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We expect to see both services will mature into vital offerings after a few nearly fatal early mistakes.

Korn-Ferry, as you probably know, is one of the two or three players who occupy the very high end of the recruiting business. Tony and focused on what we're tempted to call "celebrity" recruiting, the company has made a global name for itself in the high visibility CEO business. Futurestep is their online attempt to move "down market".

Futurestep, as we mentioned in a much earlier column, reinvents the "wheel" pioneered by Intellimatch (the now defunct online matching service). The basic premise is straightforward enough. Get candidates to fill out extensive profiles and match those profiles with opportunities. Unfortunately, the model fails for demographic reasons.

Think about it for a second. Do you suppose that Korn-Ferry really has any use for candidates who can take an hour to fill out an online career test? We're tempted to bet that having an hour of the company's time to screw around on the Web is a working definition of a candidate who doesn't fit the Korn-Ferry profile. After all, most online job hunting happens on company time. So the first flaw in the service is that it attracts the wrong audience. Once a cost-results analysis is run on the early use of the system, this will become apparent.

The second flaw is that input based recruiting (testing), as a technical solution, leaves little flexibility if changes are required. Futurestep is based on complex formulas that relate a bunch of questions and answers to each others. If modifications are required, the whole system must be rethought.

Imagine buying a recruiting database that had to be reconfigured from the bottom up if you wanted to change an input field. No one with any significant technical purchasing experience would ever get involved with a product like that. Futurestep, like Intellimatch before it, leaves its investors painted into a corner. Revisions (which the market will require) will be very expensive.

Third, the way that sales really works is: offer a prospect up front value. In a candidate poor marketplace, the idea that an hour spent filling out a form *might* result in a job offer gets the basic sales equation backwards. The unstated message is that an opportunity to be in the Korn-Ferry database is so valuable that it is worth an serious investment of time. While we're sure that the idea will sell in certain quarters, we're as certain that the dynamic defines a market that Korn-Ferry isn't really interested in...the wannabes.

Meanwhile, in other quarters of the industry, serious recruiters are wrestling with the real marketplace question: how do you create a network of candidates and potential candidates that allows long term human resource requirements to be filled on time? The answer usually involves delivering a consistent stream of value to that candidate pool.

The Korn-Ferry solution asks candidates to give the value first. It's an outdated view of the world.

So while the partnership is a wakeup call, rest assured that this isn't the market-killer. It's the precursor.

In the current environment, flavored by rapidly falling response rates, pure classified advertising plays are not as effective. Advertising doesn't instantly equal results any longer. In any situation where a commodity shifts to a shortage position, radical changes follow.

To add to the woes of ad industry executives, the "per transaction" average price is falling. Internet Job Boards, highly valued as equity components, produce lots of $150 transactions. The staffing and overheads of large ad companies are predicated on much larger transactions. As the number of transactions goes up and the per transaction average price falls, the squeeze gets serious.

Combine that dynamic with the requirement for deeper and better media planning (caused by declining results as mentioned above). Customer service requirements are climbing at the same time as the internal pressures are forcing a closer look at internal costs. The net result? The composition, structure, pricing and services of advertising agencies are changing. It's not a problem that can be solved with pure growth. It requires new models, different pricing and new services. It requires a retraining and modification of existing sales forces.

All over the industry, we're seeing task forces, internal media planning teams, intranet decision making tools, radical acquisitions and strange alliances.

Where is it headed? Expect segregated pricing for analysis and media planning. Look for advertising that behaves like recruiting (a percentage of the hiring transaction). Expect a further expansion in the number and variety of online recruitment offerings. Market consolidation is a long way off.

Tidbits

We must be successful. A web based company in Westerly, Rhode Island is sending unsolicited bills to staffing firms who sign up for their "free" service. Apparently, asking for a "free" membership entitles you to a bill. Better yet, neither the website nor the bill contain email addresses or phone numbers.

Their associated promotional material includes a quote from the Electronic Recruiting News and the implication that we endorse the service. We aren't affiliated with them in any way. We have asked to have any implication of association removed from their material. Our lawyers are drooling over the opportunity to earn their retainers.

In their latest press release, Bridgepath refers to themselves as an online recruiting firm. The company, which competes with JobTrak in the college recruiting market, offers access to students and alumni from over 800 colleges.

Their most recent news? In a stroke of near brilliance (really!), they positioned the service directly in front of a group of employees threatened by merger related layoffs. In one fell swoop, they signed up 10% of the affected workforce for their emailed jobs / resume exchange service.

Online employment service marketers take note. When Bridgepath calls themselves a recruiting firm, they mean it. By focusing on the instant availability of nervous potential job hunters, they've taken online targeted marketing to a new level.

The very clever tactic deserves applause and sets a benchmark for targeted candidate acquisition. It opens the door for a series of alliances with the online out placement firms.

Fishing With Dynamite

If you have to feed a starving village, it may not be a bad tactic. If you're sport fishing for prize specimens, you'd better have an extraordinary processing team to filter the catch. If you're simply feeding your family, it's overkill with difficult consequences. If you're building a fish company, you'll need to worry about the long term maintenance of the fishery.

In other words, the answer to the "Internet Recruiting Strategy" question is "It depends on what you're trying to do." Getting a real handle on how to maximize the effectiveness of Electronic Recruiting programs requires a detailed answer to the following questions. "What are the recruiting requirements for the next year? Five Years? What's the budget?"

For starters, we're finding that you can't make sense out of the tools without investing a minimum of 10% of your existing advertising budget. The basic pattern seems to be: start with 10%; try a variety of approaches; compare to existing approaches; invest more where the results justify it. This means that any Electronic Recruiting venture is heavily dependent on developing a system to measure the results across all media.

For companies without an advertising budget (until the labor shortage, few third party firms had significant ad budgets), the traditional starting point (for overall advertising) is 1% of gross revenue.

Just to be clear, effective use of the web is hardly a matter of shifting the spending of an ad budget. It's just a rational place to begin.

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