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Article: Online “marketplaces” - a new interface between employers and recruiters by Virginia Raemy

It is no news that the UK recruitment industry is very fast paced: there is a continuous supply of new job boards for direct advertisement and variations on multi-posting services with the latest thing being social media. Twitter-enabled job search was the name of the game in 2009. But what is happening in the more traditional candidate search and selection space?

This area, characterised by stale employer-recruiter relationships and frustrating cold-calling activity, is certainly ripe for a change. Not surprisingly, the UK recruitment industry has recently seen the advent of several innovative suppliers aimed at revolutionising the existing employer-recruiter interaction model.

Based on a model that has already caused a stir in America, these new suppliers are creating transparency in the traditionally opaque recruitment process, benefiting both employers and recruiters. Some call it a “marketplace”, some a tendering platform – the important thing is that it positively transforms the current employer-recruiter relationship.

Employers get to advertise their jobs alongside the fee they are prepared to pay to a recruitment consultant for making a successful candidate introduction. Recruiters get instant access to new vacancies and can decide, based on the job specification and advertised fee, if it is worth their while to submit candidates. Enhanced transparency eliminates the inefficiencies in the recruitment process: no need for cold calls, pitching for business or fee negotiations. In the US, BountyJobs.com has successfully offered this model for several years, whilst the UK saw the recent launch of TalentPuzzle.com, mypeoplebiz.com and several others.

Why is there a need for this service? Mainly because administering the recruitment process is taking too long for both employers and recruiters. Cold calls are the main reason why employers and recruiters often have a “love-hate” relationship. These new marketplaces eliminate the need for recruiters to spend the majority of their time sourcing new business and for employers to field unsolicited sales calls. And standardisation of terms and contracts saves valuable time that can be spent on sourcing the right candidates. By working better together both recruiters and HR can benefit from having smarter interactions - meaning less administration and better targeted CVs.

Secondly, they revolutionise the existing Preferred Supplier List (“PSL”) arrangements. What was once an elegant solution to lock in existing employer-recruiter relationships at preferred pricing and a good way to block speculative cold calls from recruitment agencies no longer holds up in the current age of web 2.0. Why should employers limit themselves to a set number of agencies if they can reach out to more without any additional work? More agencies mean access to more candidates, which usually means faster fill times. And it’s not just a matter of quantity; PSLs are by their very nature limited, but these marketplaces are open by design and they allow employers to reach a broader and more varied range of talent than they would normally have access to.

Thirdly, they dramatically reduce the channels, networks and number of relationships employers have to maintain. Now, the employer has only one relationship, and that is with the operator of the marketplace, not with a bevy of agencies. 

Furthermore, how do employers know if they are working with the best possible agencies out there? An agency that once was performing well at the time when the PSL was set, might no longer be the top agency a few months later. 

This issue can be solved by the marketplace provider incorporating cloud-feedback: employers rate each recruiter interaction they have in the marketplace and this up-to-date feedback, collected and shared amongst the entire HR community, enables employers to choose the best agencies every single time. 

Recruitment agencies benefit, as these platforms level the playing field between large and small agencies. Whatever their size or revenue, what matters is their effectiveness in delivering the right candidate. And there is no hiding place here - the metrics of all transactions are there for all to see in real-time. At the same time, recruiters face new challenges in these marketplaces. 

One is that the marketplace suppliers take between 15 and 25 per cent of the placement fee. Are recruiters willing to trade-off reduced earnings for increased access to vacancies and potentially more placements?

Another is that because spamming is so much easier online, employers could face a deluge from “resume spammers”.

This prompts the question: at what point in the development of these services will recruiters have to be certified so that lame-duck, shoddy or cowboy agencies do not clog up the system?

So are these new marketplaces the PSL replacement for the 21st century? Maybe. They certainly overcome many of the current inefficiencies in the recruitment process and offer a host of additional benefits by benefiting from the reach of the Internet and through standardisation of interactions.

Virginia Raemy set up www.talentpuzzle.com in 2008 after working for London based hedge fund managing an investment in the recruitment sector. Previously, Virginia worked in the corporate finance teams of Deutsche Bank and Citigroup. Virginia holds an MBA from INSEAD and a BA in economics from Yale University. Email: virginia@talentpuzzle.com Tel: 020 3189 2096

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