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False Nectar of the Gods by David Brensilber The Fire Brick Group

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As someone who has been in the online recruitment space for the past 15 years, I have firmly believed that performance based pricing was going to revolutionize the industry. Boy was I wrong.

While performance based pricing has provided something tangible to employers, I do not believe it has really improved the process. Under the old traditional model, employers would pay a fixed fee for the single job posting, job slot or bulk posting package. The only guarantee was that the job would be posted online as determined appropriate by the job board.

But more than 10 years ago, companies started charging for these job postings based upon some action taken by the jobseeker (from either a click or an application). The major result is that the employer now pays only when it receives some action from the jobseeker. So what?

With the “new” performance based pricing method, employers have the ability to change the CPC or CPA they are paying and manage their exposure to these clicks. So some jobs receive a low CPC like customer service jobs while other receive a premium CPC like healthcare workers. This has solely resulted in a financial change. In some cases, it has compressed the margins of players in our space while giving birth to new players. But has it helped the process?

Changing the pricing scheme has not driven better candidates or expedited the hiring of candidates. Also, how many employers know the value of a click or an application? Based upon my conversation, there are only a few sophisticated companies that fully understand their funnel from a job posted to a click to a hire (let alone an employee a year from hire).

To the typical small and medium business, the performance based pricing approach is more a nuisance than anything. I believe that most recruiters at other companies would shy away from performance based pricing if they could and that the only reason they embrace is the believed cost savings.

So that begs the question on what innovations has our industry developed to help the hiring of employees since the first generation of job boards created a resume database?

By David Brensilber
President – The Fire Brick Group

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Why Bother with Job References?

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Recently a friend of mine was asking me about a reference he needed to give a former employee of his. My friend liked this former employee but was frustrated with the hoops he had to go through in order to help out his former employee. His HR department was concerned about potential liability and cautioned my friend in providing a sanitized version of the reference he wanted to give.

This exchange started to make me think. In this day and age, why do we bother with references. Are they any real value?

The first problem with references is the job candidate cherry picks who he wants to provide as a reference. In most cases, he will dig up only people who will give him a positive reference even if he has to go all the way back to his high school summer job.

The next issue is that in our day and age, you have a false positive tendency. Other than a few people I know, most people want to provide positive references to their former employees. If they do not like a candidate, they will tend to invoke the principle that they can only confirm the date of hire and termination.

Thirdly, will the substance of a reference from a person you do not know provide any real insight in how the candidate will perform at the job you are interviewing for? In most cases no. You can find out if the candidate was untrustworthy which will only come up in a rare instance. Also, the basic premise of a reference is that you will trust a stranger on a twenty minute conversation more than you will trust yourself and your team who have spoken with the candidate for hours. Does this make sense?

From what I understand, references are less than 20% effective in predicting whether a candidate will be a good employee at his job. So why do close to half of all companies still go through the reference process?

My best guess is that recruiting sometimes gets stuck with we have been doing this for years so why change it?

David Brensilber
President – Fire Brick Group

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