Will Social Networking Disrupt the Recruiting Industry?

It may just happen if companies begin to fully exploit the power of Social Networking (SN) and gain the confidence to make important hiring decisions without middlemen.  SN sites like LinkedIn and Facebook now lay bare the key information asymmetry traditionally enjoyed by recruiters, namely access to a large and hard to access talent pool. Given the open and global nature of SN, any HR manager with a browser can now scan large, social & specialized networks for talent.  For example, Facebook has over 350M members worldwide. LinkedIn, more of a business networking site, boasts over 43M members.  These social networkers don’t just join, they also loiter and interact. According to Nielsen, a market research company, American SN users spend an average of 6 hrs per month socializing and networking, in fact more time than they spend on e-mail.  As a result, millions of  users can easily connect with employers and job opening through active and passive job searchs (via automated notifications). 

Moreover, many firms are beginning to realize that embracing SN could result in significant cost savings through the elimination or reduction of recruiter fees.  Recruiters typically charge between 20% and 30% of base salary for each placement, which for a Fortune 500 company could add up to a large amount of money per year.  According to The Economist magazine, some companies are already using SN to reap substantial savings and get superior results. For example, Intel claims to have saved millions of dollars in recruiting fees by using LinkedIn versus headhunters.  US Cellular reckons it saved over $1M in 2009 and got good candidates faster by using LinkedIn.  Even if firms continue to use recruiters, SN provides HR managers with a powerful weapon to reduce headhunter fees especially if they feel that the recruiter is accessing the same SN sites as they are – which in fact they do. 

Ubiquitous talent, easy access and lower cost are not the only advantages of SN.  Most users make available to corporate recruiters a rich trove of personal information, much of it regularly updated, templated for quick review and enabled by powerful search engines that makes it easy to find very specialized individuals. Finally, SN sites utilize sophisticated “add a contact” functionality to easily leverage a visible referral network and access prospects.  Clearly, SN represents a major opportunity for organizations to get more recruiting value at less cost.  

Of course, HR departments will have some issues with this new model.  For one thing, not every prospect, particularly of the mature vintage, is an active user or even a social networker.  Among those that are active in SN, many users (often the senior people one searches for) utilize strict privacy settings to prevent strangers from accessing their personal information.  Finally, there is always the concern that personal profiles are inaccurate, necessitating a certain amount of due diligence by the corporate recruiter.

For the reasons mentioned above, SN sites will never completely replace good recruiters.  Challenging hires (due to profile or risk) and over-burdened HR departments will still benefit from another layer of objective human screening.  And, humans being creatures of habit, will continue to employ recruiters who they perceive to be the best hiring resource.  However, given SN’s early success and medium-term potential, the recruiting industry will need to quickly adjust their strategies if they are to sustain market share and margin.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.


3 comments so far

  1. […] See the article here: Will Social Networking Disrupt the Recruiting Industry? « Mitchell … […]

  2. Kyle McGuffin on

    Social Networking will force the recruitment business to provide real value. Doing a search and printing off a CV provides no value. Its time this industry reflects on what true service means. When was the last time you met face to face with the firm that wants to represent you? Really developing a relationship with the clients. Now’s the time to build this when so many are hunting for work.

    Make it a great day!

  3. […] This post was mentioned on Twitter by Social Lattice and Maik Richter, CEO, Chikako Richter. Chikako Richter said: RT @sociallattice: #recruitment Will Social Networking Disrupt the Recruiting Industry? « Mitchell …: SN sites like L… http://bit.ly/djdnGZ #social #media […]

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