SmashFly, the war for talent and the market for re-imagined recruiting solutions

Profile picture for user brianssommer By Brian Sommer July 1, 2019
Summary:
SmashFly's recent user conference reminds us how new the Recruitment Marketing space still is and also shows what innovative CHRO’s are pondering now and next. 

HR

SmashFly is a 12-year old HR software firm. It pioneered a concept, Recruitment Marketing, that married some of the best practices in marketing (e.g., funnels, pipeline management, etc.) with new process concepts in recruiting. Its solutions have helped 100+ firms materially improve the quality, quantity and velocity of job applicants they attract. 25 of those customers are Fortune 500 firms.  Last week, I caught their user conference.

To sit in a SmashFly Transform User Conference is a really cool and different experience. These events are more of a meeting of smart CHROs than a user conference. The focus is on actionable content not flash or vague futuristic vendor promises. At SmashFly Transform, you’re surrounded by a bunch of cutting-edge practitioners who use a greater than average number of new, cutting HR technologies. They are a different demographic and what they’re thinking can become the new norm in HR.

What you learn at Transform are:

  • What radically redesigned Recruiting processes look like
  • What the best HR leaders are focusing on beyond recruiting
  • What HR leaders spend time on (i.e., the strategic, high value items) and what they have under control (but other firms don’t)
  • Where HR processes and technology must go

The Infinity Loop

An anchor slide that many presenters referenced at this event was this loop graphic:

smashfly slide

 

Photo copyright 2019 – TechVentive, Inc.

The infinity loop should be viewed in two pieces. The first five steps (on the left) address how firms can do a better job of marketing to job seekers and closing them with a high degree of success. This is SmashFly’s forte. The next four steps are on the right side of the loop. This part of the loop addresses what companies must do to take a new hire and turn them into advocates for the firm. These advocates create the environment that attracts ever greater numbers of solid candidates to the firm.

Companies today have to focus on TWO business problems if they want to have any chance of winning the war for talent. They need to fill the vacancies they have AND they have to retain all of the talent they have today. Each of these business problems has its unique issues though.

To fill vacancies, companies need a more enlightened and relevant way to source, cultivate and close potential jobseekers. Simply posting undifferentiated ads on job boards just won’t cut it.  People, and that’s what jobseekers are, want to be courted, educated and desired. They want a firm to pursue them. They want to be romanced and they’re done with an employer only seeing them as an undifferentiated, unimportant thing.

It is for this reason that candidate recruiting management/candidate relationship marketing (CRM) is a big deal with progressive firms. CRM treats potential jobseekers as people who want to learn more about the employer and provides them with access to people, content and more at each stop along the recruitment journey.  This is a market SmashFly pioneered.

The second business problem is a lot harder to do well because it requires a lot of support from groups beyond HR – in fact, it requires the effort of most everyone in the firm. (More on this below).

Interestingly, there’s also a third business problem these Transform attendees are having to solve: delivering outsized growth. Boards of directors want companies to grow in ways that are far more aggressive than mere GDP or cost of living growth rates. For CHRO’s struggling to fill existing open positions, they will fail trying to fill the positions tied to outsized growth needs. And for some firms, the additional job losses due to the record number of retirements of baby boomers will only exacerbate this issue.

CRM helps with some of this issue. What else is needed?

Beyond CRM

CRM is becoming mainstream. It’s gone from a novel, pioneering concept a few years back to something that many CHRO’s expect today from leading HR technology providers. Unfortunately, many of the large HR application suites only provide cursory CRM capabilities or these must be separately acquired via a partnership with someone like SmashFly, Beamery or Jibe.

With CRM moving to a mainstream recruiting/talent acquisition solution requirement, then what will be the next strategic area that CHRO’s will focus on? They’ll start looking at the right side of that loop. It’s the right side where the attention is creating great employment brands and the processes that increase retention of existing employees. It is intended to make the employer a more powerful lure for potential new hires.

To win on the right side of the loop, CHROs will adjust cultures, work conditions, benefits, etc. to craft a unique work/value proposition that resonates with the potential workforce of tomorrow. They’ll also explore what can be done to make work more engaging and enjoyable. They’ll want to know what it will take to make their firm a best place to work at. And, they’ll want to see those Glassdoor rankings go way up.

But, that right half of the infinity loop is challenging. I heard several speakers describe how they were creating an employment brand to complement the recruiting brand/experience they designed for the left half of the loop. Other speakers mentioned engagement and other projects. These are noble causes but they have their challenges.

Creating an employment brand or a more engaged workforce requires everyone’s support. One bad line manager can invalidate all the work (and best intents) of a CHRO that wants to change the company’s culture, work ethos or how work is actually accomplished. In fact, HR can’t change how people do their work as this generally falls within Operations’ purview not HR.  Culture change is not a one-person effort – it is, not to overuse this word, transformational and affects the entire enterprise. And, transformations are tough to pull off.

Suppose a CHRO wants to make the culture one that’s inclusive, diverse, welcoming and open to rapid advancement?  If a less-than-enlightened Sales Director wants to keep his/her best people right where they’re at, fearful of termination if they miss their quota by only a few bucks, etc., then the culture change goals won’t be met. Changing culture must start at the top and get a lot of reinforcement.

Culture changes don’t happen by edict/mandate and they don’t happen overnight either. A single piece of technology is unlikely to make this change happen quickly either.

Culture changes also have to be all encompassing. I know of one technology vendor whose CHRO has launched a big culture change and employment rebranding effort. Unfortunately, she has chosen to implement the changes in a limited fashion. Only the headquarters staff get a lot of the new perks (e.g., upgraded meal options, day care, etc.). Field consultants and sales professionals won’t. Only the headquarters staff get invited to a company picnic, get new branding t-shirts, etc. Remote personnel will not. I could go on and on. Worse, the top executives have carved out a niche club for themselves. They don’t interact with other staff – only each other – and, get this, the CHRO is part of that exclusive group! That culture change is going nowhere because it’s not genuine and not inclusive.

One memo won’t change a culture. Neither will a video of glorious leader the CEO exhorting the changes. I’ve also seen companies try to change the culture via a new logo, new corporate name and other efforts. All of these are visual markers of some executive’s intent re: culture change. They don’t reflect the hard work that’s required to actually make the cultural change stick.  That’s right – intent and hard work are not interchangeable terms.

When culture is a priority for top executives, they do things that are visible, get discussed and represent a clear break from the past. I’ve seen some executives publicly walked out of a firm because they said they’d behave differently towards subordinates but actually practiced their old, familiar and now obsolete behaviors. Sometimes some people have to be let go because they either can’t change or won’t change. The greater the desired cultural change, the more of an impact it has on individuals. No initiative that requires cultural change can be complete without serious thought given to work that will be required to educate and reinforce specific behaviors as well as how resistive people will be handled.

Left/right loop differences

I was struck by the observation that HR leaders focused on the left-side activities were looking at ways to take a functioning recruiting function and making it a top performing HR process (i.e., process excellence). These activities were all about process improvement or process reimagining of the Recruiting function.

In contrast, those executives focusing on the right-side activities were looking at a transformational effort. The difference between these two efforts is substantial. Implementing CRM is something that could be initiated by HR/Recruiting and completed by them as well. In fact, most of the impact of a new CRM solution would be felt by HR/Recruiting personnel. Changing culture or the employment brand, on the other hand, is enterprise-wide in scope and would, by default, need the full and complete support of the CEO and other top executives if it is to succeed.

This is a powerful point regarding these two types of changes. HR executives would do well to fully understand the implications of each and what would be required to make these initiatives a full success.

Back to SmashFly

SmashFly’s customer base is a case study in Geoffrey Moore’s technology adoption lifecycle. Geoff identified 5 kinds of tech buyers in his first book, Crossing the Chasm. These buyers included:

  • Innovators (i.e., the very first companies to acquire a new technology. Price or risk don’t matter much to these buyers as they are looking for tools that could provide early competitive advantage.)
  • Early Adopters (i.e., like the innovators except that they might not be the very first to acquire the new tech)
  • Early Majority (i.e., a large percentage of tech buyers who want to acquire newish tech that’s been vetted by a number of firms already and can be sourced from an emerging market leader)
  • Late Majority (i.e., another large group of tech buyers who don’t always buy the latest, hot stuff but rather value lower cost, proven solutions. They also have a low risk tolerance.)
  • Laggards (i.e., the kind of tech buyer that loves a really deeply discounted product even if the technology has been out forever.)

In my opinion, SmashFly has a number of Innovator/Early Adopter types. SmashFly originally attracted real pioneers in the recruiting world as customers. Today, the firm may be attracting more Early Majority buyers as the CRM concept is going more mainstream.

When I chatted with a table full of customers at lunch at Transform, I asked what each firm was using as its core HR/HCM solution. No surprise that most of them were Workday customers (another firm with a lot of Early Majority HR solution buyers). One user did have Ultimate and another had SuccessFactors.

When I asked them what other innovative technologies these customers used in Recruiting, I got several replies re: video interviewing (HireVue was the most common response).

SmashFly has been successful courting these early technology buyers but what happens when the CRM market goes wildly mainstream?

My take

SmashFly has an enviable customer base. It also has a lot of runway in front of it as the CRM space is still only lightly penetrated. I would estimate that SmashFly and its competitors have barely scratched the potential market for CRM and have captured less than 5% of the addressable market. There is still a lot of market upside for SmashFly to pursue.

Old-school HR/HCM software firms must enter the CRM space as their older Recruiting functionality lacks this modern capability and process design.  Competitive pressure will drive this activity. To do so, they’ll either build it organically (this is time-consuming and expensive), ally with a firm like SmashFly, or, acquire a company with CRM capabilities.

SmashFly could also expand its product offering and, in doing so, build a bigger moat around its flagship products. My counsel to SmashFly, should they pursue this avenue of expansion, would be to develop new modules with an equally radical process design. Alternatively, I’m not sure that building new modules for the right half of that loop will create apps that get wide acceptance as the projects using those solutions will be difficult to make a success.

However, SmashFly doesn’t have everything for the left side, yet. Many SmashFly customers I met with are using LinkedIn and Entelo to provide a lot of the leads for the top of their Recruiting funnel. If SmashFly’s venture backers were so inclined, they could buy big data/analytics firm Entelo to create a more powerful Recruiting solution. There are lots of other advanced technologies out there, too. Building a bigger Recruiting suite could create accretive opportunities almost immediately.

Structurally, the big question is: Will CRM remain a standalone market segment or will this functionality be subsumed into more broader Recruiting and/or HR solution suites? Given decades of watching niche, best of breed application functionality get absorbed into ever larger suites (e.g., finance, HR and MRP became parts of ERP suites), I suspect CRM won’t remain a standalone market forever.  In fact, this month’s deal where iCIMS acquired Jibe follows this exact trajectory.

This space and SmashFly will remain interesting for some time….