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December 3, 2010 / Mervyn Dinnen

One Source To Rule Them All?

I’ve sensed for some time that the game is changing for 3rd party recruiters. The industry has gorged for too long on easy fees and low value offerings and this has led to a lack of agility, an inability to invent, create and lead.

Ask any capable recruiter to name their main competition and they will reel off a number of companies who they battle against for the best briefs and candidates.

Rarely will they say LinkedIn. They see the platform as a tool that they may be able to use when they have the time, a source of candidates and vacancies, and a directory of soft headhunt targets.

Not sure how many see it as a primary resource for clients.

Clearly though, with each addition to functionality and capability being aimed solely at the corporate market, the platform has the ability marginalise any traditional transactional permanent recruiter.

On Tuesday I attended the Stepstone Solutions Summit 2010 on the Changing Face of Talent Management. I covered the event for UK Recruiter, and you can read my review of the event here

During the afternoon we had a presentation from LinkedIn. They shared some research findings which certainly captivated an audience of 200 HR and Talent professionals…the very people that most 3rd party recruiters spend their working life trying to connect and build relationships with.

The main points were:

1)      Most corporate recruiters worry that their competitors will learn to use social recruiting better than they do and build better talent pools

2)      Biggest focus for corporate recruiters at the moment is to reduce spend on 3rd party recruiters/staffing agencies. Second biggest focus is to boost referral programmes.

3)      Corporate development resources are now channelled on training in-house recruiters to find the best talent and on measuring quality of hire.

4)      What’s next for LinkedIn? To increase investment in tools THAT INCREASE VALUE TO CORPORATE CUSTOMERS.

They admitted that the outlook was bleak for 3rd party recruiters unless they could show clear differentiation and additional value. Key to this would be:

–          Insight over data

–          Understanding brand equity

–          Creating real depth to relationships

The point that left the most lasting impression was what was referred to as ‘the end of the walled garden’. No more proprietary databases, deconstruct the talent pools, and crowdsource what you need.

I’ve reported those points fairly factually, because that’s how the audience heard them.

An audience who, as I mentioned before, are probably currently dealing with, and certainly getting business development calls from, a number of 3rd parties.

Clearly LI are in selling mode, and I don’t doubt for one moment that their presentations are aimed very much at stimulating a compelling reason for corporates to use them.

Yet I don’t believe that any recruitment agency could have given that presentation. We no longer have the credibility or legitmacy. To address a talent management conference and present staffing sector findings, insights and future developments, in such a powerful way requires a commitment to innovation and a belief in the strength, ubiquity and robustness of your service that I am not sure recruiters can muster.

Change will come I’m sure, but as I wrote in a recent blog, we’re now playing catch up. I left the conference with another 200 potential hiring managers who now will wonder why they aren’t doing more themselves, how they can reduce agency spend and how well they need to ‘do’ social recruiting.

The ray of hope is that we will begin to offer insight, knowledge and value. Make the service less transactional and more about the quality of hire, less about the size of the fee.

Be a key resource, not part of the crowdsource.

At the moment though, there looks like could be one source to rule them all…and it’s LinkedIn not us.

Let me know what you think.

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20 Comments

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  1. Katie / Dec 3 2010 4:14 PM

    Great post Mervyn. I agree that far too many agencies have their heads in the sand. Both corporate clients and (more importantly?) the candidates are starting to understand the value of direct connections.

    Most corporate recruiters look after multiple client groups and don’t get the opportunity to create really deep personal networks. So I don’t think the agency model will die out. There will always be a place for specialist consultants who bring knowledge, experience and depth to the table. The big high street suppliers that claim to “specialise” in everything won’t be able to cut it against experienced in-house people.

    My team have saved 1.1million this year by using social media, with LinkedIn accounting for a big chunk of our hires. And to be honest, we’ve only skimmed the surface in terms of how we use the tool. With more focus in 2011, I expect that to rise significantly.

    My only concern is the near total monopoly LinkedIn has carved out in the professional networking space. A bit of healthy competition wouldn’t go amiss. It would be great to see the likes of Xing and ZoomInfo get their act together and offer the same level of service and usability.

    • Mervyn Dinnen / Dec 5 2010 10:48 PM

      Thanks for your comment Katie, your insights are always very valuable. You make a very valid point about the strength of personal networks that the best recruiters can bring, and I feel that it is most certainly the way to go for niche specialists.
      Ultimately I would agree that the monopoly of LinkedIn may well be unhealthy, and will certainly create opportunities in the market form others. And well done on the £1.1m savings…a stat that should send shivers down the spine of 3rd party recruiters.

  2. garethmjones / Dec 3 2010 5:24 PM

    Great post Merv. And good follow up comment Katie – are you listening recruiters? I doubt it somehow….

  3. robjones_tring / Dec 4 2010 12:12 AM

    Interesting post as usual Mervyn and WOW that’s a big number Katie (no wonder you had such a good performance review!!!)

    My question is how do they suggest corporate recruiters are measuring quality of hire? Whilst the process measures (time, cost) are easy to quantify I have had various debates with various stakeholders over time as to quality… Interested to hear their and others thoughts…

    • Mervyn Dinnen / Dec 5 2010 10:53 PM

      Interesting point Rob and it’s something that I would be keen to hear from others too. Maybe we can crowdsource some different ideas.

  4. Matt Alder / Dec 6 2010 11:11 AM

    So another corporate recruitment team report a seven figure saving. This is money that is leaving the “traditional” recruitment industry for good and it will all add up to a very large total in the UK this year and an even bigger one next year.

    Meanwhile I’m sure there are lots of 3rd party recruiters, recruitment ad agencies and job boards all optimistically preparing next year’s budgets as if nothing is happening. Time to wake up and face the revolution guys, continued denial will only make things a lot worse for you

    • Mervyn Dinnen / Dec 8 2010 4:45 PM

      Thanks Matt, and a good point. I think there are a number of people within the recruitment sector who are chasing what is happening and not looking at the bigger picture, ie what is not happening. The cake is definitely getting smaller, but it’s the hunt for crumbs that is wrongly occupying most IMO.

  5. Nick Gallimore / Dec 6 2010 11:17 AM

    What’s interesting about LinkedIn is that, in its attempts to a) woo “corporate” recruiters and b) monetise its agency-side use, candidates are the ones missing out.

    Without a paid account, LinkedIn’s usability for the individual is becoming more and more difficult – the contact police on there make it really difficult to network with NEW people (unless you’re willing to pay) and now they want you to pay for the privilege of seeing the surname of 3rd-level connections and beyond.

    None of this is a problem for “corporates” who can justify the spend but unless LinkedIn looks at the usability its value-generating users (who won’t see the value in the £60 a month for a full account) experience, it may struggle to reach its lofty, and now more transparent, recruiting ambitions.

    • Mervyn Dinnen / Dec 8 2010 4:47 PM

      Certainly the potential monopoly that they may seek will be a worrying trend, as Katie pointed out. Interesting as an inhouse recruitment manager she would also like a mix of sources.

  6. David Palmer / Dec 6 2010 11:22 AM

    It’s difficult to see what will be left for agencies as the market evolves so rapidly. However as their market shrinks, so too will the recruitment competition.
    Those that survive I guess will be the niche specialists and the “enlightened few”. The market will polarise with specialists picking up the “consultancy” work (including Search) and enlightened agencies winning work from those corporates that do not have an in-house recruitment capability (not yet or they cannot justify on cost) or a employer brand that can effectively leverage social media for recruitment purposes.
    However in order to become “enlightened” recruitment agencies will have to fundemantally change their attitudes to the way they engage with Employers and will have to review the efficiency of this engagement process to find cost savings and reduce fees.

    @Katie
    Well done on the £1.1m savings. It would be good to have some context say against the total agency spend last year?

    @Mervyn
    Didn’t understand this: “No more proprietary databases, deconstruct the talent pools, and crowdsource what you need.” Who’s it addressed to Agencies or Corporates?

    • Mervyn Dinnen / Dec 8 2010 4:50 PM

      Thanks for commenting David. There definitely has to be a shift within agency thinking towards value and insight, which will probably start with the way businesses structure, manage and incentivise.
      The walled garden comment was aimed at corporates, and was quite vivid…most of the attendees were talking about it over the next coffee break.

  7. Sukh Pabial / Dec 6 2010 3:56 PM

    Hi Merv,

    Adding to the point about candidates using social media successfully, check out this application from @Hirsute_Gent who now works for my company, LBi Ltd. http://vimeo.com/12577686

    And I’m sure you’ve heard about the Employ Kyle campaign? He successfully awarded his position to a company of his choosing. http://www.employkyle.com.

    Just 2 very excellent examples of using Social Media from the candidate’s perspective.

    • Mervyn Dinnen / Dec 8 2010 4:54 PM

      Thanks Sukh, 2 very interesting examples. I met Kyle at a recent unconference and was interested (and probably not that surprised) to hear that his age group are not particularly warm to LinkedIn, preferring Facebook. Maybe the ‘monopoly’ will be resisted by the generations entering the workforce now and over the next few years….though it will probably be the platform that is replaced not the route to market.

  8. Peter Gold / Dec 8 2010 9:43 AM

    Mervyn

    I noted your point about “no more walled gardens”. Smell the coffee my friend! Linkedin and Facebook are so walled it is somewhat worrying. Great that Katie can quote such a big saving but where did most come from? Linkedin! Guess what – we are just creating another big agency or job board or whatever. Either way, they will up the cost big time!

    So, I don’t see open databases at the moment. 🙂

    Rob makes a good point about quality – I am yet to see anyone compare (for example) the quality/performance etc of agency hires versus direct hires. I have no idea how they may compare but it would be interesting to know.

    Matt – £1.1m in my calculations equates to maybe 200+ direct hires. Someone must be hurting! Not Linkedin though 🙂

    Good post and some interesting debate.

    Peter

    • Mervyn Dinnen / Dec 8 2010 5:02 PM

      Insightful as always and very fair points. I did say that LI were clearly in sales mode to a very captive and receptive audience, and it was a comment and vision that was being spoken about during the next coffee break. I would agree that we are in danger of creating another big route to market. As I mentioned in response to Sukh’s comment, LI doesn’t have the same pull with the under 25s that FB has…this may change as their careers progress, or we may just replace the platforms.
      The agency vs direct hire quality is very interesting and anecdotally clients will usually favour direct. Having said that, a number of placed candidates become clients so must value what we can offer. Having worked in sales recruitment previously I would say that someone with a fee attached is often measured against higher expectations, though that is probably more to do with that sector.

  9. David Johnston / Dec 8 2010 11:12 AM

    An interesting review Mervyn and echoes many of the conferences and thoughts aired over recent months. There certainly is a wind of change blowing and to be honest its been blowing for a while, but I think there is still time for recruiters and RPO organisations, but the models need to change as the greatest area of cost reduction is to attract talent direct.

    One thing which is apparent is that a lot of direct employers are racing ahead with the social media mantra, but are forgetting some of the very basics of online recruitment marketing; including the career site.

    How many companies actually have a career site which attracts, engages and converts talent?

    If a company has a career site, has the candidate experience been considered and usability?

    Fundamental SEO is forgotten and when it comes to integration with applicant tracking systems, well the methods employed are very outdated when compared to those employed within the recruitment industry.

    http://www.MYATSProvider.com/mycompany/vacancy is not an acceptable integration and the use of frames is equally poor. Look at the methods employed currently with the large ATS Suppliers and ERP Systems. There are better ways of doing this, but it means working with businesses which have a pedigree within the online recruitment sector and truly understand how to deliver ROI.

    Most of the clients I’ve worked with have seen the greatest growth in attracting talent from their own website and making sure that it is the hub which feeds their social networks using twitter, LinkedIn, Facebook and more. Most have seen reductions in recruitment costs of around 50% within a year and one now has a Career site with a Google Page Rank of seven. Social media is hugely important as is mobile, but getting the basics right with the career website is even more important as this provides the platform to which candidates are delivered.

    A career website should not be seen as a cost, but as recruitment asset which will deliver financial results directly to the bottom line of a business.

    As a recruiter just think, there are millions of job searches carried out each month and over half of these include Job Title and Location. If your jobs can’t be indexed by Google, then they won’t be found. You then are relying purely on your brand and candidates that have already identified your business.

    Don’t get me wrong I’m a huge advocate of social media, but the most successful employers will use this as part of a wider solution and online recruitment strategy and a good career site platform will make your social media recruitment more effective.

    Interesting times and direct employers are catching up. 4 Years ago companies would ask me “Tell me about this e-recruitment thing” and now look at where we are.

    • Mervyn Dinnen / Dec 8 2010 5:05 PM

      Interesting points David. I agree that is most probably a question of mixing a number of routes to market, and having a compelling candidate attraction process is key.

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