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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