Online recruiting is periodically swept by new ideas that are touted as "the next big thing" in our field. There have been:
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virtual career fairs
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data-mining
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And those are just a few.
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Historically, these developments have burst onto the scene with much fanfare and breathless prognostication about how they will change life on planet Earth (or at least in the recruiting function). More often than not, however, they have had only a Warholian impact on the way we do our work. They enjoy a fleeting 15 minutes of fame and then fade away, replaced by the next big thing that catches the eye of the media and industry pundits.
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+ J5 W, v# d3 A, I9 zThe Next Big Thing
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So, what is today's auspicious, bodacious big idea? Given all of the excitement it seems to be generating, I would point to pay for performance. As the enthusiasts say, it's an idea whose time has come.
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Pay for performance is founded on the notion that specialty or so-called vertical search engines in the employment field (e.g., Indeed.com, SimplyHired.com) have reduced the job posting to a commodity. And, as any good economist will tell you, commodities have no differentiated characteristics so their value in the marketplace is a function solely of price. The lower the price, the higher the perceived value. The vendors that produce commodities, therefore, can only compete with one another by reducing their price, and that's what pay for performance is all about.
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) a F T$ ?1 V5 Q& s5 K% ?- F( O7 MThe idea originated with the pay-per-click advertising so successfully championed by Google over the past four or five years. Using an auction-like process, Google lets the market determine what advertisers are willing to pay for an ad that will appear whenever someone searches on Google using a specific keyword.
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2 X. t( Z& L4 {8 TFor example, let's say your employer produces widgets, so you go to Google and offer to pay 50 cents to place an ad on the search results that are generated whenever someone searches Google using the keyword "widget." Even better, you don't have to pay that 50 cents when your ad appears on Google unless a visitor actually clicks on your ad and (hopefully) reads it. That's pay for performance. You don't pay unless your ad performs.
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The Next Big Problems
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Sounds like a good deal, right? In today's budget challenged staffing functions, anything that will improve the efficiency of each dollar you spend in recruitment advertising has to be a positive development. But, as with all next big things, there's another side to the story. Pay for performance has at least two problems that can turn its seemingly good deal into a very bad one. They involve hidden costs and hidden talent.
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1. Hidden Costs. The marketplace auction of keywords can actually cause you to pay more, rather than less, for your recruitment advertising. How? Well, let's say you're recruiting for Java programmers, and you go to a vertical search engine and offer to pay 50 cents to display your ad every time someone uses the keyword "Java programming" in a search.
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0 W! X- L; ~) s" E* v1 L( t1 xThat modest sum seems like a reasonable investment, and it probably would be if you weren't in a War for Talent. The reality, of course, is that you are, and that competitive situation means that there are numerous other employers also recruiting for java programmers. So, what do they do? They go to the search engine and offer to pay 60 cents or 70 cent or $1.50 for the very same keyword. And, every time another employer outbids you, your ad appears less and less frequently and lower and lower in the search results. The only way to get your ad back up to the top, where it's most likely to be seen by Java programmers, is by upping your bid. That relentless upward pressure is the hidden cost of pay for performance.
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! I' c8 \. \5 h* N+ Z' h3 Z2. Hidden Talent. The pay for performance model works at Google because every time someone clicks on an ad for toothpaste or the latest CD, they are a prospective customer for that product. For the vendor, therefore, every click is a potential sale.
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The same is not true in recruiting. Just because someone clicks on an employment ad doesn't mean they are a qualified applicant. In fact, it's more likely that they aren't. Why? Because vertical search engines that focus on jobs -- at least those in the marketplace today -- have a value proposition that appeals only to active job seekers. They are nothing but a quick connection to job openings posted around the Net. There are, of course, some great "A"-level performers among active job seekers, but there are far more among the population we typically call "passive job seekers." By definition, however, that group isn't looking for a job, so they have no reason to visit a vertical search engine that specializes in jobs. And, that's the fatal flaw in the current version of pay for performance. It places a value on the visitor's click, and in our profession, what counts is the visitor's talent.
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Am I saying that pay for performance has no future in our field? Absolutely not. In fact, there are several examples of pay for performance that seem to be working:
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TopUSAJobs uses a pay for performance model that extends the reach of select niche job boards into the candidate population. By focusing on career and industry-specific niches, it provides access to talent that is more likely to be qualified for key openings and saves the advertisers money at the same time.
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7 J7 U+ m4 \4 f$ l& _! _Careermetasearch.com creates a unique value proposition by integrating pay for performance ads with professional and developmental content that appears online and would be interesting and helpful to passive prospects. As a result, its advertisers pay only for ads that are positioned to connect them with high caliber prospects.
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So, pay for performance can and will work, but not as it is envisioned by today's search engine sites. The ads recruiters place may be commodities, but the people we recruit definitely aren't. There are very real and important qualitative distinctions among talent, and until vertical search engines attract more than the 16% of the U.S. population who are actively looking for a job, all the efficiency of advertising in the world won't compensation for its ineffectiveness.
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-- Mr. Weddle is an author and commentator, and publishes Weddle's, a newsletter about successful online recruiting.
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Email your comments to
cjeditor@dowjones.com.
