Daily News. Archived Weekly. Click Here For The Current Issue.

Timing is another critical factor. If you need lots of IT professionals in this market, cost per hire is ballooning. If your major requirements are for more readily available talent, the cost is lower. The trick to developing a highly profitable third party company is identifying a key skills arena with growing requirements.

That's why we're so jealous of the folks at Staffwriters.com.

Positioned at the non-technical nexus of the Internet business, the staffing company provides writers and editors. Since every website needs a writing team (if you plan to really engage potential candidates), Staffwriters.com has staked out one of the best online niches. As far as we can tell, they are the only current players!

A look at their straightforward and effective website reveals the fundamentals required for online Recruiting success. Niche specific links, advice newsletters and postings create a solid resource for the kinds of people they engage. The site is designed to attract candidates by being useful and interesting. No more, no less.

If you want to see the minimum requirements for success in a contemporary Recruiting website, just make a list of the functions at Staffwriters.com and apply them to your niche. As long as they remain the only player in their game, it will be an adequate presence.

The cost to run a website grows once competition really enters the arena. Once the game becomes a battle for the attention of scarce resources, costs grow quickly. The bare minimum, useful only when you are the only player on the block, fades into distant memory as the cost of attracting talent increases. In a shortage, competition drives prices up.

We think that this simple trend has astonishing consequences.

Instead of Staffwriter's lightly occupied niche, imagine a similar endeavor in IT Recruiting. Given the depth and aggressiveness of the competition, cost-per-hire is skyrocketing. Websites that serve techies multiply at an astonishing rate. Features abound and the players are eternally seeking the next advantage. The bare minimum requirements might look more like Earthweb (last year's purchasers of DICE). As it has been since the dawn of the web, the services provided to IT professionals (from free training to huge perks) are the Industry's bellwether.

It's really not very difficult to imagine that HR Departments will begin moving toward the acquisition of job boards and other service providers in the IT niche. Who owns what and under what conditions is extremely subject to change as the competition for scarce resources escalates.

As it was in the beginning, the web is all about a battle for mind share.

- John Sumser, © TwoColorHat. All Rights Reserved.

FUD

Huh?

"Webhire, Inc. (NASDAQ: HIRE - news), the leading Application Service Provider (ASP) in the Internet recruiting marketplace, today announced that thepavement.com, a new online site designed to meet the career needs of recent college graduates and young professionals, is the latest career site to be Powered by Webhire."

Really? We thought CareerCast won that job.

Sowing FUD (Fear, Uncertainty and Doubt) is a traditional way of keeping the market confused. The use of FUD as a marketing technique is time honored. There are two schools: the intentional and the unintentional.

In the case of Vivant, the confusion stems from a bad case of buzzword-itis. Just a couple of years ago, we would have called it "a meaningful improvement in the idea of a Recruiting Network." Collaborating with the computerjobs.com folks, Vivant just might make a difference. The simple idea, an online service that provides one stop shopping for IT contractors, is easy to understand. The confusion comes from statements like "In vivant.com we have created a business-to-business portal with enterprise strength to solve contractor staffing challenges."

We're thinking of starting a deprogramming rehab center for recent MBA graduates.

Intentional FUD is another thing entirely.

It must be tough to be Webhire. A name change, refinancing by Softbank, a widely touted partnership with Yahoo, an online version of their enterprise software and a series of other positive moves have done nothing special for their stock price. The company continues to lose money at a healthy rate without the deep pockets of an Internet IPO. We imagine that they feel like Rodney Dangerfield.

In its announcement, Webhire used language that would confuse a casual reader. When they say "powered by Webhire", they usually mean that a job board has purchased one of their standard products. Most often, "powered by Webhire" means "using the technology we purchased from Junglee to manage the flow of data."

But, according to our sources:

They are not "powering" the pavement...nor is their input to the job data significant. They are on a "very" short term and temporary contract to supply some job data they already have in their database. That's it.

FUD, used intentionally, clutters the market with bad information. It's bad enough that our formative industry is struggling with its own identity. When the vendors, intentionally or unintentionally, add layers of confusion, it slows down everyone's progress.

- John Sumser, © TwoColorHat. All Rights Reserved.

Jobs For Cranky Managers

Although the buzz has shifted and people are talking about "cultural fit", the underlying perception remains the same. With the right formula, a single entity (you name it, company, market, industry, job board) can devise a one size fits all strategy and corner the market. We believe the more likely answer is a universe of nichey entities who simultaneously compete and collaborate with each other.

Here is our simple test case.

Any sophisticated businessperson understands the occasional importance of the "very cranky managers who know how to get things done". You know the type. They restructure ailing firms; manage operations as a representative of the Venture Capital company; kick life into failing projects; make impossible deadlines happen; and so on. Never popularity contest winners, these specialists do not fit in any sort of cultural map. By definition, they work best when they are the opposite of the prevailing culture. They understand that their future includes getting fired once the problem is solved.

Known for a lack of finesse and the ability to wield a club with precision, these executives rarely have long term relationships with their clients. The mercenary nature of their profession makes long term relationships a bit hard to muster. As a result, collaboration amongst peers is unusual. A few executive search firms have a modest practice in the arena. No one offers schooling or professional development for these turnaround artists.

A board that specialized in meeting the needs of these focused problem solvers would be a high profit, high value, easy to protect franchise. Imagine toughturnarounds.com or getitdone.com . Discussion of "war stories" (dumbest culture I ever fixed, sappiest CEO I ever replaced), on the ground tactics (how to fire the CEO's wife), organizational politics and ruthless budget slashing would be enough to make the operation a winner.

The same principle applies to other specialties. The web, we think, resists consolidation in spite of the typical analyst's desire to predict it.

- John Sumser, © TwoColorHat. All Rights Reserved.

The Most Important Website

Located in the building that the George W. Bush campaign recently vacated, Hire.com offers a different spin on the online recruiting business. The Austin headquarters and pure Texas culture are the backbone of an enterprise with its eyes squarely on management of the recruiting process. Hire.com doesn't sell advertising or claim to solve all problems for all people. They focus on the bigger than life problem of managing the candidates (and more importantly potential candidates) who constitute the traffic to a corporate website.

In yesterday's article, we tried to get our arms around the unreasonably broad group of potential employees who are referred to as "passive candidates". We underlined the point that the best definition of "passive" is "not currently looking for a job." We suggested that the category is extremely broad (maybe as large as 95% of all employees). Passive candidates never come to job boards (only active people search for jobs). Passive candidates do visit corporate websites, however. They come looking for market research information, products, service, investment data and so on.

In a protracted labor shortage, the very definition of a company is under assault. Investors, customers, competitors and the employees of those groups are all logical sources of new employees. The change, while hard to grasp in the beginning, can be assaulted on a tactical level by focusing on the company website. People who visit a company's website are precisely the kinds of people who can become a part of growth.

That's where Hire.com shines.

Rather than guaranteeing the impossible, the Hire.com system focuses on harvesting immediately available crops. By integrating a powerfully simple interface and communications system directly into the corporate web presence, the firm allows a company to successfully manage the flow of web traffic, turning it into an asset and a series of relationships.

We like the fact that Hire.com is intensely focused on a single mission: the cultivation of relationships with a talent pool. By setting aside the question of traffic development, the company neatly segments the recruiting problem into two easier to understand piles: traffic development (candidate acquisition) and relationship farming (talent pool management). Over a five year horizon, having an automated process to stay in touch with potential candidates will differentiate the winners from the losers. The Hire.com offering solves that problem clearly and effectively.

The company is very smart. They do not offer a product that can be all things to all people. Instead, they solve a single problem in a way that allows more important issues to be addressed. Obviously, a tool that mines corporate web traffic works "better" for hip, high traffic operations. In our opinion, that simply illuminates the importance of traffic development for the less hip, lower volume operations. Using Hire.com to mine your corporate traffic will make the shortcomings in your traffic development process more obvious. Knowing that you can handle the consequences, clear attention can be focused on the real problem.

In the near term, we expect Hire.com to add a marketing tagline: "Our Jobs Find People." As simple as that sounds, it clarifies a critical point. The company isn't in the business of traffic creation (though we're sure that they will help you find a subcontractor). They are clearly and elegantly focused on the management of the traffic that comes their way.

The nuance may seem subtle at first. We think it distinguishes Hire.com from the rest of the competition in a very powerful way. They are not data managers, though they do some of that. They are not in the candidate acquisition business though their result is a flow of quality candidates. They don't emphasize advertising placement though they have a sophisticated cross-posting program. They very simply sift and sort the traffic to a company website, allowing recruiters to recruit and develop relationships. It's the simplicity and focus that clearly separates them from the rest of the pack.

It's an honest to goodness different idea. They are rare these days. While we expect to see their marketing slogans copied quickly, it will take a potential competitor a while to develop the technology and momentum. Hire.com may be about to break through as a player simply because of the way that they have defined and solved the problem. That makes them a very likely recipient of large investment dollars in the near term. It's nice to see a good idea positioned so well.

- John Sumser, © TwoColorHat. All Rights Reserved.

Passive Candidates

Mind you, Monster.com isn't alone in publishing odd statistics. It seems to be the current rage in the industry. It looks like the game has changed from simply saying "We're the largest" to "Here's a really big number proving that we're the largest." For some reason, all of the high-visibility services are participating in a macho "mine is bigger than yours" contest. How interesting for them. How unfortunate for customers.

These days, everyone we talk to is busy pitching the fact that their solution helps Recruiters discover so-called passive candidates. The traditional definition of the term is "a person who isn't looking for a job." Pretty simple, no? Really aggressive Recruiters use the net to scavenge for information about these people and their contributions (or potential contributions). In the old days, the telephone was used to mine the insides of a target company for likely candidates.

The essence of the historical definition of a passive candidate was that the Recruiter made the first move.

Today, the prevalent definition seems to be "came to a job board but didn't apply for a job."

We'd call it "looked for a job but couldn't find one." We bet that the much touted "passive candidate" is more likely to be a casualty of bad site design. By definition, passive candidates don't visit job boards. They are too busy with their jobs.

The term "passive candidate" seems to be a catch-all phrase that obscures more than it reveals. Before we can really get a grasp on this significant component of the Recruiting market, we'll need more precise definitions. For instance, the beauty of a Network (like CareerBuilder's or the interesting alliance of MicroSites at ITTA) is that it has the potential to reach people who didn't intend to look for work. This approach (which is useful for describing some visitors to some corporate employment sites) suggests that there is a motivational scale involved in the question. It's likely that passive candidates range from "mildly interested" to "not interested at all". Targeting along this motivational scale might well produce some interesting sub categories.

Meanwhile, we suggest you take claims about reaching "passive candidates" with a grain of salt.

- John Sumser, © TwoColorHat. All Rights Reserved.