Here’s a smart piece from exactly 10 years ago. At the time, we were facing serious labor shortages as the dot com thing exploded. While the thinking about labor supplies has certainly changed, the fundamental point of the article continues to be valid.

Tools wear out.

The competitive advantage accorded to early adopters (when they aren’t busy being fooled by their own enthusiasm) is not a permanent improvement. The people who are making hay today with social media are not generating repeatable results. Rather, they are benefiting from the fact that they are ahead of their time.

The question of whether social media has long term recruiting relevance remains unsettled.

As pragmatists, we have little time for questions like “Why”. The academic arena concerns itself with “Why” while those of us charged with running businesses are better served with questions like “How”, “When”, “Where”, “Who”, “What”, “If” and “Whether”. “Why” is usually better left in the hands of a company’s founder. It tends to disrupt the workflow. If it has to be addressed, “Why” belongs to strategic planning and budget processes. It’s not really a democratic question.

The “How of it” is simple. As we mentioned in our last article, all tools degrade in effectiveness in a shortage driven marketplace. A prudent manager (or recruiter) must constantly search for new weapons while polishing skills on the current set. As more customers discover a given tool, its ability to generate results declines.

To reiterate, it’s an arms race.

The underlying reasons are simple and combine basic mathematics with first mover advantage.

When a new service or form of service opens its doors for business, it introduces novelty into a niche. In the early days of job boards, it was not unusual for a customer to receive 125 valid responses to a job opening. The ratio of jobs available to online candidates was skewed in favor of jobs.

As word of the successes of very early adopters spreads (that’s what marketing and sales forces do), more customers join the fray. This increases the number of jobs in the mix and effectively reduces the likelihood that a given job will get a match. Three years into the job board business, the problem was too many non-qualified candidates. Quantity was declining, but quality declined at a faster rate.

Ultimately, the effectiveness of a given tool settles at a market rate. With 70,000,000 job ‘postings’, it’s little surprise that current results are so low. A company that posts a single job to the internet risks receiving no valid responses. Targeted carpet bombing services (like those offered by RecruitUSA) offset the risk but are vulnerable to the same dynamics.

As each niche opens up, the same trend seems to take place. So, early users of the ‘left handed astrophysicists career board’ should expect better results than later users. Even the tiny niches will settle into a predictable delivery of a results stream, however.

This basic trend extends to every new addition of the arsenal. Today is a very good time to be using free agent sites. It’s a great time for referral networks and placing computers in the homes of every employee. On the other hand, you can tell from the AIRS moves into diversification that the desktop based candidate acquisition programs (like our Seminar in a Box) are beginning to show the same declining effectiveness.

It doesn’t mean that the tools don’t work. It just means that there are very real limits to the ultimate utility of a given tool. Knowing that tools are subject to decreasing relative effectiveness should be the source of strategic inspiration. Having a function dedicated to the discovery of new tools as they emerge is critical to maintaining a competitive edge in the marketplace for candidates.

Not getting this simple principle is the reason that so many CDI employees are watching their stock holdings erode. It’s at the root of the massive decline in staffing company valuations. It’s the barrier that new entrants have to figure out.

It’s also a platform for real marketing success. Imagine the success of the player who figures out how to reverse this trend for its customers.