This Week, In Recruiting - Issue 169

Sponsored by our friends Greenhouse

Greenhouse is your all-together hiring platform – built to deeply solve your hiring needs at every stage with intentional tools that support better hiring decisions and deliver better ROI.

Bringing together technology and expertise, scalable workflows from Greenhouse help you connect recruiters, interviewers, hiring managers, and candidates. Use smart sourcing tools to ?discover and engage top talent, and create organized interview plans that empower your team to make fair hiring decisions. And when new hires start onboarding, you can easily track and manage the process, complete essential to-dos, and orchestrate next steps.

At each stage of hiring, you can set goals and get meaningful insights — so your team can make measurable improvements.

Greenhouse is not just another hiring tool: We’re a strategic partner that delivers value at every step, helping you hire better and achieve business success.

Hire better, all-together... with Greenhouse. Visit greenhouse.com to learn more. ??

Open Kitchen: Thermodynamics of Job Boards, Talent Marketplaces and Staffing Agencies

Thermodynamics is the study of energy distribution. And, as mad as it might sound, it is a useful starting point for understanding the differences between Job Boards, Talent Marketplaces and Staffing Agencies. Each of these are attempts to solve the common problem of connecting job seekers with the employers, and they differ mainly on where the energy is spent in making this connection work. All other differences - in business model, pricing, user experience - stem from this fundamental difference in the allocation of energy.

I want to use today's Open Kitchen to talk about this because the distance between these forms of labour connection are not as discreet as they may first appear. By shifting a small amount of energy into a different part of the system, they can each produce new innovations which may lead to further competitive advantage. This might be a useful way to think about future innovation and new opportunity for companies in each of these categories.

1. Job Board

For Job Boards, all the energy goes to acquisition of traffic, of job seekers and of job posts from employers. There is general disorder on the job board itself once both of these are acquired as it is up to the job seekers and the employers to each discover and engage with each other.

The disorder can often lead to an uneven experience - job seekers getting approached for jobs they are not interested in, employers being overloaded with irrelevant applicants or not getting any applicants at all. The unevenness of experience and uncertainty of outcome has led to Job Boards generally being denigrated as a lowest form of job seeking / hiring, with 'we don't use job boards to hire' being routinely trotted out as a signifier of elite status.

Despite this, for the operator the job board business model is very attractive because it is so simple - invest in marketing to acquire job seekers and invest in sales to acquire jobs from employers. The earliest job boards all started this way and some of the most successful to date still operate according to this simple model. Craigslist, perhaps the canonical example. has a market capitalisation of $3 billion, running a simple job board with around 30 employees.

Most job boards will not become Craigslist because because they will not be able to consistently acquire enough job seekers or jobs, leading to a lack of liquidity on the board, a further decline of experience and outcome and then the doom loop ensues. As decline of either means certain death, it created an unexpected pressure for job boards to accept demand from organisations that they once had thought they would disintermediate. Staffing agencies - as the most consistent suppliers of demand - quickly became the biggest customers of job boards, which in turn became dominated by agency managed ads. The first time most of us encounter a recruitment agency is likely as a result of responding as a job seeker to an agency managed ad.

2. Talent Marketplace

Agency dominated Job Boards were a suboptimal experience for a certain category of job seeker and certain category of employer. Job seekers who were highly in-demand, wanted a discovery process of greater relevancy, less time commitment and less exposure to consequences of a being on an open job board. High brand value employers - ones that had too many applicants, with too little relevancy and too much noise - had exactly the same demands.

Talent Marketplace emerged to service this elite need. The innovation was pretty simple - increase friction upon entry on both sides, and reduce the disorder in the system by putting more energy in supporting the discovery process between job seeker and employer. For the former, this would take the form of some sort of vetting procedure, which would also serve as a requirements capture process which would inform the latter, a matching or recommendation system. The experience for both sides is designed to be 'more signal, less noise'.

This is a much more expensive business to run, as you need to invest on the screening / approval process and the subsequent matching experience, and it is also higher risk, given that you are intentionally slowing down the job seeker / employer acquisition flywheel, increasing the chances of a stall. This increase of cost meant that business model of pay-per-post, which dominates the job boards, was not tenable so Talent Marketplaces experimented with subscription models and eventually settled on the highest revenue option, the success fee. This has lead to the not entirely unfair accusations that Talent Marketplaces had simply become glorified recruitment agents, albeit with a cooler UX.

3. Staffing Agency

Staffing agencies accept that the labour market is disordered. They do not seek to alter this. Rather, they see the best solution to be in helping individual job seekers and employers each find their match, in a concierge rather than systematic way. There is less effort spent on Sales and Marketing because agencies have no need to 'acquire' either at scale because they are not directing job seekers or employers to any central place but simply dealing with them where they are. This can be done with a phone and an Internet connection. Staffing Agencies are notoriously easy businesses to set up because you can do it almost without any capital investment.

Staffing Agencies can emerge from experienced industry veterans converting their professional networks in candidate and employer databases, or through community organisers converting group memberships into the same. More often they emerge from enterprising individuals spotting a need and simply having a go. Job Boards have become a place where Agencies can acquire candidates and Talent Marketplaces the place where they can acquire clients. It's a simple business to run, but high risk / high reward as in most of the time your energy is not compensated - you are finding candidates and clients and only paid when you successfully make the transaction. The 20-25% recruitment fees are as high as they are because they are in effect a subsidy for all of the recruitment work that has not been compensated. The win for the employer is to avoid the management of the recruitment, and the win for the job seeker is discovery and conversion of a job role. If all works well - then all three participants can experience a win-win-win outcome.

Bi-directional Evolution

I mentioned earlier that these categories are not discreet and innovation can occur by shifting some of the energy to different places in the system. We've already seen this in the UK, famously REED began as a recruitment agency which saw an opportunity to set up a job board. Indeed - a renowned experimenter of new business models have attempted both talent marketplaces and now - it seems - also staffing agency. We can anticipate more experiments as suppressed hiring demand across the board in this new era is adding pressure on each of these models. Having vertical specialisation seems to increase the opportunity for innovation - specialist recruiters are ideally placed to build a job board or talent marketplace, as a revenue generation stream but also more importantly as a lead generation channel. Niche Job Boards are also ideally placed to support on a few quick placements, especially if you have already built a db of candidates.

What Does AI Do To All This?

The only answer is that we don't know - innovation is moving too fast, the impact is too pervasive and we are left only with speculation which is barely above simple guesswork. I do think Agentic AI may change this entire game though - as users can effectively delegate all the energy to an automated version of themselves and hence bear no cost for the activities that robot does in your name. If you haven't already seen an example of this, please do see Founders Focus with Max Armbruster l ast week, where 'Sam' the robot conducted an impromptu interview with me live and unscripted. Once we all get our own Sams, the thermodynamics of Job Boards, Talent Marketplaces and Staffing Agencies might change rather more fundamentally than discussed today. We can speculate further on how this looks like in Part Two. Let me know if you're interested in me writing about this.

Now out of the kitchen, onto the lounge ??

What's in the News?

Recruitment Events Co Wins UK Best Trade Show

As you know, I am an evangeliser of in-person events, a critical component to how this industry functions and essential for personal and professional development. It's brilliant to see one of the great events companies in our space gain recognition beyond our space. Hat tip to Jamie Leonard and all the crew at The Recruitment Events Co for winning the UK Best Tradeshow at the AEO awards last week!

Seek exiting LATAM

Few outside of APAC might realise that Seek are the dominant player in the online job advertising marketplace in the Asia-Pacific region. News last week that they intend to exit the LATAM market suggests that global expansion has been nixed in favour of doubling down on existing core territories. RedArbor - a Spanish based company - is the buyer and it seeks to consolidate its growing hold in the Spanish speaking market. Jeffrey Dickens-Chasins with the report

If you have any news which you think the wider market needs to know about, put into comments below on this thread.

What's Going On?

Big List of Recruiter Events to Attend in 2024

Big List of Recruiting and HR Events to Attend in 2024 - we're mid year and there seems to be no end of the events coming up! It's great that we can move forward into the summer with a sense of celebration and community. Bookmark this spreadsheet, add to it, share it in your community and make sure you attend some of these events!

Founders Focus - Ep45 - Up close and personal with Barb Hyman, CEO of Sapia.ai , Weds 19th June, 12pm BST

What do you think of the Founders Focus series so far? I'm delighted to be firing back up as a mid week show - this is the time where we get up and personal with the recruitment technology founders who are changing the way we hire today. Next up is the amazing Barb Hyman , who we are lucky enough to temporarily have in the UK at the moment. Find out more about what makes Barb tick on Weds 19th June - and if you need help to assessing for high volume job applicants, her product Sapia might just what you need. Register here

Brainfood Live On Air - Ep 261 - How to Select and Implement Your New ATS: A Masterclass with Patrick Boonstra , Fri 21st June 1pm BST

Perhaps the most FAQ in the Brainfood Online Community is 'what ATS should we upgrade to'? This is not only a persistent question but because it is episodic (you don't do this regularly) no one really ever gets good at it. Additionally, the rate of product innovation is such at the lessons learned from the last time you did it, may no longer apply in today's environment. So how exactly do you select and implement the right ATS for your business? We've collared one of the few people who specialist in ATS implementations - it's Patrick Boonstra , who is giving us the master class. We're on Friday 21st June at the earlier-than-usual time of 1pm BST. Register here

From Credentials to Competences: Mastering Skill Based Hiring , June 27th, 2pm BST

More on Skill Based Hiring with our friends Greenhouse. I'm actually guest on this so I will be totally unprepared in order to deliver an authentic experience for you all ??. Looking forward to speaking with Adrina August and Natasha Fernandez on this show. Join us if you are moving forward with SBH and want to know more. Register here

How to Build An Effective Employeer Referral Programme , 2nd July 1pm BST

Excited to be partnering with our friends Real Links on this webinar series. Did you know that referrals remain the No1 channel for retention? That means that referred candidates are more likely to meet the Quality of Hire bar and be the sort of fit to company which makes them stay longer. We're going to hammer out what makes an effective ERP in this webinar - consider it 1 hour of free consultancy from the likes of Bill Boorman, Carolina Guillen, Michael Boud and Sarah Meijer, co-hosted by me and Sam Davies. Make sure you register here .

Understand Quality of Hire with a Person’s Web Presence , Tuesday 18th July, 6pm BST

So this one is going to be cool - can you assess QoH based on person's digital footprint? I'm in conversation with a man who thinks you can. The Ben Mones story is fascinating example of how a challenging incident sparked an idea, which has subsequently gone on to become a unique assessment solution in our space. Huge amounts to talk about here - we're on Tuesday 18th July, 1pm EDT / 6pm BST. Register here

If you have an event, webinar or podcast going on next week and want it featured on next week's newsletter,?comment below?with the link and event details. Don't forget to at mention me so that I see it

End Notes

Anyone else watching the Euro 2024? Sport is probably the only TV I watch these days and hence it's the only cultural content with whom I can share with normal people. All the favourites have won their opening games so far, so all eyes on France later tonight, who will surely do the same.

Looking forward to the next 4 weeks - hope you are too!

Cheers!

Hung

Hung Lee is the curator of Recruiting Brainfood , and now This Week In Recruiting. Subscribe to both if you are into recruiting or HR or just interested in world of work.