Professional networking site, LinkedIn, has become an indispensable tool for the recruitment industry, and profoundly changed the way professionals interact and find jobs.
This essay will provide an overview of the platform, and its operations. It will then discuss how its revolutionary business model has aided high unemployment, changed the way recruiters do their jobs and exposed employees to vast opportunities.
LinkedIn is the world’s largest professional networking site designed to connect professionals to make them more productive and successful. Members establish their online profile to connect with those that serve to benefit their career. The platform offers the ability to expand one’s network, increase personal branding, and allows recruiters to attract potential employees (Rosen, 2012, p.131). Membership is free, however, Premium account options are available at different price tiers (Anders, 2015); for those job seekers, sales and talent professionals, and the general professional, who seek extra benefits.
The rapid growth of LinkedIn has created new forms of online labour market intermediation that has profoundly transformed both recruitment and networking processes (Sharone, 2017, p.1). Not only are those who are unemployed reaching out with applications and resumes to employers, but recruiters are actively reaching out to potential candidates they see credible for roles available (Sharon, 2017, p.26). A 2013 study conducted, found that 94 percent of recruiters using social networks to recruit are using LinkedIn (Halzack, 2013). LinkedIn serves as an online resume, where users seek to further their careers by building their connections, searching for jobs and developing their professional selves.
LinkedIn history: the road to 500+ million members
The company was founded in December 2002 by Reid Hoffman and founding team members from PayPal and Socialnet.com, Allen Blue, Eric Ly, Jean-Luc Vaillant and Konstantin Guericke. They worked together to launch LinkedIn on the 5th of May 2003. At the end of the first month, the platform had a total of 4,500 member signups, and after this, growth remained slow (LinkedIn Corporation, 2015). Despite this, LinkedIn was promising enough to attract investment from Sequoia Capital.
The acceleration of LinkedIn was huge, offering innovation through its first business line “Jobs and Subscriptions” in 2005, and introducing new features such as Recommendations and People You May Know (LinkedIn Corporation, 2015). Its growth led to the expansion of the team and opening offices globally. In 2009, key leadership changes were seen, when Jeff Weiner became the CEO of LinkedIn.
The platform saw a transformation in 2012, seeking to make it more applicable for every day use (LinkedIn Corporation, 2015). In 2013, LinkedIn lowered its age of entry, reaching to different demographics to leverage the platform. Today, LinkedIn has over 500 million users, who come from over 200 countries (Darrow, 2017). The platform is continuously growing, with the current rate of two new user accounts being created per second (Lomas, 2013).
From this, LinkedIn’s transformation lies in its social and cultural capabilities. The capacity to manage and benefit from larger social circles is an important outcome of LinkedIn (Smith, 2014), allowing for users to actively cultivate and curate online professional relationships.
The culture of networking has vastly changed with LinkedIn revolutionising job searching (Sharone, 2017, p.8). Those who do not have LinkedIn are almost invisible in the professional sector, with job applications today requiring candidates to provide a link to their LinkedIn profiles.
The Internet has paved way for thriving information infrastructures to come about (Gillespie et al., 2014), evidenced through feature adoptions on LinkedIn. The LinkedIn profile is the most important feature offered, defining who the individual is and what they are looking for (Olsen, 2008, p.6). The ability to not only explore job vacancies, but also impress those in their network through blogging, and sharing information (Carter, 2012) creates value for the user.
The insider scoop: LinkedIn’s business model
In 2016, LinkedIn was acquired by Microsoft for approximately $26.2 billion. Microsoft hopes to combine its assets and scalability with the members of LinkedIn, creating new and intelligent experiences for customers (S. Nadella, personal communication, June 13, 2016). LinkedIn operates on a “freemium” business model, with its main services being free. However, it also offers a premium service with extra features.
The business model is organised around four pillars which include:
- Talent Solutions – allows enterprises and professional organisations to identify and acquire the right talent for their needs. This is offered through LinkedIn Recruiter, advanced searches, InMail service and talent pipeline management.
- Learning and Development – this is subscription based, giving members access to thousands of professional courses.
- Marketing Solutions – allows businesses to advertise their products or services through sponsored updates, LinkedIn advertisements, sponsored InMail, and display advertisements.
- Premium Subscriptions – provides users with additional search filters, the ability to screen all profiles, do reference searches, and more.
Its business model has four customer segments, with each segment offering unique value propositions. The segments consist of:
- Regular users – those who use the site for free to develop their own personal brand and build a network of contacts.
- Premium users – subscribe to the platform and seek additional features to boost their employability and networks.
- Recruitment professionals – use premium services to search for potential employees.
- Advertising professionals – pay to use LinkedIn as an advertising platform.
The revenue LinkedIn attains comes from Talent Solutions, Premium Subscriptions and Marketing Solutions. LinkedIn’s largest operating segment is its Talent Solutions business, making up about 62% of revenue (Niu, 2015), offering LinkedIn Recruiter, Job Slots and LinkedIn Career Pages. Another 19% of revenue comes from Premium Subscriptions, wherein users pay fees for greater resources, with the intention to access career and networking services. Finally, 19% of LinkedIn’s revenue comes from its marketing and advertising business.
LinkedIn’s internet ecology
LinkedIn is the world’s largest professional network (LinkedIn Corporation, 2018a), offering the public with an essential service that helps connect job seekers and prospective employers. The platform proves to be a sweet spot of digital commerce, intending to combat high unemployment rates and works to expose employees to vast opportunities.
For the user, both the website and mobile app are used to access LinkedIn. These interfaces are efficient and user-friendly to ensure that users continue to engage with the platform. The platform is dependent on all customer segments to contribute as suppliers, through recruitment, messaging, writing articles, engaging with users or advertising (Carter, 2012).
The Internet is seeing broader social transformations, with individual and group actors coming together to LinkedIn to shape common action, and fill the gaps of social texture (Couldry, 2015, p.613). Resources such as data sets, platform designs and images, can be shared more effectively and efficiently (Couldry, 2015, p.616), which become key in understanding how activities are undergone to achieve a desired result.
LinkedIn’s channel for recruitment products is field sales, with its services being promoted and advertised to recruiters globally (Cleverism, 2018). To maximise the value of LinkedIn products, LinkedIn works with Talent Solutions partners to deliver recruiting integrations. Partners include Workday, Kenexa, Lever, and more. Additionally, the LinkedIn Marketing Partner Program (LinkedIn Corporation, 2018b) is important in improving campaign performance, with partners specialising in advertising technology, media buying, marketing analytics, audience management, content marketing and community management. Some partners include OpenDNS, Hired and Lenovo.
Despite LinkedIn being the largest and most advantageous social networking tool for working professionals and recruiters (The Muse, 2012), it faces competition from Viadeo and Xing. French company, Viadeo, is the world’s second largest social network, with over 65 million users and a focus on smaller businesses of emerging markets (Jarry, 2017). Xing, is the largest business network in German-speaking countries, with over 12.75 million members in its core German market (Top Dog Social Media, 2018). Xing’s success has resulted from LinkedIn’s failure to adapt to the culture and sensibilities of German people (Top Dog Social Media, 2018), allowing for professionals to connect with one another, find partners, and generate business ideas.
Indirect competition comes from Facebook and Twitter. When sourcing candidates, Facebook and Twitter are used to showcase the employer brand, to post advertisements and find referrals (Koch et al., 2018, p.5).
In an attempt to steal LinkedIn’s market share, Facebook launched Workplace, a subscription based service for employees to share projects and communicate. Its new Jobs Dashboard, also poses a threat to LinkedIn, given Facebook’s wider reach (Constine, 2018). Facebook’s challenge lies in convincing users that it can bridge the gap between personal and professional lives.
This competition highlights how professional networking sites are scaling, and transforming the way people interact and share information for professional purposes. These platforms are transforming the world of recruitment, self-promotion and career networking (Barnett, 2010).
The rising popularity of LinkedIn, means that it needs to become more resilient to support the customer experience (Bae, 2017). LinkedIn users enter into a Data Processing Agreement, committed to respecting the privacy rights and data collection of its users (LinkedIn Confidential and Proprietary, 2018). Australians are concerned about their privacy online, taking steps to protect their privacy and changing social media settings (Goggin et al., 2017).
LinkedIn’s European data protection law, the General Data Protection Regulation, helps ensure that all members benefit from increased control and clarity over personal data. Hence, LinkedIn should work closely with the Australian government, to put safeguards into place to ensure that the data and privacy of users is protected.
Below is a diagram of LinkedIn’s internet ecology:
LinkedIn and the transformations made possible by the Internet
Given that the Internet involves applications, content, services and interaction (Abbate, 2017, p.10), it has seamlessly paved way for the domination of LinkedIn. The platform has contributed to an alteration in which individuals interact, and has introduced innovative ways that have seen a mobilisation of recruitment methods.
These days, networking goes beyond face-to-face conversation, attending networking events and collecting business cards. The social capabilities of LinkedIn’s features allow users to connect with others and grow their network to a size that maximises professional opportunities (Rosen, 2012, p.130).
Users choose to be open or strategic networkers. Open networkers connect with members whether or not they have had a previous business relationship, and strategic networkers are those who connect to people they know or can be introduced to (Rosen, 2012, p.130-1). Growing both types of networks are dependent on the network size one is most comfortable with (Abbate, 2017, p.10), highlighting that the Internet transformation is one of freedom and flexibility.
Both the Internet and LinkedIn have been key drivers in recruitment processes, through the development of new sourcing tools and the effective use of technology (Koch et al., 2018, p.4). These new means have been innovative sourcing channels, with key advantages being quality, cost and availability (Koch et al., 2018, p.4).
The increasing amount of information available on the Internet, has seen the emergence of the attention economy (Havalais, 2013). LinkedIn presents employees with an overwhelming amount of job openings, increases competition amongst recruiters, and also results in employers sifting through endless applications and candidate profiles. As a result, both employers and employees need to allocate their attention efficiently (Havalais, 2013) amongst the overabundance of information.
LinkedIn has created a distinct change in employees’ attitudes towards work, with employers searching for the most qualified passive candidates, and attempting to convince them on new roles on offer (Koch et al., 2018, p.2). These poaching means result in employees changing jobs more regularly than in the past due to constant opportunity.
Competition for talent is increasing globally, with organisations’ seeking to attract and preserve ambitious individuals (Koch et al., 2018, p.2). The wide exposure made available through LinkedIn, blurs the boundaries between public and private. Users feel the pressure and anxieties (Sharone, 2017, p.11) associated with self-representation on the platform, and strategically curate profiles with false information. This has resulted in unethical user engagement (Koch et al., 2018, p.5), to appeal to industry professionals in a competitive marketplace.
Given this transformation, the sourcing opportunities offered by social media to recruiters, should not be mistaken for a full recruitment strategy (Koch et al., 2018, p.5). Instead, the endless opportunities, and ability to present oneself for all to see, aids recruiters in identifying potential candidates and facilitating the progression of one’s career.
Whilst LinkedIn offers various sourcing opportunities for recruiters, traditional recruitment methods remain prevalent. LinkedIn is used to supplement the processes undertaken by recruiters, turning passive candidates into active candidates (Koch et al., 2018, p.5). Identification on LinkedIn and various social networking sites are now a part of recruitment processes.
The platform presents challenges to recruiters, with the sourcing process adding a large volume of work (Koch et al., 2018, p.11), that involves appraising a high number of profiles. Thus, with the bulk of interactions migrating to online spaces, the architecture of LinkedIn and its visibility, highlight the role that professional networking sites play in mediating with the labour market.
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