Reed Exchange…another Talent Puzzle? Good or bad for Agencies and Employers?

For those of you who don’t know the gist of it is this:

1. Employers post jobs anonymously for free

2. Approved recruitment agencies put themselves forward

3. Agencies are selected by Employer based on track record

4. Agencies deliver talent, interviews begin

5. Employers pay only when candidates start

Reed makes its money by taking a % of the agency fee before passing it on.

Reed is following in the footsteps of others most notably Talent Puzzle in the UK and Bounty Jobs in the USA. They are certainly approach this market from a position of strength and the economic timing couldn’t be better but the question is who is going to benefit: Employers, Agencies and/or Reed?

1. Employers get access to Agencies with a measurable track record,

2. Employers control their vendor relationships via a piece of free software,

3. Agencies get access to new work with zero up front cost,

4. Reed collects a % of the agency fee (2% of candidate’s basic salary).

I can see some benefits for Employers and Agencies but these are overshadowed by the way the relationship is enshrined. It reminds me of the relationship between Tesco and its suppliers: the supermarket effectively controls the supply chain and uses this power to control supplier prices.

Recruiters with strong client demand are unlikely to work via a middle man that takes 10+% of their fee (25% in the case of Talent Puzzle) and doesn’t pay out the balance until the rebate period is over.

Employers suffer because they won’t be able to attract the better Recruiters to service their jobs. The one thing working in the Employers favour at the moment is the deteriorating economic picture which may force more Recruiters to consider this option.

However there is another important factor and that is the question of “relationship”. If an Employer engages with a Recruiter in such a way that there is little or no personal contact, no “Consultancy”, no valued professional opinion, the Recruiter will feel devalued and de-motivated.

The fact that  Reed is entering this space suggests it believes it has legs. 

What’s your view?

Mine is that it does not.