Supporting Startup Growth with the New Recruiting Ecosystem

Supporting startup growth with the new recruiting ecosystem

By Mike Dover

This research was underwritten by TriNet.

FUTURE OF WORK

Table of contents

Table of contents 2

INTRODUCTION 4

TRENDS AND TECHNOLOGIES 5 Social networking 5 LinkedIn meets character assassination and other bad ideas 7 Applicant screening and tracking 8 Video interviews 9 Gamification 11 Post-recruiting technology 12 Mobile recruiting technologies 12

MARKET DYNAMICS AND ECOSYSTEM 13 The power of the Facebook ecosystem 16 Career management sites 17 Employee evaluation communities 19

INDUSTRY ECONOMICS AND BUSINESS MODELS 20 LinkedIn establishes the model 20 Attracting venture capital 22 The future 22

HOW TO USE THE NEW RECRUITING ECOSYSTEM EFFECTIVELY 23 Analysis tools 23 Metrics 24 Employee privacy 25

RECOMMENDATIONS 27

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 2 - new recruiting ecosystem

FUTURE OF WORK

ABOUT MIKE DOVER 29

ABOUT GIGAOM PRO 29

FURTHER READING 30

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 3 - new recruiting ecosystem

FUTURE OF WORK

Introduction

Talent acquisition and retention are critical to the growth of startups and midsize companies. Many things affect talent management, including corporate culture, company reputation, compensation, career path and so on. But an employee’s first exposure to a company is usually through the recruiting process.

According to some estimates, traditional recruiting firms consume a third of hiring budgets but produce fewer than 10 percent of the results, due to fees that range above 20 percent of first-year salaries. However, professional social networks like LinkedIn and Viadeo are changing the rules. These companies leverage a much larger database of candidates and already play a big role in talent acquisition. Companies like BranchOut, Jobvite and Monster, meanwhile, are building Facebook apps for hiring and career development. Indeed, a 2011 study commissioned by Jobvite found that 89 percent of respondent companies planned to use social media for recruiting versus 83 percent in the previous year. The same survey stated that 55 percent of companies would raise their budgets for social recruiting and that 87 percent used LinkedIn; it also found that 64 percent recruited via two or more social networks, and 40 percent did so through three or more.

Of course, the power of these platforms is only as strong as their reach. Facebook’s reported 845 million user base would make it the third-largest country in the world if we went by population, and firms like BranchOut and Rypple want to develop apps to leverage their members, which are soon to number 1 billion. Internet technology changes the recruiting landscape in another fundamental sense, too: For many knowledge workers, physical location becomes unimportant. As long as they can get online, they can contribute.

Especially in tight labor markets, recruiting cannot just be the job of human resources. Services like Jobvite encourage employees to share job postings with their personal networks. Many companies pay a bonus to those staff members who recommend a

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 4 - new recruiting ecosystem

FUTURE OF WORK

successful candidate (typically paid out after a probationary period), while other companies make recruiting part of regular “building organizational capacity” duties.

Incidentally, the propensity of a company’s employees to recommend their friends is an excellent harbinger of morale and employee satisfaction.

Key findings in this report include:

. Small- and medium-sized businesses can benefit from innovative technology that will help their recruiting efforts, and the cost for doing so is reasonable (and decreasing). . Technology enables the recruiting process to be more streamlined, scientific and democratic. . The technology-recruiting ecosystem is quickly evolving. The technology itself is becoming more innovative, and the industry is consolidating mostly through acquisition. These trends benefit small businesses and high-growth companies, since it is easy to experiment with different solutions without having to lock into a long contract.

In the following pages we will look at what is driving these changes in the workplace.

Trends and technologies Social networking

Is everyone on Facebook and LinkedIn by now? The bell curve is in play here: The middle candidates have adopted the networks, but senior executives in most industries have not built up robust LinkedIn profiles. There are exceptions, of course, but in many cases profiles are absent or lightly compiled and maintained by an assistant or human resources employee.

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 5 - new recruiting ecosystem

FUTURE OF WORK

In order for a platform to succeed, the member needs to actively build a profile, simply because no one else is compelled to do so. In fact, that is one of the reasons why Honestly.com (formerly Unvarnished.com) does not quite work yet (see next section). LinkedIn, meanwhile, is used mostly to “marry up”: Those at the start of their career build gravitas by building their networks with more-senior people. At a senior-enough level, the urgency to do so lessens. Barack Obama has many LinkedIn contacts, but it would not surprise you that he is not the one actually cultivating the profile. White- collar employees with postsecondary education are most highly represented, although blue-collar employees, particularly tradespeople and entrepreneurs, are now leveraging platforms such as Angie’s List.

Figure 1 illustrates our projections for the viability of some of the technologies driving the recruiting ecosystem. Higher up and farther right indicate immature technologies that will take time to gain critical mass adoption.

Figure 1: Recruiting technology adoption

GigaOM Pro Source: GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 6 - new recruiting ecosystem

FUTURE OF WORK

LinkedIn meets character assassination and other bad ideas

A seemingly reasonable criticism of LinkedIn is that since the user is the sole arbiter of what recommendations appear, it provides too sunny an assessment of the candidate. While true on the surface, this criticism is questionable: Under the old system, candidates always provided a list of self-selected supporters.

However, LinkedIn can actually address this issue in a couple of ways. First, if a candidate has had four jobs in the past three years and three of them are supported by positive reviews, it would encourage a recruiter to probe about the outlier. Second, the very nature of the LinkedIn network makes it easy to do “underground reference checks.” In other words, with just a couple of clicks it is easy for a recruiter to find out who else in the network worked at a company contemporaneously with a candidate.

Honestly.com set out to eliminate the self-selection bias by allowing “the community” to build individual profiles. Ostensibly, the site allows people to give honest — but anonymous — reviews about individuals. Those individuals can contribute to their own profile but not remove any negative reviews. After its 2010 launch, the site garnered some attention, mostly for its chutzpah, with articles about it calling it names such as “Unvarnished: A Clean, Well-Lighted Place for Defamation.” Founder Peter Kazanjy assures critics that although comments are anonymous, the site verifies the person is “real,” because a user must have a Facebook account to post and the account must not be brand-new or otherwise appear to be created specifically to participate. Also, Honestly.com believes that users are not in the business of generating negative reviews. Rather it just wants to generate genuine reviews of a person, which could well be mostly positive.

The limited security protocols notwithstanding, the site does not generate much traffic, and Honestly.com profiles tend to be sparsely detailed. The hiring company is unlikely to pay much attention to anonymous negative comments from what is likely a GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 7 - new recruiting ecosystem

FUTURE OF WORK

disgruntled former employee, although there could be an opening for a question such as, “What do you think would motivate this person to make a comment of this nature about you?”

Applicant screening and tracking

A byproduct of the ability to search for jobs and apply online is the reduction in financial cost and effort it takes to apply for a job. The implication is that recruiters can be overwhelmed with applicants; since it costs nothing to click through a few links, candidates can apply for jobs without bothering to even check the posting closely to see if they really are qualified. This, in turn, leads to applicants complaining that they are less likely to hear anything back from the employer, a situation frequently cited as the most frustrating part of a job search.

Applicant tracking systems (ATS) are software suites designed to track candidates through the recruiting process. Used properly, ATS will increase the speed, impact and cost-effectiveness of the hiring process. A study by Dresser & Associates estimates that 50 percent of all midsize companies and almost all large corporations use some type of applicant tracking system and that use is expanding to small businesses through Software-as-a-Service (SaaS) offerings.

ATS typically provide the following services, usually delivered via an SaaS model:

. Promote job postings to network enhanced by social media . Accept applications in a digital format . Organize job applications into a searchable database, often including additional material such as video . Communicate with applicants as they move through the recruiting process . Democratize recruiting process by sharing applicant information with team members from multiple departments and job descriptions GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 8 - new recruiting ecosystem

FUTURE OF WORK

Applicant tracking systems offer ways to reduce the overload, including adding a qualification stage, where applicants need to specifically indicate (sometimes through check boxes) they meet certain criteria. For example, they may need a particular software skill or be located in a particular geographic location to properly qualify for the job.

There is a downside to such a strategy, however. Sarah White of HRTechBlog believes that doing so is counterproductive, as it will drive away the most talented candidates. She states, “If you receive excessive applications or the wrong type of applicants you should revisit the job description and make sure that it reads as a marketing piece that explains exactly why the best candidate should be excited to work for you.” In any case, on many platforms the recruiter can also add code that can override the qualification stage for certain candidates.

One way to assist with the screening process is to use an outsourced human resources department. For example, in addition to payroll and benefits as well as strategic services like performance management and employee and management training, TriNet offers talent acquisition services including writing and distributing job descriptions across the various boards and social networks and screening results. Using such a service can also minimize human resources risks and liabilities (such as compliance issues).

There are many other entrants in the ATS and talent management field, including Jobvite, Taleo (acquired by Oracle), Sendouts, SilkRoad and TalentFlow.

Video interviews

Another emerging trend is video interviews.

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 9 - new recruiting ecosystem

FUTURE OF WORK

Technology has improved and follows the typical Moore’s law trajectory of increased performance combined with declining costs. Even simple, free or near-free options such as Skype video add a greater nuance to a conversation when compared to a phone interview. Providers include HireVue, InterviewStream and OVIA. CareerBuilder has also added video interviewing to its service portfolio.

The advantages of video interviews versus the traditional, face-to-face method include:

. Reduced cost. Especially when distance comes into play, a video interview provides great cost advantage, especially when air travel would be involved. . Additional convenience of time shifting. Video interviews are easy to conduct when parties are physically in different time zones. Also, scheduling the interview outside the candidate’s normal business hours reduces the need for them to “sneak away from work.” . Richer information than telephone interviews. For sales, consulting or any other forward-facing positions, body language and charisma come into play. Alternatively, for coders, a real-time test would be better. . Reduced carbon footprint. If a company pitches itself as green or environmental, video conferencing helps reinforce that image, because of the carbon cost eliminated by the candidate’s not having to travel to be interviewed. . Greater record keeping. Especially compared to traditional methods involving recruiters taking notes, video interviewing improves record keeping, because of the ease of storing a digital copy. This feature is especially valuable as a backup for legal or procedural purposes. . Ability to easily compare candidates. If a group of candidates all answer the same questions, video interviewing easily enables quick comparisons of their answers. This feature works well when one response needs to be assessed by a particular department. For example, a “general fit” question would likely be assessed by a different person than a “techie” question.

GigaOM Pro . Time savings. Video interviews do not need to be interactive to provide value. pro.gigaom.com

Supporting startup growth with the April 2012 - 10 - new recruiting ecosystem

FUTURE OF WORK

Evaluating recorded answers can be an effective prescreening process. White estimates that video versus live screening can save 25 minutes per candidate, which adds up quickly when considering multiple applications. Rick Marini, the founder and CEO of BranchOut, reinforces the benefit of using video to recruit employees for remote-location positions. He points out that San Francisco is a very competitive seller’s market for engineering talent and that “video helps a great deal with recruiting to set up remote workers from places like Portland and Kansas City.”1

According to Suki Shah, the CEO and c-founder of GetHired.com, video addresses the biggest inefficiency of traditional recruiting: using a résumé as the first hurdle for a job seeker to overcome.

Another virtual method of interviewing is through tools like Second Life, an online virtual world, though job interviews via avatars have mostly fallen out of favor, due to the improvements of video technology. Nonetheless, the opportunity still exists for situations where the candidate is uncomfortable or unable to communicate through traditional video.

Gamification

America’s Army is a series of video games and other media developed by the United States Army to help with recruitment. Launched in 2002, there have been 26 versions and more than 8 million downloads. The game is designed to appeal to the target audience of 13-to-17-year-old males in an effort to recruit the 80,000 new soldiers required annually to accommodate the 20 percent annual turnover rate.

Marriott International followed the same model, introducing a video game in 2011 to help recruit for 50,000 expected vacant positions over the next year. My Marriott Hotel, developed by Evivva Brands, is a Facebook game with the same look and feel as

GigaOM Pro pro.gigaom.com 1 Interview with Rick Marini, conducted by Mike Dover, March 5, 2012

Supporting startup growth with the April 2012 - 11 - new recruiting ecosystem

FUTURE OF WORK

FarmVille. Players move through the virtual hotel, including the kitchen and front desk, and earn points for making a profit while ensuring customers remain happy.

BranchOut, meanwhile, plans to roll out gamification for recruiting at a macro level by introducing career-oriented quizzes, badges and leaderboards.

Post-recruiting technology

After the offer is made, technology can be effectively used to welcome the employee as well as provide training. Onboarding programs are crucial elements in employee retention. Virtual-world games are also interactive, fulfilling another expectation of the generation. Further, they have the advantage of immediate feedback. “In games, you know instantly that you did badly,” says Michael Cai, the director of gaming research at Park Associates. “You just got shot at.”

Although most training games do not feature gunfire, they do allow an interactive experience filled with feedback. United Parcel Service (UPS), for example, created a virtual environment to simulate the work experience of its drivers. In a virtual reality environment, new hires first learn how to overtake and pass a car and then try it with on-screen pop-ups that reinforce the techniques. Then they do it with no pop-ups to see if they have successfully internalized the processes and techniques UPS expects its drivers to follow.

Mobile recruiting technologies

Some of the best-in-class mobile apps include the HireVue mobile interview app, which allows for interactivity for both the interviewer and the prospect; JobSpeek, which displays job postings enhanced with voice and video; and business-card- and information-sharing services such as Bump, Cardcloud and kgbpeople.

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 12 - new recruiting ecosystem

FUTURE OF WORK

In a recruiting context, a QR code attached to a job posting or affixed to swag at job fairs enables potential recruits to use their smartphone to access information about the position and company and even apply in real time. Organizations that already use QR codes for recruiting include AT&T, Google and Pepsi.

While potential exists, not all experts are convinced that QR codes’ time has arrived. White believes that although the evangelists for the technology remain vigilant, application within recruiting will not catch on until usage increases (by Sept. 2011, only 11 percent of survey respondents said they had ever accessed a QR code), demand grows (she reports she has not seen the codes on the radar of HR executives), and security increases (since you cannot tell by the naked eye where a QR code will lead, it requires a leap of faith to scan it).

Market dynamics and ecosystem

LinkedIn has emerged as the critical-mass industry leader. Innovative startups including BranchOut, Monster’s BeKnown and Jobvite are meanwhile striving to carve out a profitable niche within the recruiting industry. At the same time, Jigsaw and Plaxo are trying to profitably corral contact information without violating user privacy.

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 13 - new recruiting ecosystem

FUTURE OF WORK

Figure 2: The new recruiting ecosystem

Source: GigaOM Pro

The abundance of data is particularly valuable for hard-to-fill positions. Consider, for example, a position that calls for a research analyst who can code in Vista and has a working knowledge of Romanian. LinkedIn and other résumé sources can reveal such a person through a targeted Boolean search.

Platforms can also specialize in certain areas or clients. For example, Jobvite offers a program called “Apps for Heroes” aimed at helping military veterans find civilian jobs. The program allows clients to automatically add a position to the Veterans Job Bank.

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 14 - new recruiting ecosystem

FUTURE OF WORK

There is a danger to building a business model add-on to LinkedIn or Facebook, though. Do not lock in with a supplier for a long-term contract; if LinkedIn or Google decides to adopt that space, it may become irrelevant.

Although Viadeo has enjoyed success as a professional social networking site mostly outside the United States, aiming to become the “LinkedIn of” a certain vertical or industry does not make a lot of sense, since LinkedIn is already represented across most industries and is expanding internationally. There may be opportunity for offerings that present a geographic or language specialty, but the window for these opportunities may be closing as the industry consolidates. The platforms make up the center of the ecosystem, with the other players filling supporting niches. (Note: It is important to recognize that some companies dwell in more than one place, but for simplicity, companies are represented based on their primary function.)

Figure 3: Roles in the new recruiting ecosystem

Vendor or technology Role it plays Type of employees it serves Employee portal Attracts candidate profiles Job seekers, recruiters Applicant tracking system Organizes and streamlines Recruiters the recruiting process Technology provider (e.g., Improves an individual Employees involved in video interviewing) stage of the recruiting candidate assessment process Application developer (e.g., Increases accessibility of Recruiters mobile) candidates Information provider (e.g., Enables and curates Job seekers employer evaluation sites) company information Source: GigaOM Pro

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 15 - new recruiting ecosystem

FUTURE OF WORK

The power of the Facebook ecosystem

During the first two months of 2012, BranchOut’s membership grew from 1 million to 5.5 million. According to Marini, “The average user who enters the flow invites the Facebook-set maximum of 50 friends, and some go back to invite additional batches. Now the site is signing up three users per second, and was the fourth fastest growing app on Facebook this week ahead of Spotify and Pinterest.” Marini characterizes the market as follows: LinkedIn is the leader outside the Facebook platform, and BranchOut is the leader within Facebook. Although he sees LinkedIn targeting the top 10 percent of the job market, leaving 90 percent of the market as a key hunting area, he points out that BranchOut has had success with technology positions at companies such as Microsoft, Salesforce.com and Hewlett-Packard.2

BranchOut aims to be the recruiting network of choice for everyone on Facebook, but its sweet spot seems to be people for whom LinkedIn is not a great fit. For example, young people with limited professional experience can only enhance their server or lifeguarding job so much before it borders on the ridiculous. Also, the bulk of the network of most young people dwells on Facebook, so the weak-tie reach is more powerful than LinkedIn’s. Similarly, blue-collar employees are a key target for this market, as their positions may be better suited for word of mouth recruiting than their white-collar counterparts’.

Employee Ted Metzger approached Marini with the idea to add a mobile application to the service. That became a massive success, going from zero in Dec. 2011 to accounting for 40 percent of total site traffic by March 2012. Upon reflection, Marini understands that mobile makes a lot of sense for BranchOut’s market. Young people are not the only ones to use their smartphones as their primary tool to access the Internet: Blue- collar and retail employees do as well. They do not spend all day looking at laptop

GigaOM Pro pro.gigaom.com 2 Interview with Rick Marini, conducted by Mike Dover, March 5, 2012

Supporting startup growth with the April 2012 - 16 - new recruiting ecosystem

FUTURE OF WORK

screens; they are at job sites or behind a retail desk and can quickly peek at mobile devices over the course of the day.

The future potential for firms such as BranchOut, of course, depends on the continued success of Facebook. Marini believes that since Facebook is “where people go to socialize, share information and play games,” it is a natural place to contact them about job information and that the concept that recruiting can only be done at more “professional sites” is a myth.3 Some reports place Facebook’s active daily users at more than 500 million, so it is strategic to leverage that use. BranchOut and others are hoping that many people who compartmentalize their social activity rethink opposition to using Facebook for “serious activity.” In any case, he believes the 90 percent of the online population that makes up his target market is a large-enough group to deliver success to his company.

Most recruiters agree that personal recommendations are the best method for recruiting candidates, as current employees have the best understanding of company culture and what it takes to succeed. Technology does not change this fact; it just enables it by making it more efficient for these recommendations to occur. Also, well- organized platforms like Jobvite collect the data and allow for management to track those participants that have the best record at recruiting successful candidates and can tweak performance metrics and reward as necessary.

Career management sites

People can leverage technology to proactively develop their career through platforms such as Rypple (recently acquired by Salesforce.com, which plans to rename it Successforce). The key feature of Rypple is a real-time feedback generator. The company describes it as “The social way to improve performance at work.” For example, after a person delivers a presentation, he or she can poll the attendees for

GigaOM Pro pro.gigaom.com 3 Interview with Rick Marini, conducted by Mike Dover, March 5, 2012

Supporting startup growth with the April 2012 - 17 - new recruiting ecosystem

FUTURE OF WORK

performance feedback. Since their response is limited to a Twitter-like 150 characters, the message is delivered without any platitudes or social niceties.

The concept of an annual performance review seems wildly out of date with the speed that professionals (especially those in Web-savvy Generation Y) receive information. Stanford professor and organizational expert Jeff Pfeffer states, “Annual reviews rely on hazy recall, with managers remembering recent events and overlooking what was done earlier in a review cycle.” Rypple co-CEO Daniel Debow states that Rypple replicates common online behavior. People already check sites like Facebook for friends’ updates and to add their own. Rypple, in the words of Debow, “harness[es] what was already happening.” Rypple’s mobile application makes it easy for feedback to be requested and delivered in real time.

While Generation Y is known for demanding immediate gratification and needing constant feedback, it by no means holds the monopoly on that desire. While a baby boomer would cringe at the thought of asking his first boss for daily feedback, many appreciate that the feedback cycle has accelerated, whether or not they want to give any credit to Gen Y for spurring the change.

According to Debow, people tend to accept feedback in one of two ways. Those with a fixed mentality are set in their ways and averse to change, even when it comes to self- improvement; those with a growth mentality are actively seeking and psychologically available for self-improvement. Rypple appeals to the latter, because it provides a tool for collecting feedback and a dashboard that organizes it and allows the user to track progress over time.4

While ambitious individuals use Rypple to manage their own career, the real target of the company is businesses. The product suite enables corporate clients (which include Facebook, Mozilla, Spotify and Rackspace) to combine goal setting, coaching and feedback into a single suite in a rapid and continual fashion.

GigaOM Pro pro.gigaom.com 4 Interview with Rypple co-CEO Daniel Debow, conducted by Mike Dover, March 23, 2010

Supporting startup growth with the April 2012 - 18 - new recruiting ecosystem

FUTURE OF WORK

Consistent with the consolidation we have seen in the industry, Rypple competitor SuccessFactors was recently acquired by SAP.

Employee evaluation communities

One of the most powerful developments in the consumer marketplace is the emergence of community review sites. Travelers review TripAdvisor before booking hotels or making dinner reservations, for example, and homeowners consult Angie’s List before hiring professionals like contractors. Yelp covers these areas and more.

Similarly, as carefully as a company tries to manage its online image, reputation remains “what they say about you when you are not in the room.” Sites like Vault.com and Glassdoor provide a platform for employees and job seekers to discuss companies with respect to working conditions and the interview process. For example, Glassdoor has individual pages for each company that include sections for overall reviews, salary discussions and the interview process along with an overall approval rating of the CEO.

Sites such as these matter, because even though there is a (not-too-strenuous) control process to weed out trolls or overly negative and libelous statements, companies need to regularly review the content. Most people understand that fired employees might speak unkindly about former employers, but the company can glean useful information about overall mood and sometimes needs to officially respond to a comment with a clarification, denial or explanation. Like many applications, Glassdoor has a Facebook app that identifies who in your network has indicated she has worked at or knows about the company in question.

Plaxo, meanwhile, is an online address book and social networking service. It is struggling to find its place in the current ecosystem. Its premise of being a central point where professionals can keep their contact information up-to-date even when they change companies is compelling. Given, however, that Facebook and LinkedIn both provide the option of making this information available, Plaxo risks becoming a GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 19 - new recruiting ecosystem

FUTURE OF WORK

one-trick pony. In addition, the sort of person who diligently would keep her profile up-to-date on Plaxo is the same who would be easily searchable on other platforms.

Industry economics and business models LinkedIn establishes the model

According to a study by ZoomSphere, 61 million LinkedIn users are in the United States. They are relatively evenly split along gender lines (53 percent male), mostly mid-career (70 percent are 25–57) and widely distributed across industries (the top four are higher education, with 18.7 percent; information technology, with 13.9 percent; financial services, with 11.8 percent; and retail, with 10.9 percent).

LinkedIn isn’t just a phone book for recruits, though. Building off a successful IPO (at the time of this writing, LinkedIn had a market capitalization of $9.4 billion5), its database includes more than 150 million candidates. It is launching new products including Job Postings, which enables highly targeted ads, and Employment Branding, which lets companies build a career website within the LinkedIn network to attract qualified candidates.

As LinkedIn adds features, even the passive job seeker can build a robust, compelling profile. Compare the effectiveness of “Excellent references available upon request” tucked at the bottom of a printed résumé to a dozen well-crafted recommendations on a LinkedIn page. Since the information is public, the referee is more likely to be more judicious and accurate, and she can be followed up with for more information and clarification with a single click. Further, compare the phrase “Advanced verbal and written communication” on a résumé to links to presentations and speeches on YouTube and a blog. The SlideShare add-in illustrates PowerPoint ability, and the Reading List demonstrates a candidate’s interests and understanding of current

GigaOM Pro pro.gigaom.com 5 As of March 14, 2012

Supporting startup growth with the April 2012 - 20 - new recruiting ecosystem

FUTURE OF WORK

strategies. Also, the LinkedIn Answers section highlights expertise and rhetorical ability.

LinkedIn’s original revenue source was from memberships (the basic level is free) and advertising, but going forward the company expects its Recruiter revenue line to grow just as quickly. One of its features, Talent Pipeline, is built to streamline the recruiting process so that candidates can be tracked in an organized fashion. Since the data remains on the LinkedIn platform, it is always kept up-to-date by the candidate. The feature Referral Engine suggests candidates from a user’s network who have the most similar profile for posted vacancies within his or her firm. To ensure privacy, the identified profiles are first shown to the candidate and require approval before others in the firm have access.

Parker Barrile, the head of Hiring Solutions Products at LinkedIn, states that the company is uniquely positioned to leverage the vast amount of data that it has available on its network. He reports that “LinkedIn can crunch data to come up with information like talent is more likely to relocate from San Francisco to New York than to Las Vegas even though the latter is physically closer. Also, by evaluating career trajectories of various candidates, it is better able to predict which new hire will be a better fit.”6

In most cases, firms operate in a similar fashion to traditional recruiters: They are free for the candidates and charge a fee (either a subscription or a charge per placement) from the hiring company. Generally, organizations that try to charge candidates run into trouble and are often slammed on review sites.

That said, there are many excellent career-coaching and résumé-building services available for job seekers, often for entrepreneurial freelancers who were formerly corporate HR professionals. In addition, there are some very good career-management blogs and communities including All Things Workplace and the Brazen Careerist.

GigaOM Pro pro.gigaom.com 6 Interview with Parker Barrile, Head of Hiring Solutions Products at LinkedIn, March 12, 2012

Supporting startup growth with the April 2012 - 21 - new recruiting ecosystem

FUTURE OF WORK

BranchOut generates its revenue through premium subscriptions, services for recruiters and job postings. While it offers its basic services for free, Premium Job Posts distribute a job opening to the entire network, not just the direct connections of the user.

Attracting venture capital

The recent funding and acquisition of many of these companies illustrate that the sector is hot. SmartRecruiters founder and CEO Jerome Ternynck points out that “Recruiting is $400 billion problem that affects every business in the world” and “that makes it attractive to both entrepreneurs and VCs.”

Among the reasons why this sector is considered attractive:

. Recruiting is different than human resources in general. It is seen as having a more direct link to revenue and can show more immediate return on investment. As such, it is more likely to have a budget to invest in new solutions. . General dissatisfaction with integrated talent-management suites encourages companies to look at nimbler niche products. . There is a lot of room for innovation, especially since many existing systems are housed on outdated platforms and are ill-equipped to accommodate mobile.

The future

Automation will continue as an important force and will not be limited to robotics replacing human talent in manufacturing roles. White-collar work, especially formulaic and repetitive work, will increasingly be completed by software algorithms and intelligent computers. Recruiting humans will still be important, but the nature of jobs will change. Telecommuting is not a new concept, but as technology improves it GigaOM Pro will become even better; “face time” will become an antiquated notion, and firms will pro.gigaom.com

Supporting startup growth with the April 2012 - 22 - new recruiting ecosystem

FUTURE OF WORK

move toward a results-only work environment, a concept that was successfully introduced at Best Buy. Improved, high-speed video will reduce isolation of remote workers, and interactive communication will simulate the office environment from a social perspective.

Looking further, social and professional networking may become so sophisticated that the nature of the company changes completely. Economist Ronald Coase has pointed out that a primary reason why firms were created in the first place was to reduce the transaction costs of finding contractors to complete work. As those search costs rapidly decrease, more corporations will shrink to a core team and complete products similarly to how the movie industry works: Teams will form and disband on a project basis.

How to use the new recruiting ecosystem effectively Analysis tools

New players compete by developing sophisticated templates that capture more detailed information than would be found in a typical résumé. For example, Unrabble asks candidates to fill out more information, including tools, languages and skill sets, which get matched against the position. According to CEO Kevin Watson, “Most resumes do not distinguish the candidate because the language is too similar and probably does not capture the information crucial to the position.”7

Technology can be deployed to increase the effectiveness of assessing candidates, especially when multiple people are involved in the assessment. Configurable scoring systems can be made blind (referees cannot see one another’s assessments) to avoid groupthink. Also the assessment tool can be made trackable so that people who like everyone will have their votes be made worth less. People who consistently support candidates who do not become successful can be removed from the assessment process or given training and coaching on how to improve.

GigaOM Pro pro.gigaom.com 7 Interview with Unrabble CEO Kevin Watson, conducted by Mike Dover, Feb. 13, 2012

Supporting startup growth with the April 2012 - 23 - new recruiting ecosystem

FUTURE OF WORK

Tools such as Social Mention can assess a candidate’s online profile, including her influence and general sentiment. Klout is another company that claims to be able to assess social media influence, although its methodology has been questioned, partially because the algorithm is opaque and seems to change frequently. RecruitingBar is a similar tool that was developed specifically with recruiting in mind. Twitter plays a role in recruiting, both through community organization of postings through hashtags based on industry (such as #EngineeringJobs) or geography (such as #torontojobs). Savvy organizations have dedicated Twitter handles for recruiting; good examples include @ATTjobs, @KPMG and @HyattCareers.

Metrics

Strategically deploying technology within the recruiting function should produce immediate return on investment.

An online job posting that is tactically supported by social media should produce greater reach than traditional methods. Success can be demonstrated through increased views, apply clicks (meaning the candidate enters data into the application form) and successful applicants who meet the job requirements.

Too many applicants can be counterproductive from an efficiency point of view. What is really important is finding candidates with a greater chance of being a successful fit. Metrics include the percentage of new hires that pass the probation period, the length of employee tenure and the long-term success of the new employee.

Related to this are metrics about recommendation success and interviewing adeptness. Specifically, employees can be tracked by the same metrics as above with respect to candidates who they originally recommend or approve during the assessment process. Tom Anderson, the manager of talent acquisition at TriNet, states, “People have

GigaOM Pro forgotten the basics! Technology has sped up the ability to reach talent faster. pro.gigaom.com

Supporting startup growth with the April 2012 - 24 - new recruiting ecosystem

FUTURE OF WORK

However, that talent remains human and still needs to be vetted, qualified, tested and matched. I think turnover and overall dissatisfaction is high today because the ‘match’ component is missing.”8

Another important set of metrics relates to cost savings. At a primary level, metrics such as a reduction in recruiters’ fees and lower travel costs are important. However, the more important savings will be generated by making fewer bad hires. Unsuccessful employees generate extra costs through severance packages and the necessity of hiring replacements. There are also secondary costs, such as the extra training, monitoring and disciplining of mediocre hires. In addition, technology that supports hiring successful remote employees reduces costs such as office space.

Since technology streamlines the entire recruiting process, enterprises will see improvements such as a reduction in recruiting cycles, improved acceptance rates from top candidates, and a reduction in position vacancy time. Also, since applications such as video interviewing allow for a greater democratization of the recruiting process, there will be an increase in colleagues and departments that participate in vetting candidates.

Employee privacy

Some employers have gone to the extreme of demanding that applicants provide their Facebook user names and passwords. Government agencies such as the Maryland Department of Corrections explain this measure was created to ostensibly defend against hiring people with gang affiliations, under the assumption that Facebook information behind the privacy wall including photos and updates would reveal such.

When this situation became public, the blogosphere, editorial pages and online buzz rose quickly to denounce the tactic. In fact, the ACLU pressured the Maryland

GigaOM Pro 8 Interview with Tom Anderson, manager, talent acquisition, TriNet, March 15, 2012 pro.gigaom.com

Supporting startup growth with the April 2012 - 25 - new recruiting ecosystem

FUTURE OF WORK

Department of Corrections to make the practice optional. Despite any security improvements that such a policy would offer, it would almost certainly be offset by the loss of good potential recruits who would not agree to provide that information. Not to mention that employees who do so actually risk losing their Facebook account, as the Facebook user agreement includes the clause, “You will not share your password . . . let anyone else access your account or do anything else that might jeopardize the security of your account.” Facebook recently condemned this practice. Chief Privacy Officer Erin Egan wrote, “This practice undermines the privacy expectations and the security of both the user and the user’s friends. It also potentially exposes the employer who seeks this access to unanticipated legal liability.”

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 26 - new recruiting ecosystem

FUTURE OF WORK

Recommendations

Assess your company’s social profile from a job seeker’s point of view. Ensure that job postings are not only clearly written but also marketed to the applicant as if she was a consumer. The complete Web presence should be welcoming and up-to- date. That includes profiles on major social platforms like LinkedIn and Facebook. Set up dedicated Twitter handles for recruiting. Monitor evaluation sites like Vault.com and Glassdoor and respond where appropriate. Managing the Wikipedia entry for your company is tricky, but with a bit of subterfuge it can be done. In any case, advise Wikipedia editors of any errors.

Stay nimble with your technology choices. Firms are innovating quickly, and the market is consolidating. As a result, companies should avoid signing long-term contracts. The era of large software purchases is rapidly declining, as the cloud enables firms to buy just the services they need, scaling as required rather than purchasing a massive suite, most of which they do not need.

Leverage the data. Using innovative technology in recruiting creates a lot of useful data. For example, firms can more easily (and accurately) measure the effectiveness of their recruiting activity and use performance metrics to further improve the process. Examples of this include knowing how to move candidates more quickly through the recruiting process, which employees and departments have a better record of introducing and evaluating candidates, which platforms attract the best candidates, and so on.

Incorporate more departments in the recruiting process. The recruiting process can be made more democratic through innovations like video interviews, which can be sliced so that the relevant portions can be sent to different departments for their assessment, or collaboration platforms that enable group discussions and

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 27 - new recruiting ecosystem

FUTURE OF WORK

evaluations. Ensure, however, that staff is properly trained and held accountable for its choices.

Involve gamification in your recruiting efforts, especially if you are targeting Generation Y. Offering games on platforms like Facebook is an effective way to reach young people, and it also tests the skills and aptitudes of recruits while giving them a flavor of the job.

Use technology for current employees as well. The optics in a company where innovative technology is actively used for recruiting can be similar to the mobile phone company’s always offering the best deals to brand-new customers rather than existing users. Firms should leverage products like Rypple that assist with coaching and career development for the team already on board.

Leverage recruiting technology as a long-term tool. Potential employees are actively checking out your firm through LinkedIn and other platforms. Ensure that your profile is active there and that resources such as alumni groups are supported. It is easier than ever to stay in touch with former employees and encourage them to act as ambassadors (and potential clients).

Develop social media and privacy policies. Many platforms like BranchOut and Jobvite encourage companies to piggyback on the social networks of their employees. Keep in mind that many employees prefer to keep their private and business worlds separate and do not like giving access to their personal networks to their employers. Develop a policy that rewards employees who help the recruiting process but allows those who do not wish to participate to opt out.

Outsource human resources processes strategically. Especially for growing companies, outsourcing some human resources processes can effectively develop your team and ensure that key functions are expertly completed without adding full-time employees.

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 28 - new recruiting ecosystem

FUTURE OF WORK

About Mike Dover

Mike is the managing partner of Socialstruct Advisory Group. He has than a decade of experience leading nGenera Insight, a world-class think tank. He was responsible for operations, content quality and client management for $9 million, multiyear research studies on the intersections among technology, business strategy and society, including the groundbreaking Talent 2.0 Research Program. He led more than 200 professionals over the course of the programs. The research in these programs formed the basis for the best-selling booksWikinomics: Mass Collaboration Changes Everything and Grown Up Digital: How the Net Generation is Changing Your World. Dover is an experienced public speaker and panelist who has delivered dozens of highly rated speeches about the role of technology, generations in the workplace and popular culture.

About GigaOM Pro

GigaOM Pro gives you insider access to expert industry insights on emerging markets. Focused on delivering highly relevant and timely research to the people who need it most, our analysis, reports and original research come from the most respected voices in the industry. Whether you’re beginning to learn about a new market or are an industry insider, GigaOM Pro addresses the need for relevant, illuminating insights into the industry’s most dynamic markets.

Visit us at: http://pro.gigaom.com

GigaOM Pro pro.gigaom.com

Supporting startup growth with the April 2012 - 29 - new recruiting ecosystem

FUTURE OF WORK