July 24, 2020 – If you haven’t seen concrete, visible signs yet of the turbulence COVID-19 is having on the recruitment market, here’s one: LinkedIn is laying off approximately 960 jobs, or six percent of its workforce, noting that the pandemic is beginning to have a material effect on the demand for its recruitment products. The online employment service that began in 2003 will combine its learning marketing solutions and its talent solutions business into a single entity to eliminate the duplication of internal platforms, systems and tools.
“After weeks of discussion and deliberation, the executive team and I have made the extremely difficult decision to reduce approximately 960 roles, or about six percent of our employee base, across our global sales and talent acquisition organizations,” CEO Ryan Rolandsky said in a recent note to employees. LinkedIn has roughly 15,000 employees. “I’m sharing this news so that everyone has the complete picture of these changes and why we are making them, and I want you to know these are the only layoffs we are planning.”
Mr. Rolandsky said that he had his executive team made each and every decision with compassion, pledging to help impacted employees look for other roles within the company, build new skills and land on their feet if they no longer have a role at LinkedIn. “To continue adapting and accelerating the company like we have been, we need to ensure we are focusing our efforts and resources against our most strategic priorities to set up the company for success today — and well into the future. When we took a hard look at the business, we decided we needed to make some hard calls.”
“These reductions impact our colleagues personally — talented people who have chosen to spend their time and energy working at LinkedIn,” he added. Mr. Rolandsky stepped into LinkedIn’s top role after long-time CEO Jeff Weiner stepped down just five months ago. “When we all chose to join LinkedIn, it was to realize our vision. And parting ways with our colleagues who share this vision is difficult.”
Impact of Recruiters Losing Their Jobs
“The layoffs at LinkedIn are not surprising given the fact that thousands of recruiters have lost their jobs due to COVID-19,” Chris Russell, the managing director of RecTech Media and 20-plus year expert on recruiting technology and job boards, told Forbes. Mr. Russell said that a substantial portion of the social media platform’s revenue is derived from recruiters purchasing pricey subscriptions and job postings. “With fewer recruiters,” he said, “they have less people to sell into right now.”
Downsizings in the job board space have been underway for months — beginning with ZipRecruiter layoffs announced in March. ZipRecruiter, whose advertisements had dominated radio shows and podcasts, laid off almost 500 employees, representing 30 percent of its workforce. At the time, Ian Siegel, the CEO of the job board said, “Our customer base looks like the U.S. economy by size, geography and industry. The U.S. economy is hurting and we regretfully have to do what is necessary to make sure we are there for the great American comeback story to come.”
Moving Into Outplacement
LinkedIn and ZipRecruiter aren’t the only job search and recruiting-oriented platforms to cut staff. The Recruiting News Network (RNN), which focuses on the job search landscape, reported that it “learned from sources within Monster that layoffs are underway, up to eight percent of [its] global workforce of 4,000.” Monster was the old-school, go-to job board in the early days of the internet boom and has since lost its way over the years and ceded market share to LinkedIn.
Search firms themselves have also been reporting difficult times since the pandemic really began to kick into gear this spring. Caldwell reported losses, as did Korn Ferry. That search firm, the world’s largest, is quietly entering a market that would have been unheard of until COVID-19 struck: outplacement. As it laid off and furloughed employees earlier this year, and cut pay for nearly every level of employee within its company, the talent leader was shifting gears. Instead of bringing people into corporate roles, it was tapping into ways to help businesses remove them. Conflicts are expected, according to several well placed sources within the staffing giant. Heidrick & Struggles, another publicly traded recruiting sector leader, is expected to report negative quarterly news on Monday once the markets close.
Microsoft Purchases LinkedIn for $26.2 Billion
Microsoft acquired LinkedIn Corporation for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn’s net cash. LinkedIn retained its distinct brand, culture and independence. As Microsoft president Brad Smith recently shared, Microsoft – inclusive of LinkedIn – can take steps to help people develop new skills online, find new jobs and easily connect and collaborate with colleagues. Technology alone will not solve these challenges, but together, working across private and public sectors, we can create more opportunity for everyone to participate and share in economic growth.
A good amount of LinkedIn’s revenues comes from recruiters who purchase high-priced plans. As the remaining recruiters have less assignments to work on, they’re likely to scale down to less expensive options or elect to use their free version for a while, said recruiters who use the service frequently.
LinkedIn surprisingly posted a 10 percent revenue gain (compared to the same period a year ago) when its parent Microsoft released its number this past Wednesday. LinkedIn usage was up, with professionals watching more of LinkedIn learning content. But, as expected, the COVID-19 crisis-induced weakness in the job market significantly affected bookings in its talent solutions business.
Many would expect record-high traffic on job sites, as there are currently more than 51 million Americans unemployed. However, according to multiple sources, traffic is down across all the major sites. That might suggest that job seekers who may have been seeking employment for four months or longer have started to let up on their job search efforts during the summer. Stay tuned.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media