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Pay for performance: is it in your future?

pay for performanceSince I began working in the job board industry in 1997, I’ve heard many discussions about pay for performance {PFP} (as opposed to pay to post or pay to access resumes). At one point, CareerBuilder launched a PFP service, but over time it disappeared. In fact, the only companies that have succeeded with PFP have been aggregators such as Indeed and SimplyHired. Of course, from the late 2000s until now, some in the industry have been convinced that these aggregators/job search engines would put traditional job boards out of business.

It hasn’t happened. Why?

Honestly, I don’t know – but let me posit a few possibilities:

  • PFP depends on extremely high volume for the job site to make money – because the site is making much less per posting. There are relatively few high volume sites out there – and I suspect they’re making more from their existing arrangements than they would through a switch to PFP.
  • PFP is different from what generations of recruiters and HR staff are used to – the traditional job board model was simply an extension of the offline classifieds. PFP is an entirely different model – and as we know, the HR/recruiting world is relatively change-adverse.
  • PFP lacks certain advantages of traditional job boards – the ability to build an employer’s brand, among others.

However, lest I sound too complacent, let me also point out a few other things:

  • Indeed has become the most trafficked employment website in North America (and probably the world).
  • Indeed is actively targeting direct employers in North America – and I suspect their sales staff is working hard to educate HR and recruiting staff about the benefits of PFP.

Another point: PFP doesn’t have to look like Indeed. Last week Angelist, a network for startups, began testing their own version of PFP. An employer can post a position at no charge – but if they make a hire, they pay Angelist 10% of the salary or .25% of company equity. Interesting, eh? At this point, Angelist is working on the honor system – so we’ll see how that pans out. But it’s entirely possible that a site with integration into its clients’ ATSs could more accurately track hires – and charge accordingly.

So, is pay for performance in your site’s future? It’s worth some thought. And please – let me know if you’re already implementing PFP!

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This Post Has 2 Comments

  1. Jeff,

    Good food for thought! Inherently, I think that performance-based recruitment marketing has–and will continue–to gain traction. As more companies start to gain more visibility into their data and more companies start to adopt tools like Recruitics to more easily help them understand and compare their CPV, CPC, CPA, CPH, etc., we’ll continue to see a spending shift from flat-fee postings to performance-based postings. We’ll also see downward pressure on flat-fee posting prices. The key for career site owner\operators is to have a blended mix of both offerings, so that we can sell our products to recruiters in the way that works best for them both now and in the future. I discussed this in a blog article last year…

    Job Postings: Lease or Buy?

    When it comes to buying job postings, companies are just now starting to dip their toes in the Cost-Per-Click (CPC) water, but is CPC-based job advertising really better than the traditional bulk-buy and all you-can-post-models?

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