is evident in the site's statistics for the number of registered recruiters. The number increased more than 352% from 60,454 in 1999 to 273,597 in 2000. This signifies both the confidence and commitment by recruiters in posting jobs and accessing's invaluable resume database.

According to the most recent site statistics, possesses 11.5 million unique job seeker accounts and 7.2 million unique resumes. has made strategic enhancements which include the elimination of unlimited job packages. Monster's new policy, effective January 1, 2001, while reducing the total job number, positively impacts the Company's revenue and profitability per job posting. offers consumers over 419,000 job opportunities from thousands of employers.

The way we count it, that's 26.31 unique Resumes / 42 unique job seekers per recruiter. Even if the average job seeker is much better at remembering passwords than we are, it strikes us that the ratio is severely skewed and potentially indicates a radical decline in value delivered per recruiter. The job seeker's side of the equation isn't much better. With .05 jobs per individual account, an average job seeker would appear to have a one in 20 shot at being contacted by a recruiter.

Of course, that math is suspect. Many recruiters call the same job seeker. As a rule of thumb, we suggest that 10 qualified resumes are needed to fill a an opening (assuming that the speed and availability issues are equal). So, the ratio of resumes to recruiters is more like 260 to one. Then, the likelihood of a job hunter getting called is in the 50% range (assuming a perfect correlation between the kinds of jobs offered and the kinds of people applying.)

That still leaves the value per recruiter and benefit per job hunter in the declining returns range.

It's a ticklish problem to solve. Part of the answer is in tackling the way the value of the company is described. Realistically, the number of live candidates and the number of live recruiters is significantly lower. It's good practice to make large volume statements for Wall Street. The reality is that 300,000 job seekers are chasing 400,000 jobs at any point in time in Monster's mix. That's 8 or 9 resumes per job and a 90% chance of getting a call from a recruiter, if the distribution of talent is precisely correlated to the distribution of the openings. And, of course it isn't.

The best way to describe the value of a tool like Monster would be to look at the ratio of resumes to jobs across a number of job categories and geographies. Our bet is that they are much stronger (more resumes than jobs) in some areas than they are in others. We imagine a future in which sophisticated recruiters use these sorts of ratios to make spot purchasing decisions.

We are also very certain that the dynamics that account for Monster's success create scads of opportunities for Recruiters and candidates elsewhere on the web. The younger a job board is, the more likely they are to have a higher ratio of candidates to jobs. As usual, the competitive advantage goes to the recruiter who follows the emergence of new job boards and newer tools.

Meanwhile (and back to the original point), longer term relationship management tools are required because, at this rate, all job seekers will be in someone's database in the foreseeable future. At that point, it won't be about matching, it will be about delivering value through a network.

- John Sumser © TwoColorHat. All Rights Reserved.

Full Service

(January 4, 2001) In the end, it's all about results. Electronic Recruiting systems and services that don't produce candidates are short-term plays. Systems that have no embedded way to guarantee candidate production fall into one of three categories: the middlemen (who we think will survive), the back office and the ASPs (who need to complete their offerings).

The middlemen include companies like Best Internet Recruiter, IIRC and RecruitUSA. In a different time, they might have been called advertising agencies (or media placement specialists). These companies take individual advertisements (job postings) and distribute them to a variety of pre-selected targets. Logical improvements for these firms will inevitably involve the management of advertising creation, unified billing systems and consolidation of results. By providing customers with a single "belly button", they reduce (or have the potential to reduce) the complexity of a universe that is going to continue to be extremely chaotic.

Interestingly (and importantly) Careersite has entered this market by offering a free Recruiter's desktop. The tools allow free posting on Careersite and lots of free targeted job boards and Newsgroups. By giving away access to the universe of free services from a single point, Careersite has finessed a number of the competitors who will have to respond with similar offerings.

An ASP (Application Service Provider) is a technical company that rents the use of its technology and hosts the 'application' on its servers. Boxwood Technologies and are the early entrants to this emerging field. It will be very crowded very soon. Essentially, the firms rent a technical process that manages the resumes and profiles that naturally accrue to an employment section of a website.

So, if you are a big company, you might want to consider using's service as a way of managing and understanding the traffic to the jobs component of your website. Boxwood, on the other hand, clearly specializes in media outlets and professional associations. The theory behind both operations is that the renter has the responsibility for sales and marketing; the landlord simply provides technology. It's closer to the truth for associations and media outlets (the Boxwood play) than it is for companies that want to actually hire people ('s view).

The problem for companies that want to use's service is simple. Unless you have a widely recognized name brand, there is no traffic to your employment section. Without traffic, the ability to process it is less than useful.

For Boxwood, the problem is more subtle (and easier to solve). By focusing on associations and media outlets, they solve the traffic problem. But, to make their cash-flow model work, they have to motivate a channel of resellers. All in all, building a reseller network is a simpler chore than customized traffic development. Ultimately,'s success will depend on either building or buying an in-house advertising agency. Boxwood simply has to solve a time honored problem and is making intelligent progress.

Both companies will have to endure an insane volume of new entrants into their spaces over the next 6 months. Their well established market leadership will be heavily challenged between now and the early summer. Since Boxwood's success is so entangled with their customers, they are much more likely to survive.

Finally, the back office market is a cluttered mess in need of an organizing principle. All of the companies we describe in this article offer some sort of applicant tracking capacity. The once robust $250M market for administrative management of resumes is rapidly becoming a giveaway component of larger offerings that produce candidates. Once seen as the heart of the Recruiting software business, these systems and their functions are rapidly becoming as cheap and plentiful as promotional tee shirts.

- John Sumser © TwoColorHat. All Rights Reserved.

Market Segmentation Math

(January 3, 2001) Imagine a matrix. It's got functions (from candidate aggregation to payroll) across the top. It's got company size (and a distinction for non-corporate recruiters) across the side. The third dimension is a complex description of the workforce in niches no larger than 25,000 people (probably divided by region and profession).

10 kinds of paying customers times a dozen repeated functions times 4,000 niches times (at least) three providers per niche. That's almost 1,500,000 describable combinations of niche, function, region and customer type. No wonder our industry resists consolidation.

Each of the 25,000 people in each niche change jobs every four years. At a minimum of $10K per job change (which is very low), each niche represents a potential market of $60,000,000 per year in cash flow. Simply divided equally among the functions, there's an opportunity for 12 $5M/ year businesses in each niche. Obviously, the distribution would be weighted towards processes that require human assistance.

At it's simplest, a very conservative description of the value of our industry, rooted in these numbers, is $250 Billion per year. What the pundits seem to miss is that this sort of potential will resist the vending machine mentality of contemporary retail oriented Internet technology.

In a market that size, there's a lot of room to pay for and deliver a lot of value.

- John Sumser, © TwoColorHat. All Rights Reserved.

Happy New Year!

(January 1, 2001) The Staff at interbiznet wishes you a successful New Year!


    Table of Contents
    Volume I
        1. Executive Summary
        2. Introduction
        3. The Premise: Human Capital Management Changes Everything
        4. The Human Capital Management Industry
        5. 21st Century Ad Agency
        6. Recruiter's Survey Results
        7. Valuation Models
        8. Employment Branding
        9. Forecasts and Predictions
      10. The Chief Talent Officer
      11. Stock Market Performance
      12. The Alliance Development Machine

    Volume II
    - 500 Pages of Detailed analysis of the top 225 vendors in the Human Capital Management Market.

  • Check out the Special Offers on 2001 and
    the 2000 & 1999 ERI.

     - Scheduled for release in January 2001.

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© 2013 interbiznet.
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Materials written
by John Sumser
© TwoColorHat.
All Rights Reserved.

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