As U.S. companies lay off tens of thousands of workers, the newly unemployed are flocking online to post résumés and connect with friends and former colleagues in hopes of landing a job, and business networks such as LinkedIn are among their first destinations.
The influx of job seekers is helping the privately held Mountain View, California, company add 1.5 million new members every two weeks, essentially creating one of the biggest job boards around.
On the other hand, the very companies laying off workers are the prospective customers LinkedIn is targeting with its expanded suite of corporate recruiting products that went live February 2.
The suite, previously called Corporate Solutions but rebranded as the company’s new Talent Advantage division, revolves around a stand-alone software-as-a-service applicant tracking system called Recruiter that LinkedIn debuted in March 2008. The suite also includes a new internal LinkedIn e-mail marketing campaign tool, employment ads, annual subscriptions for job listings and customizable profiles that companies can use to display job information to LinkedIn members based on their network profiles.
Skeptics maintain that companies shedding jobs and reining in HR costs aren’t in the market for new recruiting tools. They also point out that many corporate recruiters already supplement formal applicant tracking systems with informal use of Facebook, Twitter and other social networks that cost nothing.
LinkedIn executives argue that they aren’t trying to displace applicant tracking systems. In fact, shortly after rolling out its upgraded corporate recruiting services, LinkedIn announced a deal with Jobvite to integrate the latter’s software-as-a-service applicant tracking system into the business network. Jobvite simultaneously announced similar deals with Facebook and Twitter.
Job boards are a different story. If companies are using fewer recruiters to handle more responsibilities, they need the most cost-effective tools to get them the highest-quality candidates. LinkedIn fits that bill better than traditional job boards because of its huge pool of passive job seekers, says senior marketing director Francois Dufour. "They can tap into talent that’s not on job boards, so it’s a better value and has better results," Dufour says.
HR industry consultants concur that if LinkedIn successfully continues its push into recruiting, job boards will suffer the most. That fact isn’t lost on companies such as Monster.com, which in its own effort to stay relevant in today’s job market completely overhauled its Web site in January following a year that saw the $1.3 billion job board expand internationally, redo its technology and pump up sales efforts.
Even so, in a side-by-side comparison, LinkedIn wins because the company has changed the concept of what a job board is, says Dan Finnigan, CEO of Jobvite and former head of Yahoo HotJobs.
"The old model of posting a job in a database and hoping the active job-seeking audience finds it is insufficient. What LinkedIn is doing is innovative," Finnigan says.
Waggener Edstrom sold on Recruiter
Apparently corporate recruiters agree. Since LinkedIn introduced Recruiter in March 2008, more than 900 companies have signed up for the pay-per-seat service. That has helped bring LinkedIn’s corporate recruiting offerings up to par with its other major revenue sources: premium accounts, individual job listings, advertising and market research.
One of those Recruiter customers is Waggener Edstrom Worldwide, a Seattle-based, public relations agency whose 820-person staff handles such clients as Microsoft, eBay and T-Mobile. Last year the agency filled 439 positions, including more than 300 external hires to staff up for new accounts. It was sourcing strategist Kristin Kalscheur’s job to act as an in-house headhunter and find candidates for the hardest-to-fill spots. Kalscheur started using LinkedIn shortly after its 2003 debut and over the years built up a network of 2,000 connections she regularly mined for prospective candidates.
Before Recruiter, using LinkedIn to search for candidates was a cumbersome process, Kalscheur says, because she couldn’t save searches or do mass mailings. Given that experience, it didn’t take a lot of convincing for her to try the Web-based software, which is a separate application from LinkedIn’s consumer service but dips into the same 37 million-member pool.
With Recruiter, Kalscheur can create customized searches that drop lists of potential candidates in her e-mail every day, send group e-mails to prospects and save correspondence and other data in folders she can share with colleagues—helpful so multiple recruiters from the same firm don’t contact the same prospect. The software has drawbacks: It’s not completely integrated with LinkedIn’s consumer service, nor does it work with the applicant tracking system from iCIMS that Waggener Edstrom uses, forcing Kalscheur to cut and paste information from one application to the other manually.
Despite those flaws, Kalscheur is a big fan—so big that she has foresworn using any kind of job board, even the one on LinkedIn.
"We get really bad candidates; maybe one in 40 is decent," she says. "Our job titles can be misconstrued, so we get someone who is 20 years overqualified or the compulsive networker types."
TiVo Inc. is another LinkedIn Recruiter customer, and because of it, the digital TV recording service didn’t need to use an outside recruiter in 2008 despite hiring 75 to 80 people, according to William Uranga, director of talent acquisition. That’s a major change from three years ago, when the company did 25 to 30 percent of its hires through agencies, a change that has translated into cost savings and more qualified prospects.
"Is it a silver bullet? No," Uranga says. "But it’s certainly a competitive tool."
As for LinkedIn’s other new corporate recruiting features, Uranga is cautious, especially about the company’s InMail e-mail marketing tool. "In social media, the moment you get into campaign mode and you’re doing large-scale messaging, people sense they’re losing specialness," and that’s a turn-off, he says.
Management changes cap busy year
Kalscheur and Uranga are two of 521,000 corporate recruiters and a total of 829,000 HR professionals on the business network. LinkedIn is launching its Talent Advantage corporate division to convert more of those members into paying customers.
The new division’s launch comes on the heels of a busy year. In December, the company brought back founder Reid Hoffman as CEO to replace Dan Nye and added Silicon Valley veteran Dufour, who came from Yahoo, as well as several other senior execs from Google and Yahoo. In the past 12 months, LinkedIn also added numerous member features and, in addition to the Jobvite partnership, struck a deal to incorporate several IBM Lotus products into the service while introducing French- and Spanish-language versions.
During 2008, the company also raised $75.5 million in two rounds of venture financing, bringing its total funding to date to $103.2 million. Company officials won’t discuss finances in detail but say funds will be used to finance new products. In earlier news reports, LinkedIn officials have said the company has been profitable since 2007.
In better days, LinkedIn would be poised for an initial public offering and then a possible acquisition, according to industry analysts. In fact, the Silicon Valley rumor mill buzzed over possible acquisitions by Yahoo in 2006 and News Corp. in 2007, but neither deal materialized. While such a merger might make sense for a bigger tech or media player looking to bolster its social media play, in today’s market, "All bets are off," says Bryon Abramowitz, principal consultant at Knowledge Infusion, a Minneapolis-based HR management consultant.
LinkedIn’s news hasn’t been all good. The company is down to 350 employees after laying off 10 percent of its staff in November—par for the course at a time when tech companies from Microsoft on down have announced cuts. Despite adding a new member every second, LinkedIn continues to run a distant fourth behind online networks MySpace, Facebook and Classmates.com.
Recent surveys and anecdotal evidence show people are using all four networks for work as well as socializing, although LinkedIn executives refuse to lump their service in with the rest.
"I won’t say we’ve never lost an opportunity to create value for our client because of another social network," says Mike Gamson, a LinkedIn Talent Advantage division vice president. "But if we go in and talk to a company, to the best of my knowledge they haven’t come back and said, ‘We’re not using you; we’re using Facebook.’ "
Upstart Twitter, which lets people share messages of 140 characters at a time with their online connections, is catching on in HR circles too. While Twitter is still only a fraction of LinkedIn’s size, its user base jumped 343 percent in the 12 months ended September 30 to 2.4 million.
The bigger that LinkedIn and online networks get, the more fruitful they become for recruiters hunting for job candidates, says Jim Durbin, a recruiter and social media expert who pens the Social Media Hunter blog. At the same time, if recruiters misuse tools like Recruiter or LinkedIn’s other new corporate services, they’ll blow the opportunity and end up "trashy" like job boards, Durbin says.
"Ultimately it’s the behavior of the recruiters, not the tools," he says. "The more people who come on, the less who know the rules and etiquette."