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     overview

This profile looks at internet jobsearch sites and the online recruitment industry.

It covers -

• this page - an introduction, the online recruitment sector's evolution and future
• industry - the shape of the online recruitment sector and who is using online jobsearch services
• issues - are those services effective?
• studies - academic and other writing about online recruitment
• deals - landmarks in corporate acquisition of jobsearch sites

     introduction

Use of the internet to connect job seekers and employers attracted attention from the mid-1990s, with "recruitment by clicking" being hailed as revolutionary, an unprecedented business model and a laudable assault on 'big media'.

As with online match-making, 'equaintance' and other social software services much media coverage has been based on industry boosterism, with claims that

• "nearly half of all Internet users have looked for a job online" as they heed the call to "pound your computer keyboard, not the pavement"
• "by 2005 around 96% of all companies will use the Internet for their recruitment needs"
• 45% of UK job seekers use the net as "their preferred method of looking for a job, 75% have applied for a job online, 59% have obtained an interview as a result and 19% have obtained a job"
• "internet recruitment is quicker, cheaper and more effective", with "better matching of jobs and job seekers"
• "the web means better flow through for placement agencies"
• "as everyone finds jobs online, job searching will morph from want ads to rich career networks"
• cost-per-hire of online recruitment is around 10% of offline recruitment
• "over fifty million CVs are floating on the net".

We can differentiate three aspects of online recruitment.

The first - and arguably most significant - involves electronic mail, with acquaintances alerting each other to needs/opportunities, employers providing descriptions and using electronic correspondence at all stages of the recruitment chain, applicants providing bids and vitae, and third parties such as identity verification services responding to queries over the net rather than by the postbox. The impact of electronic mail rather than hard copy relates to ease of use and timeliness.

A second aspect involves use of the web for electronic publishing, with employers (or agents) posting their needs on corporate sites and recruitment sites of varying sophistication and job seekers responding to those needs or merely posting profiles that feature their aspirations and vitae.

At its simplest that publishing is an online form of traditional print classified advertising and offline job boards. More sophisticated variants encompass public search facilities, automated data matching, intranet access to specialist databases (eg maintained by a recruitment agency) and features such as the inclusion of video (useful for determining whether the owner of a CV does indeed have two heads).

A third aspect involves enhancing that publishing - and facilitating better recruitment and staff retention - through interactive testing (including intelligence, skills and psychological tests) and automated verification of credentials.

Enthusiasts have also seen scope for integration with education services and for the provision of life-long career management to members of the binary proletariat.

We have for example encountered predictions that sites operated by commercial recruitment agencies or professional associations and educational institutions will -

• house personal portfolios that demonstrate an applicant's proficiency
• leverage aggregated date to forecast job shortages several years hence and determine appropriate remuneration now
• use artificial intelligence for better analysis of vitae and matching of job seekers to job openings
• enable recruiters to offer a person to an employer before a position is advertised

In practice many claims about online recruitment are problematical.

It is clear that many jobs in some industries are not being advertised or filled online. Others, particularly elite professional and executive positions, use email but rarely appear on job boards. Personal connections - aka soft networks - have not been vanquished by the web. Much 'online' activity relates to positions advertised on corporate intranets and internet sites rather than sectoral or multisectoral job boards. Claimed efficiencies for employers and employees may not be realised, with for example suggestions that

online mainly equals more noise ... it's too easy for job seekers to 'spam' employers or do a dump a CV onto a board. Much of our time is spent filtering junk applications from overseas wannabes

skilled applicants miss out on interviews and jobs because a spotty 18-year-old has filtered out their resumes because he has no idea of what to look for

As we have noted below, the profitability and effectiveness of many services are uncertain, with few benchmarks and little public disclosure. Major operators appear to be garnering most traffic (at the expense of smaller non-specialist competitors) but some niche operators arguably deliver better results for job seekers and employers.

     evolution

Precursors of current internet recruitment sites/services took three forms: private databases maintained by recruitment agencies, bulletin boards developed by enthusiasts prior to the web and 'wanted' advertisements in print formats, in particular the classified ads that provide the "rivers of gold" for major newspaper groups. (A note on acquisition of job search and classified ad sites by media groups is here.)

Monster.com – the Amazon of the industry – was launched in 1994 as The Monster Board by Jeff Taylor, founder of specialist recruiter Adion. It was acquired by colour pages publisher TMP Worldwide in 1995, expanding in competition with independents such as Hotjobs and the online arms of advertising and recruitment groups.

Sectoral, multisectoral and geographical sites proliferated during the dot-com boom, as start-ups emulated the emerging majors, recruitment agencies tested the water (or sought to boost their market value by expanding online) and developers migrated from bulletin boards to the web.

Growth of the industry reflected consolidation within the global advertising and human resources industries, with conglomerates such as Saatchi and WPP assembling (but rarely integrating) service providers that encompassed media buying, web design, executive headhunting, clerical staff placementand psychological testing.

Forecasts that the web meant imminent demise of newspapers as such – or merely their economic basis as readers relied on banner ads, search engines, portals and other mechanisms – saw major media groups launch generic and local job sites.

The success of that expansion varied, with Australia's dominant commercial media groups fending off local and overseas web-only recruitment sites. In Europe the success or otherwise of major groups such as Bonnier, Trinity and DMGT reflected factors such as local expectations, development strategies, cross-marketing and preparedness to invest.

Caution about cannibalisation of print revenue was reflected in the US, where there were disagreements about national/regional job sites and about relations within publisher consortia, evident in dissolution of some partnerships (or competition from local sites under the auspices of individual newspapers) and laments that revenue and profitability was not commensurate with investment.

By 1999 Monster was reportedly attracting over 2.5 million visits per month, with over 50,000 job postings from 40,000 companies and around 500,000 resumes. It followed others in the dot-com trajectory, with parent TMP initially being rebadged as Monster.com, then dropping the 'com' to become Monster Worldwide.

Accelerated consolidation following the 2000 dot-com crash saw Yahoo! acquire the HotJobs job board for US$436 million in 2002, the demise or restructuring of some competitors (typically towards a sectoral/local focus), winding back of services launched by some professional organizations and increased marketing or commercialisation of 'free' services such as San Francisco-based Craigslist.

The latter – with more traffic than Monster according to some metrics providers (although lower revenue) - came into the eBay orbit in August 2004 when the auction group paid US$1.4 billion for a 25% stake.

2003 and 2004 also saw the emergence of independent academic and government studies – including some empirical research - highlighting issues such as the absence of benchmarks and public information about success rates.

One observer accordingly commented that some major services appear to be useful opportunities for the newly unemployed to fill in time (particularly if participation evokes large-scale unsolicited approaches from service providers rather than employers) but - given success rates in the US of around 0.8% to 0.2% - are less effective than using personal soft networks.

Francisco Cordero of social networking site Bebo boldly claimed in November 2007 that

Social networking deepens our interpersonal relationships and lets us communicate more effectively. Most of us leverage our personal contacts when reaching out for career opportunities, because our friends are our greatest source of inside information. Social networking compliments traditional job search strategies by taking them to the next level.

It is unclear, however, what "deepening" the "interpersonal relatonships" means and whether the "next level" is a useful concept.

     future

The future of the industry is unclear.

Some pundits, particularly those closely aligned with the industry, forsee significant growth in revenue and greater profitability. One observer notes that aggregate online online job advertising revenue in the US is around 15% of spending on print ads for recruitment but is growing at a greater rate (claimed as 25% to print's 4% growth) and will overtake traditional classified ad spending.

Investors in 'old media' need not despair, as much of the growth is taking place in regional sites owned by newspaper groups.

Forrester – unabashed by indifferent results from its past consultations with the crystal ball (or was it eye of newt and toe of gnat?) - estimates that by 2005, job boards will have

evolved into career networks that will capture 55 per cent of an online recruitment market worth $7.1bn.

Competitors and some industry figures offer less expansive forecasts, envisaging competition among the majors, the erosion of margins as job seekers and employers migrate to local sites and sectoral sites, and increased costs for marketing and provision of features that would provide the 'career networks' mooted by Forrester and its peers.

The attractiveness of those features for end users – and the ability of major site operators to provide quality at an acceptable cost – is unknown. Experience offline suggests that individuals and employers are wary about capture by 'body shops', particularly on a long term basis and without the human element.

It is likely that most candidates – particularly those whose placement is most lucrative – will continue to emphasise personal referrals ahead of corporate sites, broader jobsearch sites and print media.

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