In a currently hot Youtube video which breathlessly evangelizes the revolutionary nature of social networks, I found this statement: "80% of companies are using LinkedIn as their primary tool to find employees". In the comments this is corrected to "80 percent of companies use or are planning to use social networking to find and attract candidates this year", which sounds rather more believable. Social media is where the young people (and, eventually, us in the middle ages as well) are, so that is where you should look.
At the same time, many of the most prolific users of LinkedIn (and, at least according to this guy, Twitter), both in terms of number of contacts and other activities, are headhunters. It is these people’s business to know many people and be able to find someone who matches a company’s demands.
Headhunters are the proverbial networkers – they derive their value from knowing not just many people, but the right people. In particular, headhunters that know people in many places are valuable, because they would then be the only conduit between one group and another. Your network is more valuable the fewer of your contacts are also in contact with each other.
The American sociologist Ronald S. Burt, in his book Structural Holes: The Social Networks of Competition (1992), showed that social capital accrues to those who not only know many people, but have connections across groups. Or, in other words, if everyone had been directly linked, you would have a dense network structure. The fact that we aren’t, means that there are structural holes – hence the term. In the picture to the right, we see a social network of 9 individuals. Person A here derives social capital from being the link two groups that otherwise are only internally connected. A would be an excellent headhunter here. (Much as profits only can be generated if you can locate market imperfections).
LinkedIn is a social networks, indistinguishable from a regular one (i.e., one that is not digitally facilitated) except that you can search across the network, directly up to three levels away, indirectly a bit further. Headhunters like it for this reason, and use it extensively in the early phases of locating a candidate. The trouble is, LinkedIn (not to mention the tendency of more and more people having their CV online on regular websites) makes searching for candidates easy for everyone else as well. In other words – while initially helpful, is the long term result of this searchability that headhunters will no long be necessary.
Search technology – in social networks as well as in general – lowers the transaction cost of finding something. Lower transaction costs favors coordination by markets rather than hierarchy (or, in this case, network). Hence, the value of having a central position in that network should diminish. On the other hand, search technology (in networks in particular) allows you to extend your network, hence increase your social capital. Which effect is stronger remains to be seen.
Anyway, this should make for interesting research. Anyone out there in headhunterland interested in talking to me about their use of these tools?