Even those at
the top of the on-line technological heap find themselves struggling.
Korn/Ferry's FutureStep operation has yet to turn a profit and, as
mentioned last month, they're laying off people. We also mentioned
in February that when on-ling Internet fetcher CareerCentral went
belly up, founder Jeff Hyman took his wounded act to SpencerStuart's
newly minted on-line creation (Spencer Stuart Talent Network). Now
we hear that Hyman (who once boasted in an Inc. Magazine article that
he would make "toast" of the recruiting industry) has left
SpencerStuart after only two months to join Heidrick & Struggles'
LeaderOnline effort as COO.
Don't get me wrong. I think the Internet is a great tool and definitely
here to stay but it won't put recruiters out of business. You can
buy a car over the Internet, yet car dealerships continue to thrive.
On-line trading hasn't replaced stockbrokers. On-line loans haven't
replaced banks. On-line shopping hasn't replaced stores. Amazon.com
hasn't put bookstores out of business and there is a daily conversation
about whether Amazon will even survive. There are hundreds of things
that can be done on the Internet, including recruiting for many types
of jobs. But not all.
We are in the process of conducting our periodic Employer Practices
and Attitudes survey and, so far, several of these firms have logged
in with lukewarm results from their Internet efforts. One major employer
with several hundred openings told us that they've invested several
million dollars in their on-line recruitment department. They hired
several Internet sourcers and several in-house recruiters, increased
job posting expenditures, bought a new and very expensive applicant
tracking system, incurred upward-spiraling database access costs,
acquired additional overhead expenses, etc. And while they're having
some success, the jury is still out. And they still use outside recruiters
extensively.
Another larger hirer, First Union Corp., created an internal executive
search firm. As chronicled in the February, 2001 issue of Human Resource
Executive, they operate their search firm independently, charging
their internal hiring executives a 22% fee rather than the traditional
30-33% charged by outside recruiters. First Union's hiring executives
are their only clients and, even though it would seem to make sense
for them to hire the inside search firm who supposedly knows more
about their needs than an outsider, outside search firms are frequently
hired anyway. Harry Wilson, the managing director of this group warned
that a company must realize its limitations when it comes to search.
He said, "we've realized where we cannot be effective. Realizing
your limitations as an internal search firm, I think, is very, very
key."
Will these in-house recruiting alternatives hurt traditional recruiters?
In some ways, they will - for a while. But that will be counterbalanced
by our industry's use of the same tools to source candidates - as
well as many other methods not readily available to in house recruiters
who, by the way, are the first to lose their jobs with companies in
a "downsizing" mode. Even so, who do you think will make
a more effective use of the Internet - a third-party recruiter who
makes their living by providing successful outcomes - or an in-house
recruiter who gets a paycheck just for showing up?
Also, whatever happened to the unspoken commandment that companies
shouldn't openly raid the key employees of their direct competitors?
As a hypothetical example, do you really think that Dell's raids on
Gateway employees won't have some long-term consequences? When and
if Gateway engages in a counterattack do you honestly think that,
at some point, a lawsuit might not be filed by one or both?
The unintended consequences of the Internet recruiting paradigm continues
to emerge. Already companies have begun to revise and safeguard their
internal IT systems by erecting more sophisticated fire walls and
other defenses against such popularly used techniques as flipping,
X-raying and the like. The Holy Grail techniques for finding so-called
"passive" candidates is nothing more than a webification
attempt to do what true recruiters have always done in the sourcing
phase of a search. As the winnowing of the web-wonders continues to
eliminate those sites which were guilty of poor business judgment
or victims of underfinancing, those which remain as viable entities
will find ways to increase their profit margins by upping costs to
their ultimate bill-payers (hirers) and, sooner or later, any perceived
cost advantage between these schemes and third-party search fees will
become clear when a cost comparison is made between the ultimate performance
of a hire produced from second-rate sources and those happily-employed
corporate ladder climbers surfaced by our profession.
Just as career center concept and their suitcase computer failed to
mortally wound the recruiting business eons ago, the Internet will
present far more opportunities than liabilities for our industry.
By Paul Hawkinson
Paul Hawkinson
is publisher of the leading recruiting industry journal, The Fordyce
Letter.
<< previous
