How Online Recruiting Changes the Hiring Game

Online recruiting is changing the way employers think about finding good employees and the way employees think about their jobs and their employers. Indeed, the Internet may completely change the way companies manage human resources, says Peter Cappelli, a professor of management at the Wharton School.

For example, says Cappelli, some 18 million resumes are posted just on Monster.com, the largest Internet job site. Monster.com boasts it has almost 500,000 jobs available. With more than 5,000 job boards where resumes and job opportunities are posted, the Internet has become, by far, the most effective way to broadly disseminate information about the availability of jobs and people.

And that’s just the tip of the iceberg. Recruiters who wish to do so can access millions more resumes and biographical data that are posted on the Internet but are not intended for job searches. Take Ed Melia, a consultant with Monster.com. With virtually no effort, says Cappelli, Melia can find the resumes of employees at any company. With another command, Melia can narrow the search to just those with specific skills – 567 individuals at IBM, for example, who have C++ or Java programming skills. These are not people who are looking to change jobs. Their resumes are posted on various web sites for a variety of other reasons. Recruiters can also, as Cappelli describes it, “flip the URL”; that is, follow links back through the web sites and get into a company’s intranet to get lists of employees. The recruiters aren’t hacking into the sites. These sites are legally accessible, but were never intended for outsiders to see.

The yield of such searches is a rich trove of skilled employees who would be excellent recruits – if they were looking for jobs. They are called “passive applicants” in the business – people who aren’t looking for jobs, but might be induced to do so if approached. The Internet has thus become an extremely valuable resource for recruiters to find talented individuals who might be wooed into looking for new jobs. A recent survey by Wetfeet.com, a recruitment management firm, points out that 36% of employees are happy in their current jobs but are also willing to move within six months if something better comes along.

But significant ethical issues are inherent in the ubiquity of this information.

In the heyday of the corporation, there was an implicit contract between employers and employees. Employers received loyalty and conscientious work. In return, employees received job security and a career track. That contract has long been eroding because of such things as layoffs, corporate mergers, or sudden surges in hiring (like the recent dot-com boom), but online recruiting could put the final nail in the coffin.

Cappelli argues that online recruiting merely levels the playing field between employer and employee. “It changes the notion of equity,” says Cappelli. “Issues of fairness, with respect to things like compensation, opportunities, etc. [used to be] all based on internal criteria. Now, increasingly, they are based on external criteria. The rate of pay we [the employer] decided was fair for you used to be based on how long you’ve been with the company, your job title and position within the hierarchy of the company. Now it’s increasingly based on the rate for similar jobs elsewhere, and that’s pretty much it. It makes the balance of power [between employer and employee] much more based on a market relationship rather than on a kind of inside political relationship.”

At the same time, however, online recruiting further erodes loyalty. Before the Internet made so much information available, an employee competed mainly with others in the same firm for raises and promotions. No longer. Today, anyone doing a particular job anywhere is competition. “It’s now so much easier to hire talent on the outside than it was,” Cappelli says. “It’s so much easier to get information about passive applicants that it alters the balance between inside development and outside hiring. It throws everybody into a more open labor market.”

The majority of those who post their resumes on job boards are not actively looking for jobs. “They’re willing to be talked to, but they’re not actively looking,” says Cappelli. “But if something terrific comes up….” The danger is that such postings invite retaliation by employers, which is why some job boards block access by employers to the resumes posted by their own employees. However, such screens cannot block companies or individuals who have been hired by employers to search for resumes posted by their employees. In the tight labor market of recent years, there has been little incentive to search for such postings. Indeed, it might even work in the employee’s favor, if an employer did so, in eliciting incentives not to look elsewhere. But as the economy softens, such simple curiosity might well cost employees their jobs.

There are also issues of privacy in online recruitment, particularly when it comes to the so-called passive applicants. Many companies screen applicants or take job applications online. That’s not surprising, but some companies seed their applications with questions that elicit personal information unbeknownst to the applicant. JP Morgan’s online application, for example, is in the form of a computer game. The answers, says Cappelli, reveal information about interests and attitudes of applicants. Cisco Systems, among other technology companies, offers research facilities like libraries in part to identify and track users to recruit. And some recruiters acquire “passive applicants” by posing questions to user groups and tracing those who answer correctly.

Some of these practices disturb Cappelli. “The bigger privacy issue of online recruiting is when you think you’re playing a game, only they keep score,” he says. “What happens to that information? Who has access to it and how is it used?”

Nevertheless, the rapid growth and cost efficiency of online recruitment is beyond argument, despite the privacy issues. “It’s a general characteristic of the Internet that once anything is put on [it] for any purpose, it is available to anyone for any [other] purpose,” Cappelli says. “That’s the essence of the Internet, you know – that information is free[ly available] and cheap.”

The solution, as with many other aspects of the Internet, is more disclosure. “The technology has gotten way ahead of the ethics,” Cappelli says. “It would be nice if companies would tell people that they are interested in hiring, and that they are using the information you provide online to pitch jobs at you. Or anything at you.”

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