SI Review: August 2011

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Connect With Candidates

Social media arrives, but referrals and job boards stay strong

By Craig Johnson

Recruiters are dealing with a whole new world. And with apologies to Aldous Huxley, it’s more social than brave. Like it or not, social media sites such as Facebook and LinkedIn are starting to shake up recruiting. Facebook boasts more than 500 million active users, while LinkedIn has more than 100 million members. As a result, savvy staffing firms are creating company Facebook pages or tweeting to attract top-notch candidates.

The hunt is on, but the rules of the game have changed. For example, while the economy is growing and companies are increasing their hiring demands, recruiting budgets remain tight. So as traditional methods of posting jobs and contacting candidates lose effectiveness, recruiters are developing innovative approaches to finding talent. In this decade, the right talent is a company’s competitive advantage.

The Landscape

While many staffing executives agree social media is gaining importance in the search for candidates, referrals and job boards remain useful. Recruiters, human resources departments and hiring managers need to look at a wide variety of recruiting tools, including the more traditional methods, to be successful in finding the right applicant.

So where does your current applicant pool come from? Does it come from a major job board or Craigslist postings? If you’re relying on just one or two sources, you need to branch out. By posting in multiple places, it’s more likely that your job will surface on a job search engine, significantly increasing the visibility of your jobs.

Sourcing via social media might not be appropriate for every job type. On the other hand, job boards can be among the fastest and most efficient ways to find workers. Referrals rank high as a way to source candidates. There may also be room for other tools, such as newspaper ads or visits to schools.

Old Is Gold

A person recommending a friend or someone they know seems to do the trick. In a social media world, old-fashioned person-to-person referrals still ranked as the top method temporary workers learned about their staffing agency, according to a survey of contingent workers by Staffing Industry Analysts. Meanwhile, referrals also tend to lead to higher-quality candidates.

“I still think referrals are a fantastic way to get people fast,” says Jennie Dede, vice president of recruitment at Adecco USA. Companies with strong referral programs tend to be the most successful, Dede says. People tend not to refer others that they can’t trust and vouch for, as it reflects on them. Thus, referrals tend to yield high-quality workers. As an added bonus, there is also not a huge cost associated with referral programs.

Beyond the Buzz

Social media is still relatively new, but its buzz has been growing — especially with the splash LinkedIn made with its initial public offering in May. Facebook, of course, was the subject of a 2010 movie called The Social Network and appears to have an IPO of its own in the future.

Social media sites attract a large number of people, many of them potential job candidates. Today, those who use social media tools tend to be tech-savvy, curious and enjoy learning. They can make great workers.

“I think [social media is] critically important right now and growing,” says Rick Carlson, vice president and general manager of Corestaff Services. “That’s a considerable population we need to make sure we’re tapping into.”

Social media is a major source for reaching the passives, as well. For example, LinkedIn enables users to post a profile without having to announce they are looking for a job, Carlson says. It lets them get their information out to test the water.

However, social media may not be the most appropriate avenue for every type of job. As with anything, it has its pros and cons. For instance, it requires work.

“I think that social media is important, depending on the level of job,” says Adecco USA’s Dede. “The whole idea of social media is, in my opinion, building talent communities for the open positions you have to fill.”

While a company can simply post jobs on social media, it’s a good idea to attract job-seekers by giving them a bit more — such as information, she says. That could include hints on how to find a job or informational items on a particular industry. Having a social media presence can really pay off when trying to find passive candidates who aren’t necessarily looking for a job or when searching for harder-to fill positions. However, Dede says traditional online job boards still offer the largest reach for the lowest amount of money.

While job boards remain an important avenue for finding candidates, social media is rising to complement other methods of recruiting. Ben Meador, CEO of Houston-based Meador Staffing Services, says his firm hired as a director of communications someone who was well-versed in social media. The company has become so adept at using the medium that it has begun producing social media how-to seminars for its clients. “I think the social media aspect is really going to be a big part of the staffing industry,” Meador says.

Referrals remain a key component of recruiting, while job fairs and newspaper ads are diminishing in importance, he says. However, a social media program needs to fit in with a firm’s overall marketing strategy. Firms need to determine what their goals are and who their audience is. They also need to determine the message they want to convey.

Some firms may also be apprehensive about social media because of the possibility there may be negative information online. But Meador says responding directly to negative comments can help turn the situation into a positive one.

Still, there may be some groups of workers that might not respond readily to social media — at least at this time. Phillip McMahon, president of Labor Temps, based in the Chicago area, says social media does not get as much use in the light industrial or blue collar arena. While Twitter can be a good source to get information, it’s not a recruiting tool.

Light industrial staffing is drawn from a more local area, and location can be important. McMahon says online resources affiliated with newspapers can be productive, but it’s the more traditional recruiting methods that work well for the sector. “At the end of the day, the best one is the referrals,” he says.

Yesterday’s News?

Social media may be on the rise but it’s quite a different story for newspaper classified advertising. Before job boards, newspapers were king. But their use has waned. The Newspaper Association of America reported expenditures on newspaper classified advertising slid 71 percent between 2000 and 2010.

Corestaff’s Carlson says newspapers may still work, depending on the type of worker being sought. A local newspaper ad might be well-suited for a commercial staffing effort that needs a lot of people in a specific location and has no relocation allowance.

Smaller and remote groups can also be targeted better through a community newspaper.

Job fairs, too, are going the way of newspaper classified advertising. Once popular with some groups, job fairs may still be a good source of candidates, but there’s also concern about return on investment and spending valuable time speaking with unqualified candidates.

Companies targeting specific worker groups have other recruiting avenues. Going to schools might work for locating fresh candidates, for example. Some companies seek out new graduates to train and groom for the long term. Dede says targeted information sessions at universities — going into a specific class, such as accounting — can introduce students to jobs at firms they had not considered.

What Lies Ahead

With the growth of social media, there are those in the industry who have raised concerns that sites such as LinkedIn might displace staffing firms. In fact, LinkedIn even cited traditional staffing firms as competitors in its IPO prospectus. Some staffing firms are posing these questions: Is there a danger here? Will it make the staffing industry obsolete?

Obviously, it’s not easy to answer these questions. But experts believe that it doesn’t appear likely the staffing industry will be obsolete.

“The staffing industry is never going to go away, in my opinion,” says Rob Dromgoole, director of recruiting, national security directorate at Pacific Northwest National Laboratory in Richland, Wash. Technology has made generating names in particular easier, but a person will still be needed to get on the phone, get candidates interested and close the deal to get them onboard, says Dromgoole, who has been recruiting for 17 years, 14 of which in corporate recruiting.

Corporate recruiters don’t necessarily have the experience in making calls and selling the candidates on the position. And even for those who do, they may not have the bandwidth to pursue candidates, especially if a large number of positions are open. The financial incentives for corporate recruiters also add to the complexity. While most staffing firms pay their recruiters based on placements and sales, corporate recruiters are incentivized differently.

“I would argue that technology has made it more difficult for the inhouse corporate recruiter,” Dromgoole says. “Yes, it is easier to find people, but sifting through email and attending meetings and bandwidth make it harder to get the job done. Great agencies can take advantage of this. Those who are phone-based will succeed in my opinion.”

Approaching Employers Directly

According to a study conducted by outplacement firm Right Management, only 4 percent of job seekers in North America using its services found employment through social media in 2010. Meanwhile, 41 percent found jobs through old-fashioned networking, 25 percent through job boards and 11 percent through staffing firms. So job seekers are not really networking directly with employers online. In fact, approaching employers directly ranked higher than online networking at 8 percent in Right Management’s study.

Meador of Meador Staffing says that social media won’t be the end-all for recruiting; still, it has been working well for his firm. Meador is even developing a niche business of placing people in social marketing positions. “People call it the new media,” Meador says. “It just provides another avenue for connecting with people you want to do business with.”

And today’s recruitment is all about finding those connections. Social media platforms are just one avenue that helps people link with potential applicants and talk about their brand. It’s no surprise that we are still seeing some confusion as to how best to use these processes. People are still learning about the best ways to leverage the various tools out there. But one thing is certain: the more passive methods of posting positions and screening applicants are fading.

The staffing industry is based on finding the right person for the job. It’s in a unique position to use its expertise to leverage the old and new methods of hiring — and conquer this brave new world.

Craig Johnson is managing editor of SI Review. He can be reached at cjohnson@staffingindustry.com.

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Recruiting in the cloud

Traditionally, a worker comes to a staffing firm to apply for a job and be interviewed. Ideally, the worker would be dispatched later to a client’s location. Today it’s often all done without the worker setting foot in a staffing office or even traveling to a work site.

Welcome to recruiting in the cloud. Web-based businesses — such as Elance Inc. and oDesk Corp. — allow clients to post work orders online. The individuals working as independent contractors or employees — or third-party firms on some sites — can then bid on the work. Buyers can read others’ reviews of workers, check qualifications and monitor work in real time. Jobs can be paid on an hourly basis or on a project basis.

Fabio Rosati, CEO of Elance, based in Mountain View, Calif., calls it the “human cloud.”

“Our mission is to help companies hire and manage talent in the cloud,” Rosati says. “Smalland medium-sized companies love our model because it’s a model they can afford … there are many companies that are looking to hire people for a few hours at a time.”

Firms that provide these services say interest is growing among users. Elance’s earnings are a testament to this model’s effectiveness. It reported contractor billings have a run rate of $13 million per month in 2011 and should be up 50 percent over 2010. The company has some 435,000 active contractors in 135 countries.

Rosati said the model allows clients to find talent faster, allows for a hiring decision with more information, removes geography as a barrier and allows for more flexibility — including for the workers themselves.

Gary Swart is CEO of Redwood City, Calif.- based oDesk, which enables clients to hire, manage and pay talent online.

“More and more people want to work this way,” says Swart. The number of companies with more than 10 contractors on oDesk is up 600 percent year over year. The firm had $120 million in gross service spend in 2010 and has 1.4 million contractors on its network.

The site started with mostly Web and software work. And while still weighted toward categories such as Web design, Swart says the site is seeing growth in other categories such as blog writing and accounting.

Clients at the sites typically hire workers as independent contractors, although companies can also engage W-2s. Clients can also go to other parties for independent contractor compliance testing.

This model also allows customers to check reviews of workers and see prices when assigning out a job. The way it works is that worker  set their own prices. They can also take skills tests to prove their knowledge of various skills. On Elance, workers in creative fields can upload portfolios of their work. Swart, at oDesk, says he also recommends clients to interview candidates before engaging the work.

Sites also allow clients to check up on workers. For example, oDesk takes random screenshots six times an hour that can be viewed by clients. In addition, oDesk records keystroke and mouse activity to assure clients that a contractor is at work.

As for cost, oDesk charges 10 percent of the worker’s bill rate for its services, which is added to the contractor’s rate when a client sees it.

Elance’s fee is between 6.75 percent and 8.75 percent. Contractors include the fee in their quoted price and can use an online calculator to figure out the correct amount to charge. Elance is membership-based. With a free membership, workers may bid on up to 10 jobs per month. Eighty-five percent of the site’s contractors fall into that category. Contractors can pay more to allow them to bid on more jobs and use added features. Rosati says that increases the quality of matches as contractors are less inclined to bid on jobs for which they are not suited. The pay memberships at Elance are also usually used by teams who need the extra features.

Elance clients and contractors are spread all over the world. For instance, 65 percent of contractors on Elance are from North America, 15 percent from Asia, 10 percent from Europe and 10 percent from the rest of the world. Meanwhile, 70 percent of the company’s clients are in North America, 20 percent in Europe and 10 percent in the rest of the world. Ninetypercent of businesses hiring on Elance are small or midsize businesses.

Usage at oDesk is about one third in Asia, one third in Eastern Europe and one third in onshore or nea shore, with 89 percent of the work on oDesk being done in a different country than originated, says Swart.

A few other companies that connect contractors to clients online include Guru.com, Freelance. com and LiveOps. The latter is a Santa Clara-based company that offers virtual call centers where call-takers work from home.

[SIDEBAR]

Job Boards Still Popular

Some refer to job boards as yesterday’s news, but they are a very small minority. According to an internal study conducted by Right Management, the outplacement division of ManpowerGroup Inc., 25 percent of people using its services found new jobs through Internet job boards in 2010. That was second only to old-fashioned, face-to-face networking.

Job boards may not have the same buzz as online social networking, but job boards and related services continue to get a lot of focus from job seekers. They have also continued to evolve and grow.

A recent study by Kelly Services Inc. backs that up. Of 97,000 people in 30 countries queried in the survey, 26 percent said they used job boards to land their most recent job.

And the growing popularity of social media hasn’t hurt the balance sheets, either. Publicly traded job board providers — Monster Worldwide Inc., CareerBuilder (majority owned by Gannett Co. Inc.) and Dice Holdings Inc. — all reported year-over-year revenue growth in 2010 as well as the first quarter of 2011.

Monster announced a new social networking Facebook application on June 27 called “BeKnown.” The application allows Facebook users to network professionally on Facebook by separating out their professional contacts from personal contacts.

“BeKnown answers the need and challenge in the marketplace for people to build their professional networks on Facebook while keeping personal and work-related contacts and content completely separate,” says Darko Dejanovic, global CIO and head of product at Monster. “An estimated 700 million people globally live their lives through Facebook and 97 percent of the Fortune 500 companies turn to Monster to find talent. BeKnown now gives people and companies the ability to utilize that vast network for professional gain by tapping into the power of Monster and Facebook.”

BeKnown will include a social referral program that will encourage BeKnown users to pass along specific jobs through their network.

CareerBuilder also has an eye on social media. It believes job boards are leveraging emerging media and technologies to provide a platform for companies to target job seekers at any time. This includes mobile recruiting along with such things as smart phone apps for job hunting. CareerBuilder just launched a free iPhone app, which recruiters can use to search through applications for all posted jobs and contact applicants while on-the-go.

Global expansion for job boards is also a trend. Larger players are racing to create a global footprint that takes recruiting beyond borders, according to CareerBuilder.

Another development is the shift toward more specialized job boards, says Scot Melland, chairman, president and CEO of Dice. Jobs boards such as the Dice brands that focus on technology, finance, energy and other areas.

Additionally, job seekers are seeking more information than just what positions are available. “They’re looking for a site that not only can tell them about what jobs may be available but can really help them in building and managing their careers,” Melland says.

As a result, Dice sites offer career information along with jobs postings, as well as forums where members can ask and respond to each others’ questions.. They also have plans to roll out a smart phone app.

Job seekers are becoming savvier and demanding different avenues where they can browse and look for jobs. Enter search engines. Indeed.com isn’t a job board, it’s a search engine. A user can type in a type of job and location — such as “engineer” and “Chicago” — and get back a list of job ads that match the description from job boards as well as company websites. Employers can also buy sponsored listings — priced on a per-click basis — so that their job ads appear at the top of the list.

It’s not just job seekers who are demanding more. Jason Whitman, vice president of client services at Indeed. com, says he is seeing more staffing firms interested in metrics, including return on investment for job advertising. Another tendency is for employers to post jobs on their own websites, Whitman says. “Getting your jobs on your site is incredibly important because it opens you up to being indexed by search engines.”

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