Although the mainstream wisdom is that branding is everything (and that a solid brand ensures traffic), we're not so sure. Desktop utilities, maybe. But, the traffic will always follow what's hip and that, in the long run is the opposite of a reputable brand.

We subtitled the article Greg-Ing (after our two researchers who are so good at finding these things). From time to time, we'll point out the latest Greg-Ings.

- John Sumser, © TwoColorHat. All Rights Reserved.


A Pain In The Seat

Fast Forward.

It's late 1999 and we're beginning to publish the Internet Bugler (see today's edition). An emailed HTML daily, the Bugler covers the news that is relevant to our industry in small capsules. You'd think that 20 years would have brought technical stability.

Instead, the process of gearing up for the new endeavor has included (in no particular order)

• A complete meltdown of our existing email system
• The mysterious disappearance (and reappearance) of huge chunks of research data
• A strong ripple from the changes in the office
• The random crap out of a key computer
• The failure of the only aspect of the mailing process we didn't test
• And more minor glitches than we can explain

The interesting thing is how unruffled the team is as a whole. Time has not made technology easier to use. We face the exact same frustrations each day that we faced 20 years ago. It's just a part of the information age environment.

It might be simple to explain. In conceptual terms, the information age is characterized by a dramatic increase in daily ambiguity. The seemingly all purpose appliances we use never are configured for the precise task that we face. Everything has to be tweaked. Part of tweaking is breaking things you didn't expect to break.

In part, that explains the broad fascination most entrepreneurs in our industry have with the underlying technology. It may be that the only thing that can actually be perfected is the technology. It often feels that way. In deeply ambiguous markets, believing that you can actually be finished with a technical project gives the comfort of religious faith.

Unfortunately, the technology seems to have a mind of its own. We seem to spend a fair amount of time trying to figure out how to get the hotel window open so we can throw the laptop (acting out) to its death 20 stories below. After 20 years, we almost expect things to break at the worst moment possible.

So, bitching aside, the information age includes a heightened level of frustration. It's what Alvin Toffler called Future Shock over 30 years ago. As far as we can tell, no one is immune. We get some small relief knowing that Mr. Gates machines do the same thing. It's a normal part of our time.

Keep your eyes out for the interbiznet Bugler. - John Sumser, © TwoColorHat. All Rights Reserved.

Top 10 Things We Think Need To Be Patented

1. Single sheet of paper describing skills, experience, ambitions or a combination of the three.
2. Single computer file describing skills, experience, ambitions or a combination of the three.
3. Automated process for storing and retrieving a Single computer file describing skills, experience, ambitions or a combination of the three.
4. Multiple computer files or pieces of paper describing skills, experience, ambitions or a combination of the three.
5. Single, mostly blank piece of paper (or computer equivalent) with completable options describing skills, experience, ambitions or a combination of the three.
6. A method for transmitting items 1 through five by electronic, telephonic means.
7. A method for storing items 1 through 6 in an easily searchable computerized system.
8. A method for tracking, measuring and reporting the progress of various and results of processes initiated through the use of items 1 through 7.
9. A single sheet of paper or computer file describing all of the attributes of a particular job or position
10. A computerized job search system and method for posting and searching job openings via a computer network

Oooooooopsie.

Someone beat us to number ten.

- John Sumser, © TwoColorHat. All Rights Reserved.

Wages and Inflation

The answer is staggeringly simple. Prices drive inflation, not wages. If the costs of labor have an effect on price increases, it is secondary. Inflation is a measure of the increasing price of things, not the wages paid to produce them. There is not an inherent relationship between the two.

Since the inflation spirals of the 1980s, companies have gotten really good at managing costs. If an element of the cost of a good or service goes up, management makes the necessary investments required to keep pricing at the same (or lower) level. While tight labor markets put pressure on corporate profits, there is very little pricing flexibility in the market. Companies can not simply raise prices because their costs are going up. Global competition, the Internet (where things are 13% cheaper than other sources), relatively stable commodity prices and continuing productivity improvements take care of the inflationary pressures.

Rather than price pressure, tight labor markets cause profit pressure.

Profit pressure causes a profound internal examination of how money is sent and whether it is spent wisely. In other words, the marketplace isn't accepting price increases. Though the position can not be sustained permanently, as long as there is a chance that a competitor can realize productivity improvements, prices won't increase. Inflation will be deferred until we've seen a couple years of bad profit performance across the board.

In intelligent companies, it always comes around to simple questions. "Is our money being spent in the smartest possible way?" "What is the smartest way to perform function X?" "Is Function X really a 'core competency' of our company, should it be?" "Are we pursuing the right objectives?" "What business are we really in?" "Can someone else do this better?"

These days, the same sort of profit pressure driven rigor is starting to be applied to Recruiting. The question has changed from "How can we do this administrative chore less expensively?" to "Are we doing the right things?"; "What are the right things to do?"; and "What is our long range strategy?" The pressure from increasing costs is working its magic.

- John Sumser, © TwoColorHat. All Rights Reserved.

Innovator's Dilemma

Sound confusing, no?

It's this simple. Solid management of a successful existing business (or Recruiting function) requires an approach to risk that makes new ideas very hard to implement. The essence of solid operational management is to protect the core intellectual and capital assets. New discontinuous approaches are impossible to manage this way. Good management is great at incremental change. When the change is as profound as a revaluing of core strategic materials and the technology that handles them, typical "business cases" don't work.

Christensen offers a simple and powerful perspective on the reasons that dominant market leaders fail to stay on top. (Does anyone remember DEC, Lotus, Ashton Tate, Data General, Prime or Wang?). The new approach can not be quantified in the same way as the old approach. The risks and investments are profoundly different.

We're always tickled when the old school HR Managers wake up (a little) to the new era. They behave as if the change is normal and that they just have to swallow it like the rest of the things that they have learned. Here's a version of our standard note, perhaps you can use it in your world. The problem, ultimately, is that by the time that this new technology can be managed in conventional ways, the race will be over.

It's not at all clear to us that a compelling traditional business case can be made for investments in web technology.

Rather than cost reductions (the sort of ROI approach that would have made sense five years ago), the problem appears to have several basic dynamics:

1. Population / Demographic Shifts have transformed recruiting into an inventory development / management function
2. Unfortunately, most HR Departments currently function as internal cost centers rather than profit components
3. So, the core skillsets are missing from the HR Portfolio
4. In addition, candidate acquisition costs are rising as a direct result of the demographics
5. That means, the best way to make the business case is either:
   a. A way to slow the cost growth or,
   b. A way to capture invaluable and scarce resources
   

Typically, an individual HR Department is experiencing dramatic cost growth. However, they are usually of the opinion that they are the only ones in that predicament. As a result, our surveys trying to get at the hard data go unanswered usually. Anecdotally, we're seeing a 25% increase in the time required to fill a slot. Since that time isn't usually factored in cost-per-hire calculations, it doesn't show up anywhere.

We're also seeing a 40% annual attrition rate across Recruiting Functions. It's the churn in our mailing lists and rarely reported by the HR Departments in our surveys.

The key elements of a really valuable solution are recycling, long term relationship development, Just In Time Inventory, Supplier Development and other standard methods for handling scarce strategic resources.

This kind of thinking dumfounds the typical HR Manager and won't have really proven models for several more years. Without history, typical cost reduction investment cases don't make any sense. The history is being created now.

We'd argue, loudly and long, that it is a disservice to suggest that a traditional case should be made at all. That simply perpetuates the notion that the sky *isn't* falling. The vendors, locked into a battle for market share, emphasize cost-effectiveness. They, however, never promise long range cost reductions in cost to hire. They simply compete for the advertising component of the recruiting dollar by repeating the undifferentiated message "We're cheaper than newspapers".

By way of analogy, suggesting that a Blacksmith buy automotive tools in 1910 would have been a tough sell with no precedents. Those who did, survived. Those who waited for the history to mature went out of business.

Although we have some of the data to support a cost containment case, there is no example of a fully articulated example that we can think of. An additional component of the problem is the dramatic difference in cost per hire between high visibility, Internet savvy operations. The question of accounting for the value of the existing brand as a component of the Recruiting Equation is no small matter.

- John Sumser, © TwoColorHat. All Rights Reserved.