Supporting startup growth with the new recruiting ecosystem By Mike Dover This research was underwritten by TriNet.

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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

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ABOUT MIKE DOVER 29

ABOUT GIGAOM PRO 29

FURTHER READING 30

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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

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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.

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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

Source: GigaOM Pro

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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

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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

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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.

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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.

Time savings. Video interviews do not need to be interactive to provide value.

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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

1 Interview with Rick Marini, conducted by Mike Dover, March 5, 2012

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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.

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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.

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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.

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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

the recruiting process

Recruiters

Technology provider (e.g.,

video interviewing)

Improves an individual

stage of the recruiting

process

Employees involved in

candidate assessment

Application developer (e.g.,

mobile)

Increases accessibility of

candidates

Recruiters

Information provider (e.g.,

employer evaluation sites)

Enables and curates

company information

Job seekers

Source: GigaOM Pro

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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

2 Interview with Rick Marini, conducted by Mike Dover, March 5, 2012

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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

3 Interview with Rick Marini, conducted by Mike Dover, March 5, 2012

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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.

4 Interview with Rypple co-CEO Daniel Debow, conducted by Mike Dover, March 23, 2010

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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

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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

5 As of March 14, 2012

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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.

6 Interview with Parker Barrile, Head of Hiring Solutions Products at LinkedIn, March 12, 2012

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- 22 - April 2012

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

will become even better; “face time” will become an antiquated notion, and firms will

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 23 - April 2012

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.

7 Interview with Unrabble CEO Kevin Watson, conducted by Mike Dover, Feb. 13, 2012

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 24 - April 2012

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

forgotten the basics! Technology has sped up the ability to reach talent faster.

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 25 - April 2012

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

8 Interview with Tom Anderson, manager, talent acquisition, TriNet, March 15, 2012

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 26 - April 2012

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.”

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 27 - April 2012

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

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 28 - April 2012

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.

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 29 - April 2012

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.

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

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 30 - April 2012

Further reading Beyond social: the crowd-based enterprise

The next big thing in collaboration is crowds, not social. We still struggle with silos of

collaboration in most enterprises today. By adding social tools we have accelerated

communication but not necessarily increased the overall level of collaboration and

action in the enterprise. That’s where crowds — defined here as a network that drives a

task or goal that has business value — come in. This piece aims to demonstrate how

crowds will add value to your business and shows some examples of what work in the

future might look like using this largely untapped resource.

Working out loud: how work media and social cognition are altering

business

Work media refers to tools based on the patterns of interaction, influence and

communication from social networks of the open Web. Today these tools are being

adopted at a startling pace — perhaps the fastest of a class of new software in the

business sector since the Web itself. And, perhaps even more startlingly, IT

organizations seem to be scurrying to pick company-wide solutions that utilize these

new tools and ideas. This piece makes a different and largely positive case for the use

of work media, based on what we have learned in recent years about human cognition.

The bottom line? Work media is key for work productivity and innovation, in large

part because it lines up with the way that the human mind works and the way that

people’s thinking is influenced by their social connections.

How cloud computing plus Facebook might mean the end of personal

privacy

Thanks to Facebook and other social networks, if we can accurately put a name to a

face, there’s a lot of personal information available online to tell us about that person.

And recent experiments unveiled at this year's Black Hat conference showed that soon

all it will take is a poorly snapped photo of someone to learn in real time sensitive

information about that person, including his Social Security number. What does our

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FUTURE OF WORK

Supporting startup growth with the

new recruiting ecosystem

- 31 - April 2012

culture of sharing and the technology to exploit it represent? That we might have to

reconsider our notions of privacy in a Web 3.0 world and beyond.