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 Krash
(March 22, 2001) Jobs.com has filed for Chapter 11. Isearch clients
are having "issues" with abandonment following the firm's decision to
"wind-down". A few companies have received additional "funding" recently.
The money came with the agreement that the companies would "reduce their
burn rate". The number of impending business disasters seems to grow
daily.
The folks who think our industry is a horse race between
Venture-funded operations are proclaiming the arrival of the long heralded
"consolidation". In that world view, the internet somehow manages to grant
huge market shares to companies that didn't even exist two or three years
ago. The old businesses of recruiting and recruitment advertising bear no
relevance, according to this perspective. It seems that Recruiting on the
web is limited to placing ads on huge job boards. We say "pshaw".
A quick look at the alliance development successes of operations
like CareerCast (new clients
every day), RecruitUSA (a
constantly growing and improving distribution network), Salary.com (new advertising methods),
little guys like bajobs (who
profitably describe a market in one square mile increments), Recruitsoft (huge new client
momentum), and the emergence (lawsuit or not) of new starts will leave no
doubt that the industry is experiencing spring rather than a dark winter.
The recent "crashes" should serve to highlight several important
issues, however. If your service providers are not profitable, you should
be worried. Pricing in the industry, which had been artificially lowered
by Venture Capital subsidies, will rise to reflect the real costs of doing
business. A dollar spent on erecruiting tomorrow will go about one third
as far as one spent yesterday. The freebies (and there have been an awful
lot of them) are over.
There are a couple of more subtle questions:
- Check to see if anyone involved in the vendors you use has any
actual business experience. It's surprising how little training in the
fundamentals many CEO's have. Bad pricing and financial decisions are at
the root of a lot of the current failure.
- Is your vendor chasing a "visionary's dream"? Really good ideas
developed in interesting companies have been able to gain market
traction over the past several years. Unfortunately, visionaries often
fail basic checkbook problems. The Jobs.com problem can be traced
directly to their insistence on the core "universal resume" that wasted
so much of their early money. The "visionary thing" is better used for
marketing purposes than managerial decision making.
- What is your vendor's customer satisfaction policy? With rumblings
about class action suits (Isearch, TheWorksUSA, Resumix), customer
satisfaction issues are hitting the hot burner. Be sure to be clear
about your recourse if you are unhappy.
- How fast is your vendor growing? Many companies encounter severe
growing pains when they try to sustain growth rates over 200% for more
than three years. Essentially, the original management team is
ill-equipped to deal with issues of growth and scale. Do you know how
dependent your vendor's organization is on its founders?
- How dependent is your operation on "free" services? A number of
"training companies" have made a great deal of money selling techniques
that depend on the continued generosity of Venture Capitalists.
Remember, lunches aren't free.
As a customer of online Recruiting
services, it is a time to be wary while bracing for logical price
increases.
Here's a gem. The most comprehensive listing of HR mailing lists we've
ever seen is available at: http://www.hrprosgateway.com/listserv.html.
It's a small service of a website called "The HR Pro's Gateway to the
Internet"
Keep your eye on Hailstorm
(Microsoft's code name for their new .NET service structure).
- John Sumser
******************************************************************************************
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