E-recruiters fight for market share as slowdown kicks inOn 27 Nov 2001 in Personnel Today Previous Article Next Article Online recruiter StepStone made 500 employees redundant earlier this month.Paul Nelson examines its impact on the future of Internet recruitmentThe closure of online recruiter StepStone in the UK has sparked a heateddebate about the future of Internet recruitment. Employers are tightening their recruitment belts as the global economicslowdown continues and experts believe that the online market is set for aperiod of consolidation. One view is that the online market can only accommodate a small number ofbig all-purpose recruitment sites. Chris Hermannsen, chief executive of the UK, Ireland and Nordic region ofTMP Worldwide eResourcing, which owns online giant Monster, explains,”Only the strongest and the largest will survive in an environment thatdemands size and reach as the criteria for success – this is the future ofonline recruitment. “What we will see is the creation of a cluster of online super brandsthat will act as online recruitment hubs for the growing number of virtualCVs.” Along with the largest online players, smaller niche recruitment companieswill strengthen their positions. “What will happen in a couple of years’time is that there will only be two broad-based online recruitment sites, withmany others concentrating on niche industries,” said Johnathan Lines,sales and marketing director of Fish4jobs. There are going to be winners and losers as the market evolves and onlinerecruitment companies restructure. Shaun Collins, head of marketing at TotalJobs, explains that the currentmarket is overcrowded. He believes that “defensive players” – thoserecruitment companies that are using a website to defend their establishedmarket share – will lose out over the next three years. In time, the big onlineplayers will dominate the whole recruitment sector. When StepStone closed in the UK on 2 November and made 135 staff redundant,it sent out some strong messages to the rest of the recruitment community. Many of the experts in the field believe that StepStone tried to grow toomuch, too quickly. Collins commented, “It was a classic dotcom story, not a classicrecruitment site story. StepStone had a set amount of money in the bank with aset amount of time to make X amount of profit. “It was very bold move in the beginning, going for rapid expansion witha huge brand awareness and hoping that everything would follow.” Some questioned its massive marketing outlay, which included spending areported £8m on sponsoring Channel 4 sport. Keith Potts, managing director ofGoJobSite, said, “Big advertising campaigns do not work in the recruitmentindustry. They will capture some people, but recruitment is not likeadvertising a Mars bar, it works on a cycle of anything from two to five years.An advertising campaign cannot retain brand awareness for that length oftime.” Potts believes that a proliferation of Internet links from other sites ismore important than a massive marketing budget. GoJobSite has 5,000 weblinksposted on other sites to drive traffic. Furthermore, recruitment websitestructure is vital. It has to be easy to use and interactive. Collins agreed, “We feel that the secret [to a successful recruitmentwebsite] is to offer a focused tool for job seekers and recruiters. The trickis to keep it simple. Human interaction and advice are both distractions. “StepStone made its mistake by buying existing sites, which led totechnological problems as they had numerous different platforms,” Collinsadded. To succeed in Internet recruitment organisations must be in both the big andniche recruitment market. “Companies must be able to offer both the sectorsite and the big generalised site. We believe in both models online recruitmentis no different to offline,” said Potts. “Reed Business Information, for example, has been very successful inrecruitment via the trade press and online. The Sunday Times has alsosuccessfully used both models in its recruitment drive.” Developing partnerships is another approach to developing scale andcompetitiveness. Last week, Monster announced a deal with AOL Europe. Itreciprocates the companies’ relationship in the US and will give users accessto over 1 million jobs as well as Monster’s career resources, including its CVbuilder. “Being big is good,” said Peter Croasdale, European product andcontent director for Monster. “The search engine is there so that jobseekers can find exactly what they want. In two clicks they can go from apossible scope of 1 million jobs to narrowing it down to five vacancies.” For the smaller operators, providing high quality customer service is vitalto a strong niche position. “We restrict our database to 1,500 senior ITstaff and we look after our candidates, unlike the big sites,” said PaulSmith, chief executive of IT recruitment site FirstPersonGlobal. StepStone’s investors have agreed to bail out the firm to the tune of £13.4m– most of which will be spent on redundancy payments. It has made over 500 ofits 876 staff redundant and is focusing on its core markets in Belgium, Denmarkand Germany. It provides a salient reminder of the dangers of trying to develop brand. AsFish4Jobs’ Lines explained, “StepStone tried to build a significant marketbrand and this takes considerable financial backing just to break even. Thereis a danger that backers will run out of patience and call it a day.” How online recruiters can prosperOnline recruiters have been warnedthat to prosper they must expand their job-hunter base and improve corporatesatisfaction.Research by Forrester concludes that online recruiters shouldtarget local firms with specialised staffing needs and include lower managementjobs if they are to compete in a slowing economy. To keep HR departments’ revenue, online recruiters must alsoimprove their success rate. The study, released earlier this month, suggests the best wayto do this is to pre-scan applicants. According to the research, only 6 per cent of UK Web users haveapplied for a job online because online recruiters focus on middle and uppermanagement jobs, which excludes over half of the population.Forrester claims that online recruiters should eitherconcentrate on the localised approach taken by firms such as Fish4Jobs or thinkbig and provide the worldwide coverage offered by companies such as Monster.www.forrester.com Comments are closed. Related posts:No related photos.