Porter’s five forces model view of the job board industry
Taught in every MBA course, Michael Porter’s Five Forces model is a useful tool to make sense of the competitive environment of a particular industry. By mapping the various forces influencing an industry, Porter’s model helps in assessing the attractiveness (profitability) of a market and the planning of corporate strategy.
Whether you are a job board operator, a recruitment agency, an ATS provider or a consulting firm, the Five Forces model is a quick and useful framework to assess competitors, threats and opportunities. For example, the competitive environment of job boards can be briefly illustrated by using Porter’s model (refer chart)
(note: The deeper the red arrow is pushed inside the square box the more influential the competitive force)
Currently, the jostling for larger market share is the dominant force (box 1) dictating the job board industry in Australia. With close to 300 job boards competing for a slice of the revenue pie, rivalry is intense. Job board technology is available freely, barriers to market entry is almost nil. Every month a new job board sprouts up, while another vanish into obscurity. Brand name is a powerful differentiator in the job board industry. It is tough for a new entrant to make a mark. New entrants will not cease, but they are unlikely to be a major force (box 4).
There is currently a lot of noise and debate around box 5. Are social networks emerging as a substitute to job boards? What about Internet sourcing? Recruitment firms? Linkedin? Resume database? Free classifieds players? Online referrals? Without doubt the threat from ‘substitute service providers’ is a major force dictating competition in the industry. How incumbents react to substitute providers often varies, some embrace change, some deny it, some fight it. We will see a lot more activity in this space, including redefining what a job board is.
Advertisers (box 2), both recruiters and employers, wield enormous power in the current environment. Advertisers are more discerning and rates are under pressure (we are seeing a lot of freebies lately). Advertisers have all the bargaining power, but will flock wherever candidates go; reaching out with whatever tools are available and effective.From where I sit, box 3 is the key force. I think candidates wield enormous power and it is increasing by the day. The options and opportunities for job seekers to find employers are increasing by the day. The fortune of many players will be dictated by whether candidates reject them or not. In summary, I think job boards ought to pay attention, in order of importance, to box 3, 5, 2, 1 and 4. What do you think?
(note: In the coming days, I’ll explore each forces in greater details. I will also include a framework for the recruitment industry. Also, check out Job Board Landscape)
Good article about new job board technologoes from the wall street journal a few days back –
http://online.wsj.com/article/SB10001424052970204475004574126832685403014.html
The latest Neilsen traffic figures which show the top two players at an all time traffic high. Don’t have access to the hard data that some of the ATS providers have, but I think you’ll find applications per job ad on job boards are the highest they have ever been in history at the moment. This data probably doesn’t support your thesis that number three is the weakest link here. Probably the metric you’re looking for is ‘exclusive audience’ rather than ‘audience’ – hard to measure in the social arena, but it doesn’t look like there’s a migration to social or other experimental models at the expense of job boards which ever way you look at it.