THE TECHNACIOUS RECRUITER NEWSLETTER

May 25, 2006   view past issues

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Feature: Pay for Performance Advertising

Online recruiting is periodically swept by new ideas that are touted as “the next big thing” in our field. There’s been:

  • virtual career fairs,
  • datamining,
  • social networks, and
  • online videos to accompany candidate resumes,
  • to name just a few.

    Historically, these developments have burst on the scene with much fanfare and breathless prognostications about how they will change life on planet Earth (or at least in the recruiting function). More often than not, however, they have had only a Warholian impact on the way we do our work. They enjoy a fleeting 15 minutes of fame and then fade away, replaced by the next big thing that catches the eye of the media and industry pundits.

    So, what is today’s auspicious, bodacious big idea? Given all of the excitement it seems to be generating, I would point to pay for performance. As the enthusiasts say, it’s an idea whose time has come.

    Pay for performance is founded on the notion that specialty or so-called vertical search engines in the employment field (e.g., Indeed.com, SimplyHired.com) have reduced the job posting to a commodity. And, as any good economist will tell you, commodities have no differentiated characteristics so their value in the marketplace is a function solely of price. The lower the price, the higher the perceived value. The vendors that produce commodities, therefore, can only compete with one another by reducing their price, and that’s what pay for performance is all about.

    The idea originated with the pay-per-click advertising so successfully championed by Google over the past four or five years. Using an auction-like process, Google lets the market determine what advertisers are willing to pay for an ad that will appear whenever someone searches on Google using a specific keyword.

    For example, let’s say your employer produces widgets, so you go to Google and offer to pay 50 cents to place an ad on the search results that are generated whenever someone searches Google using the keyword “widget.” Even better, you don’t have to pay that 50 cents when your ad appears on Google unless a visitor actually clicks on your ad and (hopefully) reads it. That’s pay for performance. You don’t pay unless your ad performs.

    Sounds like a good deal, right? In today’s budget challenged staffing functions, anything that will improve the efficiency of each dollar you spend in recruitment advertising has to be a positive development. But, as with all next big things, there’s another side to the story. Pay for performance has at least two problems that can turn its seemingly good deal into a very bad one. They involve hidden costs and hidden talent.

  • Hidden Costs. The marketplace auction of keywords can actually cause you to pay more, rather than less for your recruitment advertising. How? Well, let’s say you’re recruiting for Java programmers, and you go to a vertical search engine and offer to pay 50 cents to display your ad every time someone uses the keyword “Java programming” in a search.

    That modest sum seems like a reasonable investment, and it probably would be if you weren’t in a War for Talent. The reality, of course, is that you are, and that competitive situation means that there are numerous other employers also recruiting for java programmers. So, what do they do? They go to the search engine and offer to pay 60 cents or 70 cent or $1.50 for the very same keyword. And, every time another employer outbids you, your ad appears less and less frequently and lower and lower in the search results. The only way to get your ad back up to the top, where it’s most likely to be seen by Java programmers, is by upping your bid. That relentless upward pressure is the hidden cost of pay for performance.

  • Hidden Talent. The pay for performance model works at Google because every time someone clicks on an ad for toothpaste or the latest CD, they are a prospective customer for that product. For the vendor, therefore, every click is a potential sale.

    The same is not true in recruiting. Just because someone clicks on an employment ad doesn’t mean they are a qualified applicant. In fact, it’s more likely that they aren’t. Why? Because vertical search engines that focus on jobs-at least those in the marketplace today-have a value proposition that appeals only to active job seekers. They are nothing but a quick connection to job openings posted around the Net. There are, of course, some great “A” level performers among active job seekers, but there are far more among the population we typically call “passive job seekers.” By definition, however, that group isn’t looking for a job, so they have no reason to visit a vertical search engine that specializes in jobs. And, that’s the fatal flaw in the current version of pay for performance. It places a value on the visitor’s click, and in our profession, what counts is the visitor’s talent.

  • Am I saying that pay for performance has no future in our field? Absolutely not. In fact, there are several examples of pay for performance that seem to be working:

  • TopUSAJobs uses a pay for performance model that extends the reach of select niche job boards into the candidate population. By focusing on career and industry-specific niches, it provides access to talent that is more likely to be qualified for key openings and saves the advertisers money at the same time.
  • Careermetasearch.com creates a unique value proposition by integrating pay for performance ads with professional and developmental content that appears online and would be interesting and helpful to passive prospects. As a result, its advertisers pay only for ads that are positioned to connect them with high caliber prospects.
  • So, pay for performance can and will work, but not as it is envisioned by today’s search engine sites. The ads recruiters place may be commodities, but the people we recruit definitely aren’t. There are very real and important qualitative distinctions among talent, and until vertical search engines attract more than the 16% of the U.S. population who are actively looking for a job, all the efficiency of advertising in the world won’t compensation for its ineffectiveness.

    Thanks for reading,

    Peter

    P.S. Don’t keep WEDDLE’s to yourself. If you like our newsletter, please tell your friends and colleagues about it. They’ll appreciate your thinking of them. And, we will too!


    This Issue’s Sponsor: The International Association of Employment Web Sites

    This issue of WEDDLE’s newsletter is brought to you through the generous support of the International Association of Employment Web Sites.

    The International Association of Employment Web Sites is the trade organization for job boards and career portals. Its members include over 500 sites operated by stand-alone enterprises, newspapers and professional journals, associations, radio stations and affinity groups. Their services cover every profession, craft and trade, every industry and virtually every location around the world.

    Why is it important to you? Because it will help you to be a smart consumer on the Web.

    There are over 40,000 employment sites, and not all of them operate according to accepted business standards. How can you tell the difference? Look for the Association’s logo on Web-site home pages. It’s the “good housekeeping seal” you can count on when you make buying decisions among job boards and career portals.


    Section Two: Site News You Can Use

    Business 2.0 published its tips for road warriors. Among the suggestions, bet on the come when it comes to achieving elite status. In other words, if you know that you’ll be accruing 10,000 miles in the air as you do your college campus recruiting visits (or for any other reason), contact your airline and see if they’ll grant you whatever elite Frequent Flyer status you may qualify for in advance. Most airlines don’t publicize this perk, but it is available. For more information, see the Flyer Talk Bulletin Boards. Whether you’re upgrading to first class or not, however, you will probably be sitting in an airport at some point cooling your heels. One way to make the time as productive as possible is to find the nearest Wi-Fi access point and log on. It’s a tough choice I know-given all of the other fun options you have in an airport-but if that’s what you decide to do, JiWire.com and WiFinder.com can help you out. Each lists thousands of free and fee-based Wi-Fi connection points in airports, barber shops, and coffee shops around the world.

    Monster launched Monster Intelligence, a new program offering employers human capital-related market analysis, research and solutions. According to the site, the initiative was developed in response to its “customers’ needs for industry data and real-time insight to aid in their strategic human resource planning.” The program provides free access to established indices, such as the Monster Employment Index, as well as customized information on individual industry sectors, including finance, healthcare and retail.

    Right Management Consultants presented the results of a survey to assess the impact of bad hiring and promotion decisions. Among its findings:

  • It costs an average of two times an individual’s salary (including recruitment and severance expenses and lost productivity) to replace a bad hire. An astonishing four-out-of-ten of the respondents said it actually costs at least three times an individual’s salary.
  • Bad hires also cost the employer in other ways, including loss of customers and market share, higher training costs and higher recruitment costs.
  • Sobering as these findings are, however, they should not be viewed as an excuse to slow down. Yes, we want to be careful about selection, but not at the expense of speed. In a highly competitive labor market-and that’s definitely what the War for the Best Talent is-the most successful employers will be those that can make optimal hiring decisions faster than anyone else. How do you accomplish that trick? First, sell the leadership of your organization on the cost of under-prioritizing recruitment and making a bad hire. Then, re-engineer your process to take out all of the speed bumps and tighten all of the connections that will accelerate coordination and decision-making.

    The Times of London reported that the Japanese government has taken retirement planning to a whole new level. Apparently, many Japanese gangsters are nearing an age when they want to hang up their guns and garrotes, so the country’s Ministry of Health, Labor and Welfare has drafted a set of rules for those gambling, loan sharking and protection workers wishing to qualify for retirement benefits. Since organized crime leaves no paper trail, however, “retiring mobsters” (now, there’s an oxymoron) must supply a letter of retirement from their crime boss and, if that’s not available, be able to show gang tattoos, criminal records and missing finger tips. Who says crime doesn’t pay?

    Two researchers from the University of Michigan and Stanford University, Fiona Lee and Larissa Tiedens, found that practicing what you preach pays off. For years, CEOs have been exhorting employees to make sure they understand how their work contributes to the enterprise’s success. In other words, they are in control of what happens and they must make sure that what happens benefits the organization. In marked contrast to their sermon, however, more and more CEOs are adopting the Ken Lay defense when things go bad-“it was all beyond my knowledge and control.” They might have been able to get away with such behavior in the past, but with today’s more savvy investors, it costs the company real money. The academics found that a company’s stock price was higher one year later when its leaders blamed poor performance on controllable internal factors rather than on external ones. Saying the dog ate your homework may work in elementary school, but it apparently doesn’t hold much weight with investors.


    Section Three: Site Profiles

    Site Insite … how well do you know the Web’s 40,000+ job boards?

    1. The customers at your grooming salon are starting to think about the summer swim suit season, so you need to hire another cosmetologist fast. Where could you go online to take the wrinkles out of your search for candidates?

  • BehindtheChair.com
  • SalonJobStore.com
  • SalonEmployment.com
  • BeautyPeople.com
  • 2. Barbero’s tragic run at the Preakness has increased interest in riding lessons at your stable, and you need to add several groomsmen to your staff. Which of the following sites would help you saddle up some experienced prospects?

  • YardandGroom.com
  • Groomsmen.com
  • Whinny.org
  • StableMasters.com
  • 3. Recent gyrations in the stock market have increased customer calls to your financial services firm, and you need to hire some additional brokers to meet the demand. Which of the following sites would enable you to maximize the return on your investment in online recruiting?

  • BrokerHunter.com
  • jobsinthemoney.com
  • CareerBank.com
  • BetOnUs.com
  • (answers below)

    Site Spotlite … from the pages of WEDDLE’s 2005/6 Guides and Directories

    Jobscience

    http://www.jobscience.com

    Post full time jobs: Yes

    Post part time, contract or consulting jobs: Yes – All

    Distribution of jobs: National-USA

    Fee to post a job: Less than $100/posting

    Posting period: 90 days

    Can posting be linked to your site: Yes

    Resume database: Yes

    Number of resumes: 500+

    Source of resumes: Direct from candidates

    Top occupations among visitors: Registered Nurse

    Other services for employers: Automated resume agent, Banner advertising, Status reports: Banners/postings

    Member, International Association of Employment Web Sites: No

    Answers to Site Insite

    1. All but BeautyPeople.com, the site of a dating service.

    2. Only YardandGroom.com and Whinny.org; Groomsmen.com is the site of a store for the groomsmen at weddings and Stablemasters.com is the site of an educational company specializing in online degrees.

    3. All but BetOnUS.com, an online gambling site.


    Support Our Sponsor: The International Association

    This issue of WEDDLE’s newsletter is brought to you through the generous support of the International Association of Employment Web Sites.

    The International Association of Employment Web Sites is the trade organization for job boards and career portals. Its members include over 500 sites operated by stand-alone enterprises, newspapers and professional journals, associations, radio stations and affinity groups. Their services cover every profession, craft and trade, every industry and virtually every location around the world.

    Why is it important to you? Because it will help you to be a smart consumer on the Web.

    There are over 40,000 employment sites, and not all of them operate according to accepted business standards. How can you tell the difference? Look for the Association’s logo on Web-site home pages. It’s the “good housekeeping seal” you can count on when you make buying decisions among job boards and career portals.