The mistrusted recruitment industry will be disrupted by the sharing economy, so MBAs’ candidate recommendations will be valued highly by their organisations, argues Juliet Eccleston
Earlier this year, Harvard Business Review reported that fewer than half of the people it surveyed globally said they could trust business, media, government and non-government organisations – and that even includes charities. Conversely, 60% of respondents agreed that you can trust ‘a person like yourself’ – a figure on a par with confidence in a technical expert or an academic.
It’s clear that people are more likely to believe their peers’ appraisals – that is, fellow users of products and services – than those with a vested interest in endorsement. For this reason, peer-to-peer recommendations and reviews, such as those TripAdvisor and Amazon have become a critical way for individuals to decide whether to trust a business. In fact, one recent study from BOXT, an online boiler business, found that eight out of 10 millennials won’t purchase anything without reading reviews first.
This trend has translated into the sharing economy. Platforms such as Uber, Airbnb and Purplebricks, a British online estate agent, are booming because they get rid of intermediaries such as estate and travel agents, and allow users to deal directly with each other in a way that seems more transparent and honest. Instead of suppliers trying to persuade customers that the service provided will be impressive, individuals can rely on the star ratings and reviews provided by verified users of the platforms. This gives them an authenticity that doesn’t come from entirely anonymous reviews which can be submitted by anyone, including people who aren’t customers or who may be competitors.
‘People are more likely to believe their peers’ appraisals’
Of course, trust is vital in the sharing economy and star ratings alone aren’t enough to provide peace of mind to users of certain platforms. For example, there’s an arguable element of risk in getting into a stranger’s car or allowing people to stay in your home. This means that businesses operating in this space have to have checks to provide customers with greater peace of mind.
Uber, for example, now ensures that every UK driver using its app goes through a licensing process with their local authority, which includes a background check. Also, user privacy is vital: businesses can’t risk their reputations by being careless with the information that customers entrust, so it’s important that they are transparent about what information they are holding, what they are doing with it and, in line with the new GDPR regulations, that people have recourse to stop being contacted if that’s what they want. I’d say that the future of the sharing economy is dependent on this trust and new entrants to the field need to build transparency into their business strategy from the beginning.
However, there is one notoriously mistrusted industry which is ripe for disruption by the sharing economy and peer-to-peer recommendations: recruitment. In my 20 years as a programme director, I worked on a number of large-scale change programmes which necessitated hiring a number of professionals to help with delivery.
My experience of the traditional hiring process was predominantly negative. I was presented with applicants that I could see didn’t come close to matching my requirements, yet recruiters tried to convince me that the shortlisted candidates would be perfect. I was charged exorbitant fees for very little value in return. The agencies lacked honesty, transparency and integrity.
And it’s not just me. I recently conducted research which reveals that almost half (49%) of professionals have average-to-low trust in recruiters. By contrast, an overwhelming 95% of those surveyed stated that they would be more likely to apply for a role if it was recommended to them by a peer rather than a recruiter. Again, the evidence shows that people are more likely to trust someone who has worked for an organisation to tell them exactly what it’s like than a recruiter who is earning a commission for filling the role. An endorsement from a past or present employee is priceless, which explains the popularity of anonymous employee review platform, Glassdoor.
‘Almost half (49%) of professionals have average-to-low trust in recruiters’
Given that the core of every business is its talent, finding the right people is vital. It’s only logical that businesses are much more likely to find a good fit if the individual they hire comes recommended by someone who already knows them in a professional capacity. And it’s here that MBAs have a distinct advantage.
Using wider networks
Typically, well-connected MBAs can use this to their advantage when either hiring or looking for opportunities themselves. Their wide networks are a powerful and effective way to source individuals who would be perfect for opportunities in their own businesses. It’s simply a case of asking if anybody knows of a suitable person. And, because recommendations made this way are personal and come from people within the list of professional contacts that MBAs have built, it engenders the trust that is so important.
As the co-founder of a peer-review platform, AnyGood?, which enables well-connected individuals to recommend people that they know for roles, I’ve contemplated the best way to get professionals on board and encourage them to actively endorse people in their networks. I think it’s logical that people are more likely to use platforms and leave reviews for other users if there’s something in it for them.
Our incentive is to pay a finder’s fee to anyone that refers an individual who is later hired. It works and I think it’s because people are much more likely to trust a platform that’s willing to share its commercial gain with its own members. It’s certainly a better option for a business to reward someone for helping them find the right candidate than it is to pay an inflated fee to a recruiter who may not be open and honest. And, given that the sharing economy is about distributing resources between individuals, it makes sense.
Other businesses might offer different incentives for leaving reviews, such as discounts on orders or perhaps a free taxi trip up to a certain value. However, it’s still important to make sure people aren’t endorsing a service simply to get a reward. With my business model, nobody receives one just for putting a name forward. We also ask hiring managers to rate the quality of the suggestions that were made. The overall process of recommendation, rating and reward is transparent and means that there’s trust among all stakeholders. That’s what businesses in the sharing economy need to have if they are to survive.
I’ve just launched a campaign to highlight the trust issue in traditional recruitment and I am outspoken in my belief that it’s time for businesses to replace their use of agencies in favour of a sharing economy model, which is a more dependable, transparent way to hire. We’ve already seen the sharing economy successfully disrupt the travel, hospitality and estate sectors, and I think people’s lack of faith in recruiters will mean that the hiring industry will be the next to feel the impact.
It’s going to be really interesting to see which other sectors will be affected by this rising trend. Importantly, I think it’s going to be driven by consumers’ growing demand for businesses and services which they feel are trustworthy and ethical. Without a doubt, platforms operating in the sharing economy also need to make sure that they have the necessary checks and balances in place to provide that reassurance for all of their stakeholders.
‘Given that the core of every business is its talent, finding the right people is vital’