Cheezhead Recruiting News and Opinion

What does the current economic crisis mean for the recruitment industry? Well, quite frankly, the rules of the game have changed. In order to thrive, or even survive this recession, there needs to be drastic changes in the way online companies and job boards do business.

Despite the economic decline, it is important to note that the online space is still expected to grow over the next few years, with a 43% increase in online advertising by 2011, and a 25% increase in recruitment spending by 2012. This growth in online advertising is good news for many of the targeted or niche job boards who are positioned to represent the most growth in recruitment, according to Borrell Associates. These boards are quickly gaining momentum and more aggressively competing with the bigger job boards, which are slowly losing market share.

However, these growth numbers do not mean that it will be any easier for career sites to achieve success in today’s economy. Competition is stiff, the job market is down, and many online companies are finding it necessary to adapt to the economic circumstances to ensure that their business stays profitable throughout this difficult time.

There are many steps that job boards can take to improve their chances of weathering the economic storm and position themselves for future growth. Here are my top tips:

1. Ensure profitability. First things first, it is imperative to ensure that your business is making money. If your revenue numbers are down in certain areas of your business, then it will be necessary to cut back expenses to maintain profitability. Your best chance of survival is to ensure that your business can be self sustaining, regardless if revenue numbers are suffering as result of the economy. Start by eliminating unnecessary expenses, preserving capital and exercising frugality wherever possible. This does not mean lay-offs. Lay-offs are a sign of a failing business and not a smart business.

2. Be aware and avoid seeking funding. Raising capital or obtaining a loan in today’s economy will be close to impossible (not to mention a bad idea). Job boards and online businesses need to maintain their company at its current status, and be cautious about seeking acquisition or capital funding until the market improves. It is important to value your company against the big players in the online space. For example, if you look to Monster, their current market valuation is only one times the amount of their annual revenue, while only 15 months ago, their market valuation was four times the amount of their annual revenue. Although these numbers may not directly affect your business, it can affect how venture capital firms value what other job boards are worth and the amount of money they would be willing to invest or the percentage ownership that they would receive in return.

3. Diversify your revenue stream. It is crucial to ensure that your business is not solely reliable on one source of revenue, especially if the well is drying up. Your ability to generate revenue from several areas of the business is critical. Perhaps there are opportunities that you are not taking advantage of. In the online job space, although employer revenue is a big piece to the puzzle, it should be supplemented with other forms of revenue, such as advertising, to ensure that the business can survive an economic downturn. Moreover, look at the makeup of your employers. Are you only serving small businesses when your product could be suited for larger businesses that may have deeper pockets? Also, it’s important not to forget to look at the financial stability of your business partners and ensure that you have alternative providers in the event a key vendor goes out of business, especially if they provide a critical component to your revenue stream.

4. Take calculated risks. If an opportunity presents itself that you can not refuse, consider the pros and cons, and determine if the opportunity has the ability to make your company profitable in both the short and long term. The idea is to grow your business into a growing economy, not into a failing economy. However, don’t stretch your company too far by growing the business faster than it should. Put your employees first. Chances are if you decide to hire an excess of employees in an uncertain economy, there is a good probability you will have to layoff many of them if growth does not go as planned which will damage employee morale. Avoid gambling with the success of your company. Sometimes slow-and-steady-wins-the-race.

5. Understand how job seekers and employers think. Customers are the key to your business, which is why it is important to understand how your users think, and what they want, so you can offer them what they need to accomplish their goals. Now may be a good time to conduct a customer satisfaction survey to know where to focus your energy. It is important to have the ability to adapt quickly and to continue to align your business with the changing demands of the marketplace. Don’t try to be all things to all people, instead target your business to a specific audience that will directly benefit from your products and services.

6. Look under the hood. Once you understand your customer needs and wants, a slow time is the best time to look under the hood at your underlying infrastructure and technology and make improvements that will allow you to offer more value to your customers once the economy heats up. Are you offering the right products and services, are you creating the best user experience for your visitors, are you partnered with best of breed service providers, are their processes and procedures that should be developed to help your company run more efficiently? Sometimes small improvements can make a big impact on the business today and in the future.

7. Listen and be lenient with your customers. If the customer is always right in a thriving economy, it is safe to say that the customer is even more right in a down economy. Listen to your customers and work with them to meet their needs, especially if you already have an established relationship with the organization. Your existing customers are more likely to spend money than new customers in a financial downturn because you have already earned their trust. Negotiate a deal that works for both of you, for example, a customer may be more willing to negotiate a cost per hire deal instead of an ad buy.

8. Build your brand. Position your company for success by sharpening your corporate message during the economic downturn. Understand and take an offensive on your competition by nailing your sales and marketing message and launching an aggressive PR and advertising strategy to ensure that your target market knows about you and your value when the economy turns around. Many reporters today are interested in what is going on in the job market, so it is the perfect opportunity to share industry knowledge gained from being in the recruitment industry. One way to build your company’s profile is to start a blog or comment on other industry blogs, such as Cheezhead.com or Jobboarders.com, to establish your company as a thought leader in the recruitment space.

9. Manage what you can control. You can’t control the economy, but you can control the fate of your business. Just as you have to be honest with yourself, it is important to be honest with your employees too. Establish a strategic focus for your company and develop an internal communications platform to help employees understand what is going on with the business and let them know what they can do to help the company stay on track. Employers need to emphasize that the entire company is in this together, and that it will be a team effort to help the company be successful. Give your employees something to work towards by sharing your plans to celebrate the successes with them once the economy bounces back.

10. Stay positive. The worst thing that you can do during a time of economic crisis is to be an alarmist. It’s important not to portray “doom and gloom” in order to keep employees positive, focused on the right things and producing at the highest level possible. There are a lot of incentives that you can provide to keep up employee morale that don’t cost much money such as developing an employee recognition program, creating a flexible work schedule or developing internal training programs to share information, ideas and allow employees to grow personally and professionally.

During an economic recession, it is critical to expect the unexpected. Be sure to continually evaluate what is working in your business and what isn’t, so you can quickly adapt. Capitalize on this downturn period to differentiate your businesses from other players in the recruitment space, which will position your company for success when the economy stabilizes. Remember, it is not only survival of the fittest; it is survival of the companies most capable of adapting to the shifting marketplace.