Talentism

Getting Help from Finance and Marketing

Yesterday I went to the store to buy some mouthwash. I have just moved and so all my essentials (like mouthwash) are in boxes somewhere buried in my house. I was growing restless and concerned without the warm embrace of the safety of Scope, so I went to go buy some.

This seems like a pretty easy buying decision, one which many people make every day. But as I stood there in the toiletries aisle of my local supermarket I started to see just how complex this decision was really going to be.

It is surprising how often we make complex decisions without all the data. Lost in my own world, I decided to go through all the specifics of the “mouthwash” decision and see what I came up with.

First, I was going to pay money for the mouthwash. The money has value that everyone understands: $5 is worth $5 everywhere I go in the country. But what value does the mouthwash have for me personally? One way to evaluate this is to try to determine the “opportunity cost” of not having the mouthwash. So when I am deciding to buy mouthwash I have to evaluate the cost of not having it, which can include:

• My wife won’t kiss me before I leave in the morning

• My kids won’t hug me when I come home

• My coworkers won’t want to work on projects with me, and

• My dog won’t go for a walk with me

These are all “costs” to me. So in evaluating not buying the mouthwash, I have to evaluate what each of these things is worth to me (quite a lot, it turns out).

In addition, I can take the $5 and buy mouthwash, or I can take the $5 and invest in some hot new Internet stock, which could give me lots of return. So another question is “what is my expected return for buying the mouthwash versus investing the money elsewhere?” So maybe my wife won’t kiss me if my breath smells like feet at the end of the day, but maybe she will get over it if I am fabulously wealthy after my Internet investment goes through the roof.

Finally, I have to evaluate whether it makes sense to buy mouthwash at this time. Maybe there is some new and improved mouthwash that is coming to market in a couple of weeks. Maybe it will be like Willy Wonka’s Everlasting Gobstoppers – I can take a little mouthwash today and have fresh breath for the next 10 years. If I only have $5 total to spend on mouthwash it could be that I would be wasting it if I buy the mouthwash that only lasts a few hours, instead of waiting for a couple of months for the stuff that lasts all year.

Now, why bring up this slightly embarrassing topic of my personal hygiene decisions in a recruiting forum? Simply put, buying mouthwash is a lot like hiring an employee, only more so. No matter how complex I made the “to buy or not to buy, that is the question” hygiene event in the grocery store, hiring an employee is orders of magnitude more complex and portentous. But I guarantee that I put more thought into the mouthwash decision than finance or marketing puts into the hiring decision. And that is the point of this article.

Since we are often responsible for the recruitment piece of the whole talent chain we are often blithely ignorant of all the calculations that go into deciding whether to hire someone. We assume that our hiring managers have done a lot of hard thinking, aided with complete data from their finance and market partners, about whether it is worth it to hire someone. In fact, there is usually more thought put into what to have for lunch that day.

This is rarely the fault of the hiring manager. It is almost always the fault of the finance and marketing departments. In fact, if you trace why great companies become not-so-great and dissolve into the business graveyard, it is often because these two functions just don’t know how to do their jobs.

To prove this, let’s return to the mouthwash decision. But let’s change the scenario participant from me to your hiring manager and the scenario from mouthwash to hiring a new employee.

The hiring manager has a budget. Hopefully this has been developed with great care and consideration the year before, but more than likely the process involved someone trying to make sure that they just got more money than they had last year. In addition, the hiring manager has their business objectives for the year. Again, hopefully these have been developed through the careful consideration of top-down and bottoms-up strategic planning efforts by the best and brightest in the company. But more than likely it was just some random targets picked to make the boss happy.

So the hiring manger has money and goals, and they have a problem, which is they need to meet those goals by spending the money they are allocated. Now this is where it gets tricky. A good hiring manager (business person) will sit down with their finance representative and say “Given what I know right now (which is more than I knew when I drew up the budget) I need to understand the opportunity cost of making a hire.” What does NOT having the person on board cost me?

This is a critical question. The ability to answer this question drives all kinds of critical metrics in our world, including “Time to Value”, “Candidate Quality” and “Cost of Vacancy.” So you would think that a lot of time and effort goes into the finance department developing great toolsets to help answer this question. But of course, nothing could be farther from the truth. Most finance departments don’t have a clue about how to answer this question. It is a complex equation involving the total output of the hiring manager’s organization, the value of that output, the effects of a lack of person power in the organization towards meeting that output, and various other items.

So after the finance person gives the hiring manager a blank look and shakes their head on the “opportunity cost” question, then the hiring manager wants to know what else they could do with their money to achieve their objectives. For instance, what is the possible return the hiring manager could get with their money if they decided to buy more computers to automate some of the function and move other people around rather than hire for this position? Could they achieve even more of their goal for the same amount of money?

Again, this is a critical question and one that directly affects the recruitment function. When we get a requisitions (or are told of a need), we have to assume that the need is real and that smart people have done the calculations necessary to make the sourcing and filling of that requisition worthwhile. But of course we have all found out the hard way that this is usually not the case. Finance rarely can answer the “where do I get the best return” question because it involves variables (like the expected value of a non-financial decision) that they often consider beyond the scope of their duties. The consequence is that we have hiring managers who are taking shots in the dark, asking us to hire people that they will then have to fire or move once they figure out that some other investment of that money could have gotten them a better outcome.

Finally, the hiring manager will often need to know what objective they are really trying to accomplish. We all see this all the time. We get a list of hiring priorities for the year and start to go source for them, only to find out three months later that “plans have changed.” And we dutifully go about disappointing candidates we have been working with for a long time, or telling TPRs that we no longer need their help in this area. This process, more than anything else, hurts our employment brand and causes great pain throughout the organization and with our candidates.

So how often do we ask “why?” Why do we get these sudden shifts from the hiring managers that disrupt our lives and hurt our relationships with candidates? Because the marketing department makes mistakes. Lots of them.

Most people think the marketing department’s job is to put together nice collateral, pick the colors for our lobbies and come up with catchy advertising. But real marketing is about being able to predict the future. Not an easy job by any stretch of the imagination, but an essential one all the same. Marketing is supposed to be figuring out “Here is what our customers will want next year, and here is how much they are willing to pay for it.” This becomes the basis for the strategic plan, which becomes the basis for the workforce plan, which becomes the basis for the budget, which becomes the basis for the email we get saying “We are going to need 50 paper folders next year.”

But marketing as it is practiced today is more art than science, and so marketing changes its mind. A lot. As they get new data, observe new buying trends, figure out the rate of inflation, etc. they make new predictions. Those new predictions cause strategic plans to change, which affects workforce plans… all of which dribbles down to you in the form of an email that says “Stop hiring paper folders, and start hiring Russian acrobats.”

So you would hope that the hiring manager is sitting down with the marketing department and asking questions like, “Before I go and tell recruiting to hire this guy, why don’t you tell me what you think is going to be happening in the next 6 months and how that is going to change my business.” In other words, in mouthwash speak, should I buy this mouthwash or wait a couple of weeks for better stuff?

Just like the finance question, this is important stuff for our organizations. It affects not only who we hire but what “quality” of a hire looks like.

But like their brethren in finance, marketing really doesn’t have a clue about any of that. It would be great if marketing was a business partner to the hiring manager who could answer those critical questions, but a lot of times they don’t have any more thoughtful input than manufacturing does.

So the next time that you feel yourself ready to jump off a cliff because your hiring manager change their mind all the time, or feel like you are hitting your head against a wall because your hiring manager’s seem even more clueless than you feel, start thinking about ways to help finance and marketing to do their jobs better.

Business People in HR Have Something To Say

I was talking with a good friend yesterday about another good friend. All three of us have worked in the business world a long time (some longer than others). Friend number 3 (let’s call him Bob) is a topic of concern these days, because Bob doesn’t seem happy in his job. In fact he seems very, very unhappy with his job.

So I asked “Why is Bob unhappy with his job?” and my other friend said “I think he is finally coming to understand that just because someone is a business leader doesn’t mean that they know much about ‘business.’ In fact, I think he is coming to realize that most people in business don’t know anything about business. And so he is working with a bunch of people who know how to do their individual jobs, but that don’t know how to be a business person. And this means that he gets frustrated a lot because he thinks about business first and function second.”

I thought that was an interesting comment, and I started to think about recruiting and HR in light of this.

Let’s assume for a second that “C” level officers inside of companies know “business”, as in how to make a profit and / or return more value to the investors than they put in. This actually is a bad assumption, as numerous company failures show, but go with me here for a minute.

If you look at the executive suite in most companies it is made up of people who rose through the ranks in finance, marketing, sales or manufacturing / engineering. You rarely see someone from HR in the top spot.

The rationale behind this is clear: the language of business is finance, so it is logical that someone who speaks that language well will be on a career track to the top. And when execs talk finance, what they are really talking about is how to make more (or spend less) money, so it is logical that people who talk the language of marketing (“this is what people will spend money on and why”) and sales (“this is how I get people to cough up their dough better than my competitors”) have the next shot at the executive washroom. Then the manufacturing / engineering people come in and say “Nuts to all of that, you have to have something to sell in the first place, and you aren’t going to make any money if you don’t have something to sell,” so they have a track to the golden handcuffs, especially if they get the first two areas (finance and marketing).

And this is where I start to hear people cry, like Charleton Heston in Soylent Green, “It’s people! It’s all people!” You can’t count money, market or sell or even design without people. People are the core of everything in business. So if business = people and people = HR, then business must = HR (also known as the transitive property of equality in math lingo). But it almost never does. Why?

It's not that finance or marketing or sales or engineering people are more competent. Most finance people are accountants and just want to count change and have no pretensions to running the show. They don’t think about business, they think about AP, or AR, or GL. And if the way they think about that and do their job make it harder for the business to make a profit, or return value to investors, then big deal. That’s not their problem. They just make sure that the expense is journaled to the right account.

And so it is with HR. Most HR people don’t care about profit and loss or “business” – they care about their transaction and responsibility. The execs take care of business and the transaction agent takes care of “their stuff” and everybody is happy. So if most functions are filled with people who aren’t business people, why do more business people rise to the top in finance, marketing, sales and engineering than HR?

All functional areas have business people (again, people who understand how to make a profit and / or return more to the investors than they put in). Yes, even in HR. But the business people in the other functions typically spend their day talking about exciting stuff that will lead to more money, whereas the HR person typically spends their day talking about how to spend money, or spend less money, or how not to get sued. It’s partly a language problem, but it’s mostly a leadership problem. If every time the HR-business person stands up and says “Hey, I think this would be a great way to make millions more” the executives reply “That’s nice, but I have a board member up my rear about headcount reports, so go handle that first” it gets a little difficult to keep your eye on the business ball.

Frankly, execs are not looking for HR to deliver “business opportunities.” They are looking for risk and cost mitigation strategies. When a “C” level exec talks to sales and marketing they are looking for cool ways to make more money. When they talk with finance they are looking for ways to count money better, and when they talk with engineering they are asking about ways to make things that make them more money. These are all business discussions, and because you are more likely to have those discussions in the marketing, sales, finance and engineering departments, the people who want to have those conversations (the business people) get more of a chance to show what they are about in those departments than in the typical HR function.

In short, if HR wants to be “strategic” they first have to figure out how to have more discussions that the business people inside their organization can feel good about.

Clarification

I received a call yesterday from a friend who I respect greatly. He said “You have your head up your $%^ and need to retract the post on Kevin Wheeler. It looks like you didn’t read his article at all.” Now I am fully open to the fact that I may have experienced a bad bout of cranial rectosis, and (as I mentioned in the piece yesterday) I really admire Kevin Wheeler. So I went back after a night’s sleep and reread the article and reconsidered my response.

I took into careful consideration that Kevin is NOT saying that technology is bad, or that all recruiting represents is a phone and a Rolodex. I read Kevin’s article as saying “Get back to understanding what is at the core of recruiting before you start throwing a lot of other stuff around it that just obscures the basic nature of the job.” Or, in his own words “What I mean by this is, how minimal could you go and still deliver good people in a reasonable time?” Well, I completely agree with the sentiment and with Kevin’s desire to get back to basics. I just don’t agree with his analysis or his conclusions.

Kevin takes as a given that the business of recruiting is delivering good people on time. In many places it is. In other places it is not. I am aware of more than a few places that would say the job of recruiting is to deliver the cheapest person possible before everything blows up so badly that the company gets sued (objective: cost and risk control). Other places hold recruiting accountable for delivering game changers immediately – talent that will make a significant financial impact right away (objective: driving the top line). Other recruiting departments are chartered with defining talent strategies and helping business partners go after business lines and product strategies that can be supported by the available talent (objective: drive competitive advantage), and they outsource a lot of what they consider “meet and greet” functions.

Depending on what your objective is your process is going to be different. And depending on what your process is, your activities will be different. So my fundamental issue with Kevin’s article is that he takes something pretty significant for granted (the objective of the recruiting department or function) and then builds an argument from that point. But depending on the businesses objective for the recruiting function, the “simplest form” is going to look different.

There are a couple of other issues with Kevin’s argument. Let’s say that we can all agree that “delivering good people in a reasonable time” is the recruiting function’s objective. We would then have to agree on what “good people” are. In my industry, the definition of “good people” is a lot different than the definition of good people in the sanitation and waste management industry. In my industry (digital entertainment) “good people” would not think seriously about coming to a company that could only reach them through phone or snail mail. In fact, in many high tech and creative industries the more sophisticated you are in finding and connecting with candidates, the more credibility you gain in the brand building process. Then there are industries where even getting someone on a phone is a challenge, and you have to use career fairs and paper-based advertising to reach potential candidates. Again, what “good people” means changes what is core about your recruiting process.

Then there is the problem of how you measure and communicate success. In a small shop with low volume hiring a simple single-entry ledger will suffice to record activities. You can then handwrite a note to your clients and mail it to them in order to assure them of your continued good efforts. But in a large, high-volume shop where squeezing every last nickel of value out of a process is critical at the same time that you are attempting to find every advantage in your recruiting process, the only way you can capture, manage and report the data needed is through digital systems. I am not making an argument here that technology makes for good recruiting. But if a basic, core component of your recruiting operation is to tell the people who pay the bills that you are actually doing your job, the size and nature of your recruiting operation will change what is defined as “simplest” significantly.

I thought Kevin’s analogy of the car was really a perfect insight into what I disagreed with in his analysis. Kevin says “A car is at its simplest when it consists of a chassis, four wheels, a basic engine with no electrical system, no gauges or dials, a steering system directly connected to the wheels, and a single seat. Everything else is sure nice to have but does not make the car any more functional.” Well, maybe and maybe not. If you are defining a car not by whether someone wants to buy it but instead by a dictionary, then Kevin is probably right. But very few people would buy the car he describes because they would find it of little value. Yes, there are some people who just want to get from point A to point B, unsafely, with the wind in their face and the sun on their head. But most people, while they may agree that “this is the most basic components of a car” would not buy it or want it. It doesn’t fit their needs, which include safety, comfort and enjoyment.

It’s the same thing with recruiting. If you start with “here is a basic definition of recruiting, now let’s boil it down to its simplest form” you will likely end up with Kevin’s analysis. But if you are focused on what people find of value (what they would want to buy), “a phone and a Rolodex” isn’t any more compelling than “four wheels and a seat.”

I want to reiterate: I think Kevin is absolutely right to challenge people to strip away all the fluffery that surrounds recruiting these days and challenge people to excel at the basics. But I believe the industry would have been better served by an analysis that started with “First figure out why and what your customers are buying, and then figure out what is core to delivering value.” That would lead people to figure out what their customers want and serve that in its simplest form, which is a business discipline our industry often lacks.

And did I mention that I am a big fan of Kevin Wheeler's? Just want to get that in one more time. Thanks to my friend for inspiring me to go back and look at this again. I always appreciate feedback!

Simple Recruiting is Harmful Recruiting

I am a very big fan of Kevin Wheeler, but his article in today's ERE is fundamentally wrong.

Assuming that he is talking about corporate recruiting departments, staffing firms and RPOs (as opposed to the single retained recruiter running their own show), Kevin misses the point that all economic activity is predicated upon continual improvement in process efficiency and the effectiveness of the results provided. There is absolutely no way to increase recruiter efficiency and measure the effectiveness of the results in multi-person shops without capturing data about the entire process end-to-end. And you can't do this with a rolodex and a phone.

What surprises me most about the article is that Kevin is one of the best strategic thinkers in the market. This article is a huge step backwards in making the case that recruiting is a strategic business function. Any business executive reading this article (especially in the finance and operations side of the house) would laugh out loud if they heard that recruiting is just about phones and rolodexs. Unfortunately this argument proves what business people have suspected all along - that recruiting is a just a dialing for dollars people business that has no real connection to driving competitive advantage and which can be done just as well by a call shop in India as by a talent professional sitting next to an executive.

My hope is that Kevin will think more deeply about both his argument and his analogy. A car with no frame, no windscreen and no headlights is only "functional" at low speeds in broad daylight. It would not be functional for the types of driving that most people do, or fit most people's transportation needs, nor even be permissible given the realities of government policy requirements (fenders for instance). Similarly, a recruiting department that is a phone and a rolodex is good for low volume, non-critical hiring environments where continually improving the recruiting and hiring process is not important. This type of recruiting department would not be functional for the types of recruiting that most companies need, or fit most executive's recruiting needs, nor even be permissible given the realities of government policy requirements (EEO 1 reports for instance).

Its the Talk, Not the Posture, That Counts

It was another boring recruiting presentation. The speaker droned on about “getting the best talent” and “the candidate experience.” I started to doze. I had arrived late to the presentation, and only caught the second of two speakers. That was disappointing, because I knew the first speaker to be a smart business person who only recently had stepped into the world of corporate recruiting.

At the end of the session both speakers stood at the podium and took questions. The first question was typical: “How come you don’t do assessments on your temporary clerks when do them on your regular clerks?”

The first speaker (the one I had missed) replied casually, “Because we have done the analysis and given the turnover of those employees we can't rationalize the cost given our profit margins.”

The room went stony silent. Not a peep. The speaker suddenly realized that they had made the fatal flaw of talking profit and loss to a crowd of “people people.” So they said quickly, “You know, it just is a big hassle and the candidates don’t really like it.” Relieved, most of the room nodded their head in approval and understanding.

When you read articles like the recent Fast company article about why everyone hates HR, spend time in sessions like the one I described above (which is a true story, by the way), have run your own business and also worked in a line function inside a larger company, you start to get a complete picture about why HR isn’t viewed as “strategic.” I know, I know – a lot of people are just getting sick of the concept. I thought Heather’s take on the idea was especially honest, since she said “I don’t want to be strategic, I just want to do my job” (which is ironic, since Heather is one of the few people that would be pointed to as “strategic” by virtue of the press she brings to Microsoft recruiting… but I digress).

But “being strategic” isn’t anything magic. It means you have a special sauce, that this special sauce is valued by the company, and that it would be more expensive if not downright impossible to get the same sauce elsewhere. By that measure most corporate recruiting departments (especially of high tech and creative companies) are “strategic” even if they don’t understand or appreciate the term or the position.

The real issue is not whether the corporate recruiting function is strategic. That is a smoke screen thrown up by people who can't really describe why they are so uncomfortable talking business with "people people." No, the real issue is that recruiters cannot speak the lingua franca of business – money. Corporate recruiting (again, my perspective is more geared towards high tech and creative companies, where talent shortages clearly impact the top and bottom line) is really the only business function that is strategic, but that still talks like a staff function.

Think about it. The finance department is seen as strategic (even though it is usually lousy at its job, but that is another gripe for another time). The CFO is at the center of most big corporate decisions, and the people who run finance usually sit at the right hand of operations and marketing. But you can take almost any finance department and outsource its various functions and still run your business just fine. Its not like there is something magic about a chart of accounts in one company versus another; no mystery in a GL for company A versus company B. Double entry accounting is double entry accounting no matter where you go. GAAP is GAAP. The fact that finance is so regulated and so disciplined really reduces much of its work to commodity transactions. You might argue that treasury provides real value if done right, but treasury is a small function compared to AP, AR, GL and cost accounting.

Compare that to the more advanced corporate recruiting department. They have highly specialized communication skills specific to the organization's needs, can negotiate objections that are specific to the company they work for, have to serve a client base that, due to the ambiguous nature of the client's needs and desires, can take years to understand and serve. In short, corporate recruiting is strategic because it provides unique value that is not easily or more cheaply replaceable outside the organization while getting the same quality of result.

Yet finance is universally recognized as strategic and recruiting is being outsourced regularly. Why?

Again, because recruiting can’t (or won’t) speak money. Recruiting describes its tactics, strategies and transactions in people and headcount terms, not in Cost Benefit, Net Present Value, Economic Value Add, or any of the other metrics that are used by "money" people (like the commodity finance department) to describe the outcomes of their processes and activities.

Once recruiting learns that it is not “strategic posturing” but instead “money talk” that is keeping them away from the Grail-like “table” then recruiting can start to change the way it communicates its value. Once people take their mind off "strategic" and put their mouth behind "money" we will start to see a change in the way that the recruiting department is valued.

A Contrary Point of View on The Vertical Search Market in Employment

Back in the days when I ran my own company I learned a hard lesson. We had some great new technology we had developed. I thought it was going to be really big. Then a bunch of people inside the organization started to give me contrary opinions. Being a concerned boss I listened to their points, which amounted to: its been done before and didn't work so it won’t work now.

I listened. I figured they were more experienced than me in this area, so I stopped focusing on the new technology. Eventually we stopped development all together and went another direction.

The problem was that the naysayers were wrong. The technology we developed eventually was developed by others and was a big hit in the market. The doomsayers made the common mistake of applying the filter of past technological failures to future technological opportunities. I have since learned that any argument about the impending doom of a technology based on the "it didn't work before" logic is faulty at its core and should not be listened to. If there is a real argument as to why something won’t work then it will be based on real data and analysis, which prejudice based on experience is not.

I bring this up because there is a lot of talk going around about the "vertical search engine" (I’ll call it VSE from here on) market place. While the vertical search phenomenon is hitting multiple markets (including ticket sales and general shopping), I have been most interested in the area of recruitment and recruitment advertising (specifically Simply Hired, Indeed and the recently acquired Workzoo).

A lot of people are scratching their heads and then predicting the doom of this particular industry. The arguments tend to fall into the following catagories:

1 - Its been done before and didn't work (Flipdog failed).

2 - There is no real business there.

3 - They are on shaky legal grounds.

4 - Once the job boards turn them off then they are dead.

All these arguments are inane, and none of them is well considered or based on fact. I agree that any new venture faces challenges, and that those challenges can eventually cause the failure of the enterprise. But it is not likely that this new "VSE" space is going to fail for any of these reasons.

Before we get into it, two pieces of information. First, I get paid by my employer to judge and manage the effectiveness of different methods of finding and connecting to talented people, including the use of job boards and like services. Second, I sit on the advisory board of Simply Hired, so I am a true believer in this market, its opportunities, and the benefit to companies like me. I thought it was best if you knew my context up front.

So, the arguments point by point (and my intent here is to offer a contrary point of view to the Chicken Little's, not to be exhaustive in my analysis):

1 - Its been done before and didn't work (Flip Dog failed).

First of all, Flipdog was bought at a premium by another company (Monster), so it is a bit of a stretch to call this a failure. But even more so, if the merits of this argument were persuasive on their face, then there would be no (as in none, zip, nada, zilch) technological advancement and you would be hunting coyotes for lunch. “Mmmmm, Zog no make fire first time, fire never going to be made.” Or electricity as a utility, or the car, or the United States or the PC, or the Internet. Each one of those things was tried in some other form, in some other place, and failed before somebody else made it succeed. In fact, there are few (if any) technological achievements of note that weren’t based on numerous failures prior to that point, by competent people trying to do exactly the same thing as the person who succeeds.

The fact is that there are many elements that can determine the success or failure of a product or service, and the old “its been done before” is never one of them. Market’s can change rapidly, people’s tastes can change. In short, economic theory is always more art than science.

Towards that end, the present crop of VSE’s have better technology than Flipdog (and therefore are getting closer to getting consistently superior results) and can distribute results through RSS (which FlipDog couldn’t, limiting its reach). So there are already some marked differences. But even without the technological advancement, there are clearly many other market factors which have changed in the last year. But to claim that an approach that didn’t work before can’t work now is to claim that the market is a static place when it clearly is not.

2 - There is no real business there.

Companies that compete heavily for talent want to do anything they can to connect to the best people. Everyone agrees with that. In addition, almost everyone agrees (except maybe the employees of TMP and Yahoo) that job boards are consistently over promising and under delivering, especially for mission-critical positions.

But regardless of the “money will move to places that get better ROI” argument, the overarching argument of “no real business” is faulty and ill considered. The real argument should be “There is no way to attract passive candidates to use these vertical tools.” Because if passive candidates use the tool, money will flow. Period. I won’t say how, since I want my ideas to benefit my employer first and Simply Hired second, but most people could tell you at least three things that they would be willing to spend money on if they had a source of clean information about passive candidates.

So, can the VSE’s attract high-end passive talent to their site? Good question. I think the answer is yes, and since this (in my opinion) is the crux issue of the whole thing I think they will succeed and that therefore there is a very viable, very powerful business there.

3 – The VSEs are on shaky legal grounds.

I don’t get this one at all. First of all, if they are on shaky ground for scraping content from other sites then every search engine in the world is on shaky ground. These companies are a portal to other destinations. In order to be effective as that portal they have to spider and scrape information. Welcome to Yahoo in 1996.

As a little test I went to Google and typed in “Microsoft jobs Redmond wa” and got a set of results. I then typed in the same query to Simply Hired (leaving out the word “jobs” as redundant). And two things were immediately evident:

A – Simply Hired only “aggregates” about 40 more words of information than Google. But Google caches the entire page in its database. So you don’t even have to leave Google to see the entire content. But you do have to leave Simply Hired to see the content.

B – Google returned Indeed as a result. So if Indeed is in trouble, Google must be going through fits as it contemplates the quick sand of it business plan. Google aggregates the aggregators. Time to sell them short for sure.

I am sure that job boards could determine that they are on shaky market grounds and decide to head off the competition at the pass and shut down their ability to spider (see next point) their postings. But frankly, that has nothing to do with legality. That just has to do with business strategy.

4 - Once the job boards turn them off then they are dead.

Again, a silly argument that isn’t even addressing the real issue. Since all job board ads come from “customers,” and since most job board customers now have their own hosted job sites, and since ever more of those job sites are powered by distribution technologies that take reqs and distribute them to various job sites, the real question is “will employers post directly to the vertical search engines if the boards turn them off?” And then answer is clearly “yes.” So there will be a source for the VSEs even if the job boards turn them off. (Actually if my assumption about the vertical search company’s ability to attract and hold passive talent is true, then this argument is all just semantics. Of course companies are going to post to where they will get the best return. And if they don’t, then God bless ‘em, because my ads will have to compete a lot less!)

But the most important point here is that most companies want their ads to be seen by as many candidates as possible. That is why they distribute them to different sites, both free and paid. So why would a job board want to limit the effectiveness of their business model by preventing the customer’s content from being found? I would think that such a move by job boards would be market limiting after a short period of time.

Again, I know this isn’t the best researched or argued point of view. But the stuff that is passing for discourse these days about this market is so poor that I thought it important to bring up a contrary point of view.