An article on ere.net caused quite a stir this week, suggesting that large swathes of the recruitment industry could be washed away by the rise of the LinkedIn recruiter.
"How LinkedIn Is Eating the Recruitment Industry" is worth a read as a wake up call. I've argued elsewhere that LinkedIn - and the broader growth of social networking - has bred a new form of recruiting that's effectively eroding the value proposition of a portion of the recruitment industry. The ere piece seems to support this view - but goes way further in suggesting that the rise of the LinkedIn recruiter sounds the death knell for much of the traditional recruitment industry.
The first person to comment on the article said "Hogwash"! Have to say I'm in total agreement (hat tip to Martin Snyder).
The lower value parts of the recruitment industry are being eaten alive by LinkedIn. In-house recruitment teams are now targeting segments of the LinkedIn membership and messaging them to consider joining their company. This is equivalent to low-end selection work where recruitment firms would solicit advertising response and send mailshots to their candidate database. They rely on candidates responding to the message - without investing resource in either researching the broader market or in selling candidates on being interested in the role.
This will still leave a good portion of the recruitment industry intact though for a whole variety of reasons. Let's look at just a few of them:
Imagine a recruitment agency coming in to pitch for a piece of work and opening with the suggestion that they would restrict themselves to only tapping into a small portion of the candidate market. That'd be cue for the meeting to end and the agency to be escorted out of the building! Yet this is exactly what is being touted by those who espouse LinkedIn killing off external recruiters. It's fine for bringing in a portion of the hires needed in any business, but is so far from exhaustive it'll only ever be part of the solution.
Now the portion of the professional candidate market covered by LinkedIn varies significantly by region. But the membership figures are also hugely flattering - and therefore misleading from a recruitment perspective.
At any point in time a significant minority of LinkedIn users do not have a working email address assigned to their account (just see how many bouncebacks you get if you ever try emailing your first degree contacts). A significant number also don't check their inboxes that frequently (just see how high a proportion of your inmails are recredited for not having been opened by the intended recipient). Then of course there's the issue of the huge number of fake profiles created purely for the purposes of spamming. This is true of all social networking platforms, but in the case of LinkedIn exaggerates the portion of the professional candidate market that they purport to reach.
Take all these factors into consideration and you suddenly realise that the proportion of the candidate market that would be reached by proactive external recruiters is far greater than the proportion that will see your LinkedIn approaches in the timescales you'd want them to. Ergo, it's good for run of the mill recruiting, but no more.
We've covered above that a portion of the candidates you've tried to contact will never see your message, or not see it in the timescales you'd want. But LinkedIn recruitment has another shortcoming over external recruiters. It will only ever elicit a response from people who are inclined to pursue a career move AND who have an interest in joining the company being marketed to them.
What about all the people on LinkedIn who are passive candidates, happily employed, high achievers? They're arguably the most valuable hires for your company - and yet they're also the professionals least likely to respond to a direct marketing message. They need the personal touch. They need to be sold.
What about all the people on LinkedIn who aren't that excited about joining your company - or simply don't know that much about you? Think they're going to respond to a direct marketing approach? Maybe. Maybe not.
I'm hearing numerous examples of in-house recruitment teams becoming exasperated when a candidate they approached on LinkedIn is hired through external recruiters. Why does this happen? The candidate doesn't respond to the LinkedIn message, but they do take the calls external recruiters put in to them. Professional people like to be coveted and treated with respect - and so a good portion of the market is always going to be more responsive to personal approaches from external recruiters than to impersonal messages in their inbox or adverts as they're browsing.
Those of you talking to quality candidates will know this is fast becoming a big issue. The more recruiters buy into LinkedIn's services, the more candidates are targeted by recruiting messages that they may or may not appreciate. There's only so far LinkedIn can push this without irritating the very candidates whose details they want to sell. Plus of course there are usually diminishing returns to any form of marketing - so the more recruiters that start to use LinkedIn's services, the lower the results for each recruiter are likely to become.
I personally suspect the recent changes we've seen on LinkedIn are all aimed at getting more of the LinkedIn user base engaged on the site again. Endorsements are a way of fueling site activity. Hosting more content from authority figures is a way of getting people back to the site. By increasing the proportion of users who are actually active on the site, LinkedIn can increase the number of candidates that recruiters choose to target - and so push back the point at which they'll have saturated their candidate base with marketing messages. But that constraint is there - so there's only so much further this channel can be pushed.
I don't know about you, but most businesses I have dealings with like to have ownership of their key assets; or at the very least, long term binding agreements giving them certainty over their use of those assets. Yet relying on social networking sites to effectively host our candidate databases (and our applicant response and tracking systems) is surrendering this key asset to third parties.
We've all seen how LinkedIn has progressively restricted the functionality available on free accounts. We've all witnessed other social networking sites moving the goalposts - Twitter's recent spat with LinkedIn being just one example, Facebook's changes to how comprehensively posts are displayed is another. No company is going to be enamored by the idea of being hostage to LinkedIn and the rule changes and price rises that could be pushed through at any moment. So all will want to maintain relationships with other providers of talent, be that external recruiters, job boards, trade publications...
LinkedIn can generate lots of hires for companies, at a cost that's considerably lower than that of a recruitment agency. But the costs of scaling up an in-house operation are significant. Hiring permanent employees and forking out for LinkedIn licences is quite an investment. It takes time to scale up - and there are longer term liabilities the company is taking on should the economy turn and the team need to be scaled back.
External recruiters, by contrast, can usually be put to work on requirements more or less instantly. They're also paid only when a successful hire is made - and usually only if that hire stays with the business for some time thereafter. In all businesses you reach a point where the lower costs per hire of one option are less attractive than the variable costs of an alternative option. You'll also see situations where the timeframes in which hires are needed are such that recruitment agencies have to be used in preference to growing the in-house team.
So there you have it. My take on why portions of the recruitment industry have a lot to fear from the rise of LinkedIn; but also why LinkedIn is not about to gobble up the recruitment industry just yet. What other reasons would you add to the list?
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