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Pay for performance: the future, a fad, or something in between?

pay for performanceAbout a year and a half ago, I wrote about the pay for performance model (PFP) – where employers pay for specific candidate actions (usually clicks), rather than for a job posting.  The idea has an intrinsic appeal – after all, who wouldn’t want to pay for just what they want, rather than a bunch of stuff they don’t need?

Well, many months later, the discussion over PFP continues. At the most recent IAEWS conference, some recruiters said it was just what they wanted – while others seemed satisfied with job postings and other traditional job board products. We’ve also seen products such as come to market focused exclusively on PFP – and of course Indeed, SimplyHired, and other aggregators continue to push their PPC offerings.

So this got me to thinking. Is PFP a fad – like .jobs – that creates a big whirlwind of publicity in the recruiting press, then fades away? Or is PFP the future, destined to eliminate the paid job posting and related products where the employer pays for access to candidates, rather than actual candidate activity? Or is PFP something in between – a new tool that is added to the recruiter tool box alongside existing options (like job postings)?

If you’ve been reading this blog for any length of time, you can probably guess where I will come down. There’s nothing like being in the industry for almost twenty years to make you a bit skeptical of new models that promise to ‘revolutionize’ the industry. Such things do happen – but much less often than people think.

My take: PFP can offer true value to certain types of employers hiring for certain types of positions. Are you advertising for a highly skilled position in a constricted market? Then paying for clicks or applications will probably cost you less than paying for a job posting. Your job – by its nature – is going to attract less traffic and interest than a lower level, less skilled position. So you’ll save some money. Plus if you don’t like the clicks/applications you’re getting, you can cut off the ad.

However, if you’re advertising for less skilled jobs in less constricted markets, job postings will probably treat you better. You’ll get tons of clicks/applications, and after a certain point, your cost per click/application will drop substantially.

My other take: if I was an employer, I’d be a lot more interested in paying for applications than I would paying for clicks. Applications are much closer to what I really want – hires. Some companies already offer this. The challenge – on the job board side – is figuring out how to make it economically viable. Some sites – like Hired and Angelist – are simply using a variant on the contingency recruiting model: make a hire, pay us a percentage of the 1st year’s salary. Interesting idea, but sounds tough to scale.

So, is pay for performance going away? No. Is it going to grow? Yes. Is it going to replace every other recruiting option out there? No.

Your thoughts?

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This Post Has 5 Comments

  1. PFP is ok and won’t go away. Paying for applications will provide motivation to generate a lot of inappropriate applicants; ATS’s do this all the time. The deep, crying need is to improve selection, not get more candidates. Tools to improve selection should be front and center for job boards. It’s counter the rapid transaction model but it is what’s needed.

  2. @Paul,

    What do you mean under “improve selection”?
    Is it “improve filtering of candidates” or “have more choice of candidates”?

    Would it be easy to convince recruiters to pay $100+ per qualified lead?

  3. Many years ago I convinced 2 smaller job boards to try PFP if they wanted my business. At the time I had very detailed analytics with URL source code tracking and I said I would be transparent with candidates applying and where they were in the workflow. The difference was that my PFP definition was a actual hire originating from their sites. In summary, one bombed and I spent nothing and the other did quite well and I spent more than the traditional subscription approach. Did I care I paid more, no, as one balance I was getting true PFP. Would the big boards do this today, I don’t know but showed me what is possible.

  4. I think part of what’s tough in making PFP work for job boards is that the exposure from being posted on a job board may not always directly, immediately translate to an application or a hire. A click on a job post today might result in awareness of the employer, a candidate following them for a year, and finally applying for a totally different job.

    Another issue is, if a job post sends the applicant to some labyrinthine ATS on the employer’s career page, and then he/she abandons the application, does the job board still get paid? In such a scenario, the problem lies with the employer, not the job board. A pay-per-click model accommodates for that kind of situation, but a pay-per-applicant doesn’t.

    @Rob – So you only paid for the candidate you hired? It’s almost a recruiting model in that sense, then.

    Pay for performance in that sense gets tricky, because what if you didn’t hire an applicant on *that* job, but wind up hiring them for a different role down the line? You’ve still gained the value of that hire thanks to that job posting, but the referral isn’t direct, in that sense.

  5. Hi Jeff, if this is the latest post on this topic, is it possible to do a new post? thank you.

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