I wanted to follow-up on Dave’s discussion yesterday by demonstrating how the principle of measurement has worked in our business.
As many of you know, I’m the Managing Director of Tidemark. Tidemark is a recruitment process outsourcing company that specializes in sourcing large numbers of candidates for high volume hiring applications. In simple terms, we’re hired to help companies develop a consistent and predictable flow of candidates.
We use many different tools to accomplish this task for a company, and we find that each application needs customization to produce the best results. However, one tool we commonly use is the traditional job board. 
There are more than 40,000 job boards on the internet today. The general business model for a job board is to charge a fee to “list” a job on their website. Successful job boards drive a lot of traffic to their sites, and the jobs on the high-traffic sites get viewed by more potential candidates. Theoretically, the price of a job posting on a particular site is related to the traffic a job board can garner. Higher traffic—higher cost per job.
But, reality does not always match the theory. In a business arena where it is difficult to measure and verify common metrics such as internet traffic, it is to our advantage to dig deeper. We advertise very specific jobs in very specific industries. We have an interest in what kind of traffic can be generated to our specific jobs. We also have an interest in knowing how many people viewing our jobs actually turn into applicants.
Although there are a number of other factors that cause results, we eventually boil down this process (from a job board perspective) to a single metric: “advertising cost per applicant.” With this metric we now have a negotiating platform that is based on solid data and reality—our reality.
Over time, we’ve been able to collect data from more than 20 metropolitan areas and track issues such as seasonality, changes in the job market in the industries where we source, and even revenue flowing into our client’s industries. But, everything still filters down to the “advertising cost per applicant” metric.
With this metric in hand, we’re able to cut through the sales and marketing rhetoric offered by a job board as a way to justifying pricing. We question the job board on a very specific issue: can the job board produce enough candidates to support the price that they are suggesting we pay? If their competitors can produce results at a certain “cost per applicant” for our application, doesn’t it make sense that this vendor should be able to meet the same metric? If they can’t meet this standard, they need to lower their prices to meet their competitors—that only makes sense.
In this process, we’re not trying to disparage the vendor; we’re just helping both sides to see the true value of the service for our unique application. Through this process, we’ve saved our clients tens of thousands of dollars in advertising expenses. Tomorrow, I’ll share a specific example of how a negotiation was done with a particular vendor. It will help clarify the concept if I run through an example.
Of course, most of you are not in the recruitment process outsourcing business, so what worked in our business will not directly apply to what you’re doing. But, don’t miss the principle:
Every business process has points of measurement that can be identified and then optimized.
What are the measurement points in your business? If nothing comes to mind, that’s a red flag! If you do have measurement points identified, are they the right ones? In some cases, metrics are overcome by events and need to be adjusted to match a new reality. It may be worth the time to take an inventory of one your business processes and see what can and needs to be measured.
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