Monster Worldwide announced Monday, July 30, that it plans to eliminate 800 full-time positions—about 15 percent of its international workforce—over the next six months. The move is part of a broad offensive that new company CEO Sal Iannuzzi is mounting to invigorate the job board, whose second-quarter profits dropped 28 percent from the same period last year.
The slowdown was the result of various factors, including a change in the company’s telephone sales model, which didn’t deliver anticipated results, and decreases in traffic across some of the online properties, CFO Timothy Yates said during the Monster’s second-quarter earnings conference call. Much of the deceleration is in the North American market, not in the high-growth European and Asian markets, which now account for about 35 percent of Monster’s total revenue.
Along with the reduction in headcount, Monster announced plans to centralize its corporate brand-building functions as well as departments that do not generate revenue, such as finance and human resources.
The company anticipates these efforts will reduce expenses by $150 million to $170 million through 2008. Iannuzzi said this money will be put back into the business. He said he has pegged $80 million for what he considers long-term growth prospects, such as product and technology innovation, as well as global advertising campaigns and the strategic expansion of the sales force.
The research and development budget may be substantial, but unless Monster can do something that is fresh and innovative, its efforts may be in vain, observers say.
“Monster is going to have to do something big and bold,” says Kevin Wheeler, a recruiting industry analyst and president of consulting firm Global Learning Resources. “Doing more of the same in R&D isn’t going to get it out of the bind that it is in.”
Wheeler says that the future of online recruiting will most likely resemble a hybrid of social networking and job posting. He points to innovative online recruiting platforms, such as Jobfox.com and Itzbig.com, as being the next wave of players in the job board industry.
“Monster is going to redefine its boundaries if it wants to succeed,” Wheeler says. “It is going to have to come up with something cool and dynamic that really draws people in.”
Regardless of what technology Monster decides to invest in, the company must make sure it comes on line quickly, given the fast pace of the Internet industry, says Mark Mehler, principal at recruiting consultancy CareerXroads in Kendall Park, New Jersey.
Novel products and services will have to be introduced within six months to a year, and they will have to be relevant to the needs of the market, he says. Some of the features that are in high demand among online recruiters include the convenience of one-stop shopping for products and services, as well as ease of use and the ability to attract high-quality candidates inexpensively, he says.
Another concern among industry experts is how Monster will implement the announced strategy, particularly since the current management team has not been in place very long. “We are cautiously optimistic,” says Tim McHugh, an analyst at William Blair. “This is a new team and we haven’t seen their ability to implement strategy.”
In spite of the concerns in the market, Iannuzzi said in the second-quarter conference call that it’s a new chapter in Monster’s history. The strategy is meant to deliver strong growth as well as bolster innovation, which was once at the core of the company’s success. Threatened by a loss of focus and a lack of efficiency, two problems that often plague large companies, Monster’s new leadership says it hopes to turn a corner with these changes.
“Make no mistake: This management won’t tolerate a short-term philosophy that fails to make the investments needed for long-term growth,” Iannuzzi said during the call.
Getting away from the past, however, could prove to be difficult for the company, which can’t seem to shake off the stock backdating scandal that resulted in the departure of longtime CEO Andrew J. McKelvey. Finance chief Yates said that legal fees and investigation processes have cost the company $5.3 million.