Changing industry structure in the labor market
Two weeks ago the online social network magnet.me launched its third version. Hundreds of recruiters, students and job-seeking starters got a new interface to connect to each other. In the light of how internet changes an industry structure, I would argue that magnet.me is an excellent example to illustrate this topic.
So how does it work? Students subscribe for the free online network and get access to an environment where they can create a standardized resume and choose the industries where they are interested in. Then their profiles should be launched. After that it’s up to the recruiters. Many companies have a paid account on magnet.me in which they can set preferences of which students they want to connect to. When someone meets the requirements, an invitation is sent and a connection is made. The student gets access to the company’s profile and is able to apply for internships, jobs or other opportunities.
Now here is why the industry structure is changing. In the old days it took weeks to find a relevant vacancy and connect to the relevant recruiter. Large companies had more marketing budget and were therefore much more visible than their smaller competitors. Oral skills were sometimes more important at a job interview than actual accomplishments of applicants. But with the standardization of resumes and the automation of the connection process Porters five forces of industry structure are changed.
Barriers to entry are lower, even small companies can easily connect to potential future employees. Through the standardization of resumes companies are able to select in advance which students are of potential interest and search in there database of connections. Bargaining power of the students is therefore reduced and the threat of substitutes is higher. On the contrary students can easily compare different vacancies and get a good overview of what companies offer in their contracts.
For now magnet.me is only focusing on Dutch students but it is quite logical to think that this kind of networks become available in the future for all kind of segments. I would say it is a step in the good direction, what do you think?