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Randle Reece
Randle Reece

Randle Reece presented on the state of the talent acquisition market. Some key points: - North American employers spent $83 billion in 2015 to find and recruit labor, with $47 billion going to external vendors like staffing agencies and recruiters. - The talent acquisition market is ripe for disruption, as high-cost segments like temporary staffing, contingent search, and executive search make up a large portion of spending. - Changes in the labor market over the past 15 years, like slower population growth and an aging workforce, have impacted recruiting needs and made hiring more challenging. - Online help-wanted advertising peaked around 2007 and has declined since as job boards lost market share to other sources like social media.

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The View of the Analyst June 24, 2016 Presented to the Job Board Summit North America 2016
Randle G. Reece, CFA Vice President, Senior Analyst Business Services Sector Research Avondale Partners, Nashville, Tennessee USA 2 Career Highlights: Two decades experience as a research analyst and investor in equities, with heavy emphasis on service-oriented companies. Senior research analyst at Stephens Inc., Montgomery Securities / Banc of America, Avondale Partners Buy-side stock picker for Mackenzie, Waddell & Reed, Hoover One-year interlude as Investor Relations Officer of StaffMark, a publicly traded staffing company (now owned by Japans Recruit) Preceded investment career with 11 years as a newspaper reporter, editor and columnist Biography of the Speaker
Global staffing industry Online recruiting / talent acquisition technology Professional consulting all about the business value of labor 3 Avondale Business Services Research Focus
Defining the Talent Acquisition Market 4
North American employers spent $83 billion to find and recruit labor $47 billion went to external vendors Largest categories of spend: Temporary / contract staffing Internal recruiters Job marketing including help- wanted was a $4 billion business, less than 10% of market 5 2015 MARKET SIZE Sources: Temporary and contract staffing Avondale Partners estimate based on American Staffing Association headcount statistics and projected gross margins Contingent and executive search Avondale Partners estimates Job marketing Avondale Partners estimates, based on proprietary industry sources Employer marketing Avondale Partners estimates Applicant tracking systems Bersin/Deloitte Internal recruiters Avondale Partners estimate based on Occupational Employment Statistics, US Department of Labor Referral systems and incentives, and other Avondale Partners estimates, Bersin/Deloitte, and sources of hires surveys from CEB, Jobvite, SilkRoad, and CareerXroads North America Market: Talent Acquisition Temporary and Contract Staffing 24$ Contingent Search 9 Executive Search 5 Job Marketing 4 Employer Marketing 4 Applicant Tracking Systems 1 External Spend: 47$ billion Internal Recruiters 21$ Referral Systems and Incentives 2 Other Expenses 13 Internal Spend: 36$ billion
Temporary and Contract Staffing: Markup on >$100 million of gross billings from staffing agencies to employers Contingent Search: $10,000 - $50,000 fee per successful mid-level search Executive Search: Retained search assignment, high-end jobs fees $100,000 up All of these high-cost segments are ripe for disruption 6 MARKET SEGMENTS North America Market: Talent Acquisition
Job Marketing: Old Help-wanted classified and display advertising Now Cross-media candidate acquisition, search engines, sponsored ads, targeted campaigns, search retargeting, e-mail marketing, mobile apps, SMS, and WHY DO RECRUITING INDUSTRY PEOPLE KEEP SAYING POST AND PRAY? Employer Marketing: Brand advertising Employer brand equity-building campaigns Traffic acquisition for corporate career sites Career network-building 7 MARKET SEGMENTS North America Market: Talent Acquisition
How the Labor Market Shapes Talent Acquisition
2000: Growth rate of womens labor force down in line with that of men 2000: End of financial sectors job growth leadership 2000: Last year of job growth in publishing industry 2001: Last year of job growth in communications sector 2001: End of retail sectors job growth leadership 2007-10: Worst drop in construction jobs since World War II 2009: Last material growth in government jobs 2010-16: Slowest population growth rate since Great Depression 2011-15: First annual increases in manufacturing jobs since 1998 Major Changes in the Past 15+ Years
10 Changes Over the Past Decade 170 140 2005 2015 Hires Per Recruiter 1.3 1.0 2005 2015 Hires Per Job Opening In the United States: Hires per recruiter declined Recruiting professionals increased at a 1.5% annual rate Hiring volume in 2015 was 3% lower than it was in 2005 Private-sector jobs: 7% higher Hires per job opening declined Job openings increased at an annual rate of 2.7% Voluntary and involuntary attrition declined Job openings per existing job - higher Are employers making smarter hires? Or is something else involved?
Sources: US Bureau of Labor Statistics microdata, Avondale Partners research 11 Labor Market Conditions Determine Needs of Recruiters US Employment Metrics for Ages 25-54 Statistics for Men Statistics for Women 92% 90% 90% 88% 85% 80% 85% 90% 95% 100% Participation Rate Employed / Population 2.7% 3.3% 3.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Unemployment Rate 70.9% 40% 50% 60% 70% 80% Participation Rate Employed / Population 3.1% 3.5% 4.1% 2.0% 4.0% 6.0% 8.0% 10.0% Unemployment Rate Among prime career-age people: Participation is in secular decline for men and women Employment is within a year of approaching full Large differences persist among occupations
12 Are We in a Recession? Unemployment Insurance Claims Momentum Indicator: Not A Recession Sources: Avondale Partners calculations based on US Employment & Training Administration data; recessions as defined by the Bureau of Economic Analysis. 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 Recessions ClaimsMomentum
13 Why Are Job Losses Slower Than Ever? 0.5 1.0 1.5 2.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 %ofEligibleWorkers,SeasonallyAdjusted Sources:Avondale Partners calculations,based on data from Employment and TrainingAdministration,US Department of Labor Four-WeekInitialClaims for RegularUnemployment Benefits 1.0 2.0 3.0 4.0 5.0 Monthly%ofUSLaborForce Short-TermUnemploymentRates Recession 1-14 Weeks < 5 Weeks Hiring is slow, but attrition is slower Slowes t ever Employers view: High cost of attrition Little excess labor on hand More cross-company hires Difficulty of hiring
14 Why Is Hiring Slower Than Ever? Hiring is slow, but attrition is slower Slowes t ever Workers view: Iffy competition for talent Increased switching risk Clinging to benefits Playing out the string Age demographics are a key factor Mixed Messages from Hiring, Job Openings Y/ Y Growth Rates: 2011 2012 2013 2014 2015 Last 3 Mo Workers Hired 5.1% 3.9% 3.8% 8.3% 4.8% 1.2% Job Openings 18% 13% 7% 17% 17% 7% Sources: Data from Job Openings and Labor Turnover surveys, US Department of Labor. Avondale Partners charts and calculations. May 2016 = Avondale Partners estimates. May-16,93% 75% 100% 125% 150% 175% 200% 2001 2003 2005 2007 2009 2011 2013 2015 MonthlyPrivate-Sector Hiring, %of JobOpenings - 1.0 2.0 3.0 4.0 5.0 6.0 2001 2003 2005 2007 2009 2011 2013 2015 Millions MonthlyJobOpeningsNear Recent High HiringRemains Below Past Peak Job Openings Hires
Sources: US Census Bureau projections, Avondale Partners research 15 Labor Market Conditions Determine Needs of Recruiters The population ages 18-24 will not grow in size for the next TWENTY years The population ages 45-64 was the fastest-growing demographic for 25 years Soon, it will begin to shrink 27% 24% 22% 22% 11% 10% 9% 9% 33% 27% 28% 27% 18% 26% 24% 23% 10% 13% 17% 19% 0% 25% 50% 75% 100% 1990 2015 2025 2035 USMalePopulationbyAge 65+ 45-64 25-44 18-24 0-17 24% 22% 21% 20% 10% 9% 9% 8% 32% 26% 26% 25% 19% 26% 24% 23% 15% 16% 21% 23% 0% 25% 50% 75% 100% 1990 2015 2025 2035 USFemale PopulationbyAge 65+ 45-64 25-44 18-24 0-17
16 Implications of Age Demographic Shift Lack of growth in 18- 24 population Decline in 45- 64 population Brutal competition for college freshmen Greater reliance on older workers to fill entry-level jobs Lack of demand growth for products and services aimed at young adults (apparel, games, devices, entertainment...) Rate of new family formation slower population growth = slower economic growth Coming shortage of experienced leadership Lack of demand growth for products and services aimed at middle-age adults (cars, upscale homes, apparel, investments, entertainment...) Faster rate of change as businesses depend more on workers ages 25-44
17 Implications of Age Demographic Shift Growth of the 25-44 population Growth of the over-65 population Competition for mid-level career jobs will intensify Shortage of entry- to mid-level jobs More older, part-time workers competing for entry-level jobs Faster shift from consumption to service economy
State of the Industry in 2016 18
19 The Short, Unhappy Life of Online Help-wanted Advertising Data sources: Bars represent Y/Y percentage changes in two data series. HWOL = The Conference Board Help Wanted OnLine census of US online job postings. Openings = Nonfarm job openings, Job Openings and Labor Turnover Survey, US Department of Labor -40% -30% -20% -10% 0% 10% 20% 30% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year-over-yearChangesinPercent HWOL Openings Online absorbed the print help- wanted market Market share gains ended Market share losses began
20 Whats a Job Board? Staffing companies ... Fortune 500 corporations ... Social media ... Networking sites ... The government ...
21 Recruiters Biggest Problems Competing for talent against hot industries with high stock-based compensation. Dealing with the sudden decline in productivity and soaring cost of print recruitment ad campaigns. How to balance spending on internal and external recruiting resources. Adapting to the massive scale of online recruiting. Trying to develop wholly new processes around this new source of candidates. How to conduct candidate research and relationship management on a large scale. Dealing with clunky applicant tracking systems and corporate career websites. Filter tremendous volumes of active, unqualified job seekers from the online applicant stream. Develop research methods for identifying and connecting with attractive recruiting targets. Manage frequent fluctuations in the corporations urgency about hiring. 1995-2000 2001-07 2008-13
22 Recruiters Biggest Problems Recognize swift change in the labor market, make competitive offers fast enough to hire high-impact talent. Hire/develop productive recruiters fast enough to keep up with need. Present job openings to targeted social media audiences (on mobile devices). Convert the gusher of social media applicant traffic into usable candidates. Recruiters will strain to handle the demands of corporate leadership: Insource procurement of temporary, seasonal and contract labor. Compete harder for direct hires of high-value talent. Employers will be forced to make more green hires and deal with higher attrition. Job marketing will move to cross-media, cross-platform, programmatic buying. Much spending will be done without anyone knowing whether the winners and losers are justly decided. The cheap-and-easiness of candidate flow will subside as social media mature and recruiters focus on targeted campaigns. When that day comes, where will the recruitment marketing industry be? 2014-16 2017-20
23 Mobile Apps Are Job Boards, Too The mobile environment is especially well-suited to search engines, hastening an adverse trend: Search gets credit for job boards content For now, mobile is a job-discovery channel, with applications done on the desktop Guess where job- seekers go first on the desktop, to locate jobs they saw first on mobile
24 Parts of the Industry Are Growing Some Arent $0 $1,000 $2,000 $3,000 CY13 CY14 CY15 CY16E US$Millions Indeed LinkedIn Hiring Solutions $0 $1,000 $2,000 $3,000 CY13 CY14 CY15 CY16E US$Millions Monster CareerBuilder SEEK Sources: Company financial reports, Avondale Partners research, FactSet currency exchange rates Indeed No. 1 in job search traffic LinkedIn No. 1 candidate database In 2013, the three largest job boards had about 2x the revenue of LinkedIn and Indeed In 2016, we project LinkedIn and Indeed will beat them by >50%
25 LinkedIn Aimed at Contingent Search, Hit Job Boards Instead - 10,000 20,000 30,000 40,000 50,000 1Q2009 1Q2011 1Q2012 3Q2013 1Q2016 CorporateSolutionsCustomers Sources: LinkedIn, Avondale Partners research Why LinkedIn succeeded: By far, largest source of fresh profiles Timely launch of direct sourcing tool After recession, job ads were swamped with undesirable applicants
26 LinkedIn Growth Rate Is Coming Back to the Pack Slowing Growth of Corporate Solutions Clients Sources: LinkedIn, Avondale Partners research 174% 121% 63% 33% 1Q09-1Q11 1Q11-1Q12 1Q12-3Q13 3Q13-1Q16 Annualized Growth Rate Why LinkedIn slowed: Client over-penetration Direct sourcing is less effective in later-cycle Member data losing its freshness edge
27 What Explains This? (Dont take it as an indication of strength.)
28 Indeed Had a Great Idea, Then Got Aggressive Indeed.com is the most popular job-search site with 120 million monthly unique users in the US Indeed grew revenue >60% per annum in 2013-15 We estimate 70% growth in 2016
29 Who Gets Credit for the Hire? A Case of Marketing A major problem for job boards: ATTRIBUTION
30 Why Does SilkRoad Credit Indeed with ~60% of Hires? SilkRoads ATS enables its clients to feed job posts directly to Indeed SilkRoad credits Indeed as the source of applicants on the employers own site Indeed creates no job content But Indeed allows SilkRoad users to avoid paying for job posting traffic (at first) SilkRoad also credits Indeed as the source when Indeed sends candidates to commercial job boards
31 Stampede: Other ATSs That Distribute Job Ads to Free Outlets ApplicantPro ApplicantStack Avature Breezy HR Broadbean Bullhorn CATS ClearCompany Crelate Talent Deltek FinancialForce Fitzii Greenhouse Halogen HireHive HireSelect HiringThing IBM Kenexa iCIMS Infor HCM Jazz (Resumator) JobBoard.io Jobvite Lumesse myStaffingPro Newton Oracle Taleo PCRecruiter Recruitee Recruiterbox Talentera TargetRecruit Technomedia UltiPro Unrabble Workable Workday ZipRecruiter Zoho Recruit
32 How Does the Job Board Business Evolve? Go digital community first lead with real content Address the small and midsize business market o 60% of US jobs are in firms with < 250 employees o Giants get 80% of revenue from large enterprises + staffing firms Solve targeting demand is real, execution is poor Have different solutions for all stages of the labor cycle Help employers find and use neglected labor supply o 1.5 millionAmericans ages 35-54 among shadow unemployed Dont be afraid of being 1) recruiters, 2) the ATS Dont let attribution just happen to you
What May Come in the Next Five Years 33
34 Major Fallacy: Shift to Service Economy 29% 34% 39% 43% 42% 40% 10% 9% 9% 17% 15% 13% 1985 2000 2015 Sources:USBureau of Labor Statisticsmicrodata,Avondale Partnersresearch SkillCompositionof US Employment Blue collar Skilled service Service Professional Service-sector job growth is lagging Traditional service jobs are upskilling into professions Future growth will be led by professional and blue collar
35 You Should Prepare for These Events Demise (or death throes) of browser-based advertising Ascendance of pay-for-performance job advertising and automated buying and subsequent problems Cross-media branding + job marketing campaigns Intensified competition for talent: Longer time to hire, higher turnover Regulatory efforts to combat fake job posting / contact harvesting Newspapers begin dropping out of the help-wanted business Job search engines win the huge small/midsize business market The next economic recession by 2019
36 Contact: Randle G. Reece, CFA Avondale Partners, Nashville (615) 467-3519 rreece@avondalepartnersllc.com Twitter: @RandleReece

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Job Board Summit presentation

  • 1. The View of the Analyst June 24, 2016 Presented to the Job Board Summit North America 2016
  • 2. Randle G. Reece, CFA Vice President, Senior Analyst Business Services Sector Research Avondale Partners, Nashville, Tennessee USA 2 Career Highlights: Two decades experience as a research analyst and investor in equities, with heavy emphasis on service-oriented companies. Senior research analyst at Stephens Inc., Montgomery Securities / Banc of America, Avondale Partners Buy-side stock picker for Mackenzie, Waddell & Reed, Hoover One-year interlude as Investor Relations Officer of StaffMark, a publicly traded staffing company (now owned by Japans Recruit) Preceded investment career with 11 years as a newspaper reporter, editor and columnist Biography of the Speaker
  • 3. Global staffing industry Online recruiting / talent acquisition technology Professional consulting all about the business value of labor 3 Avondale Business Services Research Focus
  • 5. North American employers spent $83 billion to find and recruit labor $47 billion went to external vendors Largest categories of spend: Temporary / contract staffing Internal recruiters Job marketing including help- wanted was a $4 billion business, less than 10% of market 5 2015 MARKET SIZE Sources: Temporary and contract staffing Avondale Partners estimate based on American Staffing Association headcount statistics and projected gross margins Contingent and executive search Avondale Partners estimates Job marketing Avondale Partners estimates, based on proprietary industry sources Employer marketing Avondale Partners estimates Applicant tracking systems Bersin/Deloitte Internal recruiters Avondale Partners estimate based on Occupational Employment Statistics, US Department of Labor Referral systems and incentives, and other Avondale Partners estimates, Bersin/Deloitte, and sources of hires surveys from CEB, Jobvite, SilkRoad, and CareerXroads North America Market: Talent Acquisition Temporary and Contract Staffing 24$ Contingent Search 9 Executive Search 5 Job Marketing 4 Employer Marketing 4 Applicant Tracking Systems 1 External Spend: 47$ billion Internal Recruiters 21$ Referral Systems and Incentives 2 Other Expenses 13 Internal Spend: 36$ billion
  • 6. Temporary and Contract Staffing: Markup on >$100 million of gross billings from staffing agencies to employers Contingent Search: $10,000 - $50,000 fee per successful mid-level search Executive Search: Retained search assignment, high-end jobs fees $100,000 up All of these high-cost segments are ripe for disruption 6 MARKET SEGMENTS North America Market: Talent Acquisition
  • 7. Job Marketing: Old Help-wanted classified and display advertising Now Cross-media candidate acquisition, search engines, sponsored ads, targeted campaigns, search retargeting, e-mail marketing, mobile apps, SMS, and WHY DO RECRUITING INDUSTRY PEOPLE KEEP SAYING POST AND PRAY? Employer Marketing: Brand advertising Employer brand equity-building campaigns Traffic acquisition for corporate career sites Career network-building 7 MARKET SEGMENTS North America Market: Talent Acquisition
  • 8. How the Labor Market Shapes Talent Acquisition
  • 9. 2000: Growth rate of womens labor force down in line with that of men 2000: End of financial sectors job growth leadership 2000: Last year of job growth in publishing industry 2001: Last year of job growth in communications sector 2001: End of retail sectors job growth leadership 2007-10: Worst drop in construction jobs since World War II 2009: Last material growth in government jobs 2010-16: Slowest population growth rate since Great Depression 2011-15: First annual increases in manufacturing jobs since 1998 Major Changes in the Past 15+ Years
  • 10. 10 Changes Over the Past Decade 170 140 2005 2015 Hires Per Recruiter 1.3 1.0 2005 2015 Hires Per Job Opening In the United States: Hires per recruiter declined Recruiting professionals increased at a 1.5% annual rate Hiring volume in 2015 was 3% lower than it was in 2005 Private-sector jobs: 7% higher Hires per job opening declined Job openings increased at an annual rate of 2.7% Voluntary and involuntary attrition declined Job openings per existing job - higher Are employers making smarter hires? Or is something else involved?
  • 11. Sources: US Bureau of Labor Statistics microdata, Avondale Partners research 11 Labor Market Conditions Determine Needs of Recruiters US Employment Metrics for Ages 25-54 Statistics for Men Statistics for Women 92% 90% 90% 88% 85% 80% 85% 90% 95% 100% Participation Rate Employed / Population 2.7% 3.3% 3.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Unemployment Rate 70.9% 40% 50% 60% 70% 80% Participation Rate Employed / Population 3.1% 3.5% 4.1% 2.0% 4.0% 6.0% 8.0% 10.0% Unemployment Rate Among prime career-age people: Participation is in secular decline for men and women Employment is within a year of approaching full Large differences persist among occupations
  • 12. 12 Are We in a Recession? Unemployment Insurance Claims Momentum Indicator: Not A Recession Sources: Avondale Partners calculations based on US Employment & Training Administration data; recessions as defined by the Bureau of Economic Analysis. 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 Recessions ClaimsMomentum
  • 13. 13 Why Are Job Losses Slower Than Ever? 0.5 1.0 1.5 2.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 %ofEligibleWorkers,SeasonallyAdjusted Sources:Avondale Partners calculations,based on data from Employment and TrainingAdministration,US Department of Labor Four-WeekInitialClaims for RegularUnemployment Benefits 1.0 2.0 3.0 4.0 5.0 Monthly%ofUSLaborForce Short-TermUnemploymentRates Recession 1-14 Weeks < 5 Weeks Hiring is slow, but attrition is slower Slowes t ever Employers view: High cost of attrition Little excess labor on hand More cross-company hires Difficulty of hiring
  • 14. 14 Why Is Hiring Slower Than Ever? Hiring is slow, but attrition is slower Slowes t ever Workers view: Iffy competition for talent Increased switching risk Clinging to benefits Playing out the string Age demographics are a key factor Mixed Messages from Hiring, Job Openings Y/ Y Growth Rates: 2011 2012 2013 2014 2015 Last 3 Mo Workers Hired 5.1% 3.9% 3.8% 8.3% 4.8% 1.2% Job Openings 18% 13% 7% 17% 17% 7% Sources: Data from Job Openings and Labor Turnover surveys, US Department of Labor. Avondale Partners charts and calculations. May 2016 = Avondale Partners estimates. May-16,93% 75% 100% 125% 150% 175% 200% 2001 2003 2005 2007 2009 2011 2013 2015 MonthlyPrivate-Sector Hiring, %of JobOpenings - 1.0 2.0 3.0 4.0 5.0 6.0 2001 2003 2005 2007 2009 2011 2013 2015 Millions MonthlyJobOpeningsNear Recent High HiringRemains Below Past Peak Job Openings Hires
  • 15. Sources: US Census Bureau projections, Avondale Partners research 15 Labor Market Conditions Determine Needs of Recruiters The population ages 18-24 will not grow in size for the next TWENTY years The population ages 45-64 was the fastest-growing demographic for 25 years Soon, it will begin to shrink 27% 24% 22% 22% 11% 10% 9% 9% 33% 27% 28% 27% 18% 26% 24% 23% 10% 13% 17% 19% 0% 25% 50% 75% 100% 1990 2015 2025 2035 USMalePopulationbyAge 65+ 45-64 25-44 18-24 0-17 24% 22% 21% 20% 10% 9% 9% 8% 32% 26% 26% 25% 19% 26% 24% 23% 15% 16% 21% 23% 0% 25% 50% 75% 100% 1990 2015 2025 2035 USFemale PopulationbyAge 65+ 45-64 25-44 18-24 0-17
  • 16. 16 Implications of Age Demographic Shift Lack of growth in 18- 24 population Decline in 45- 64 population Brutal competition for college freshmen Greater reliance on older workers to fill entry-level jobs Lack of demand growth for products and services aimed at young adults (apparel, games, devices, entertainment...) Rate of new family formation slower population growth = slower economic growth Coming shortage of experienced leadership Lack of demand growth for products and services aimed at middle-age adults (cars, upscale homes, apparel, investments, entertainment...) Faster rate of change as businesses depend more on workers ages 25-44
  • 17. 17 Implications of Age Demographic Shift Growth of the 25-44 population Growth of the over-65 population Competition for mid-level career jobs will intensify Shortage of entry- to mid-level jobs More older, part-time workers competing for entry-level jobs Faster shift from consumption to service economy
  • 18. State of the Industry in 2016 18
  • 19. 19 The Short, Unhappy Life of Online Help-wanted Advertising Data sources: Bars represent Y/Y percentage changes in two data series. HWOL = The Conference Board Help Wanted OnLine census of US online job postings. Openings = Nonfarm job openings, Job Openings and Labor Turnover Survey, US Department of Labor -40% -30% -20% -10% 0% 10% 20% 30% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year-over-yearChangesinPercent HWOL Openings Online absorbed the print help- wanted market Market share gains ended Market share losses began
  • 20. 20 Whats a Job Board? Staffing companies ... Fortune 500 corporations ... Social media ... Networking sites ... The government ...
  • 21. 21 Recruiters Biggest Problems Competing for talent against hot industries with high stock-based compensation. Dealing with the sudden decline in productivity and soaring cost of print recruitment ad campaigns. How to balance spending on internal and external recruiting resources. Adapting to the massive scale of online recruiting. Trying to develop wholly new processes around this new source of candidates. How to conduct candidate research and relationship management on a large scale. Dealing with clunky applicant tracking systems and corporate career websites. Filter tremendous volumes of active, unqualified job seekers from the online applicant stream. Develop research methods for identifying and connecting with attractive recruiting targets. Manage frequent fluctuations in the corporations urgency about hiring. 1995-2000 2001-07 2008-13
  • 22. 22 Recruiters Biggest Problems Recognize swift change in the labor market, make competitive offers fast enough to hire high-impact talent. Hire/develop productive recruiters fast enough to keep up with need. Present job openings to targeted social media audiences (on mobile devices). Convert the gusher of social media applicant traffic into usable candidates. Recruiters will strain to handle the demands of corporate leadership: Insource procurement of temporary, seasonal and contract labor. Compete harder for direct hires of high-value talent. Employers will be forced to make more green hires and deal with higher attrition. Job marketing will move to cross-media, cross-platform, programmatic buying. Much spending will be done without anyone knowing whether the winners and losers are justly decided. The cheap-and-easiness of candidate flow will subside as social media mature and recruiters focus on targeted campaigns. When that day comes, where will the recruitment marketing industry be? 2014-16 2017-20
  • 23. 23 Mobile Apps Are Job Boards, Too The mobile environment is especially well-suited to search engines, hastening an adverse trend: Search gets credit for job boards content For now, mobile is a job-discovery channel, with applications done on the desktop Guess where job- seekers go first on the desktop, to locate jobs they saw first on mobile
  • 24. 24 Parts of the Industry Are Growing Some Arent $0 $1,000 $2,000 $3,000 CY13 CY14 CY15 CY16E US$Millions Indeed LinkedIn Hiring Solutions $0 $1,000 $2,000 $3,000 CY13 CY14 CY15 CY16E US$Millions Monster CareerBuilder SEEK Sources: Company financial reports, Avondale Partners research, FactSet currency exchange rates Indeed No. 1 in job search traffic LinkedIn No. 1 candidate database In 2013, the three largest job boards had about 2x the revenue of LinkedIn and Indeed In 2016, we project LinkedIn and Indeed will beat them by >50%
  • 25. 25 LinkedIn Aimed at Contingent Search, Hit Job Boards Instead - 10,000 20,000 30,000 40,000 50,000 1Q2009 1Q2011 1Q2012 3Q2013 1Q2016 CorporateSolutionsCustomers Sources: LinkedIn, Avondale Partners research Why LinkedIn succeeded: By far, largest source of fresh profiles Timely launch of direct sourcing tool After recession, job ads were swamped with undesirable applicants
  • 26. 26 LinkedIn Growth Rate Is Coming Back to the Pack Slowing Growth of Corporate Solutions Clients Sources: LinkedIn, Avondale Partners research 174% 121% 63% 33% 1Q09-1Q11 1Q11-1Q12 1Q12-3Q13 3Q13-1Q16 Annualized Growth Rate Why LinkedIn slowed: Client over-penetration Direct sourcing is less effective in later-cycle Member data losing its freshness edge
  • 27. 27 What Explains This? (Dont take it as an indication of strength.)
  • 28. 28 Indeed Had a Great Idea, Then Got Aggressive Indeed.com is the most popular job-search site with 120 million monthly unique users in the US Indeed grew revenue >60% per annum in 2013-15 We estimate 70% growth in 2016
  • 29. 29 Who Gets Credit for the Hire? A Case of Marketing A major problem for job boards: ATTRIBUTION
  • 30. 30 Why Does SilkRoad Credit Indeed with ~60% of Hires? SilkRoads ATS enables its clients to feed job posts directly to Indeed SilkRoad credits Indeed as the source of applicants on the employers own site Indeed creates no job content But Indeed allows SilkRoad users to avoid paying for job posting traffic (at first) SilkRoad also credits Indeed as the source when Indeed sends candidates to commercial job boards
  • 31. 31 Stampede: Other ATSs That Distribute Job Ads to Free Outlets ApplicantPro ApplicantStack Avature Breezy HR Broadbean Bullhorn CATS ClearCompany Crelate Talent Deltek FinancialForce Fitzii Greenhouse Halogen HireHive HireSelect HiringThing IBM Kenexa iCIMS Infor HCM Jazz (Resumator) JobBoard.io Jobvite Lumesse myStaffingPro Newton Oracle Taleo PCRecruiter Recruitee Recruiterbox Talentera TargetRecruit Technomedia UltiPro Unrabble Workable Workday ZipRecruiter Zoho Recruit
  • 32. 32 How Does the Job Board Business Evolve? Go digital community first lead with real content Address the small and midsize business market o 60% of US jobs are in firms with < 250 employees o Giants get 80% of revenue from large enterprises + staffing firms Solve targeting demand is real, execution is poor Have different solutions for all stages of the labor cycle Help employers find and use neglected labor supply o 1.5 millionAmericans ages 35-54 among shadow unemployed Dont be afraid of being 1) recruiters, 2) the ATS Dont let attribution just happen to you
  • 33. What May Come in the Next Five Years 33
  • 34. 34 Major Fallacy: Shift to Service Economy 29% 34% 39% 43% 42% 40% 10% 9% 9% 17% 15% 13% 1985 2000 2015 Sources:USBureau of Labor Statisticsmicrodata,Avondale Partnersresearch SkillCompositionof US Employment Blue collar Skilled service Service Professional Service-sector job growth is lagging Traditional service jobs are upskilling into professions Future growth will be led by professional and blue collar
  • 35. 35 You Should Prepare for These Events Demise (or death throes) of browser-based advertising Ascendance of pay-for-performance job advertising and automated buying and subsequent problems Cross-media branding + job marketing campaigns Intensified competition for talent: Longer time to hire, higher turnover Regulatory efforts to combat fake job posting / contact harvesting Newspapers begin dropping out of the help-wanted business Job search engines win the huge small/midsize business market The next economic recession by 2019
  • 36. 36 Contact: Randle G. Reece, CFA Avondale Partners, Nashville (615) 467-3519 rreece@avondalepartnersllc.com Twitter: @RandleReece

Editor's Notes

  1. COVER PAGE To use client name vs. logo, delete image box and insert client name directly beneath Presented to: (single space) If no client name/logo is being used, delete Presented to and image box.
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  3. GRAPHICS/CHARTS Refer to chart template guidelines (pgs 25-33)
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