Five lessons from the Glassdoor acquisition

In what is both one of the bigger tech acquisitions and recruitment stories of the year, the Japanese firm Recruit Holdings is set to buy Glassdoor in a deal worth $1.2bn. The buyer, which also owns recruitment site, will gain access to a vast database of employee reviews, salary data and a huge volume of active job seekers. Glassdoor is also the second-largest job site in the US – the largest being Indeed – so the synergies are obvious, especially if the new owner opts to further integrate the two sites. Whether this justifies the gigantic valuation is another question entirely – the barrier to entry for new rivals doesn’t seem especially high to me, leaving the sector very open to further disruption. But Glassdoor, which has 30m members worldwide, is already growing faster than LinkedIn, Indeed and Monster, so what lessons can employers learn from it?

Culture matters
This shouldn’t be news to anyone – companies constantly bang on about how great their office culture is, although it’s not always obvious that their employees agree. We’ve talked about this before and it’s not become any less important in the intervening time, especially because:

Your treatment of your employees affects your brand
This should be a no-brainer, but for too long the common assumption was that what went on behind office doors was unlikely to affect the perception of a company in the wider world. Now, with a higher level of transparency than ever, the absolute reverse is true. A large number of terrible Glassdoor reviews is likely to indicate a high level of staff turnover and make it harder to recruit good replacements than ever before. And it’s not just about Glassdoor, as anyone familiar with the recent travails of Vice and Uber will tell you. This means…

Recruiting the right managers is more important than ever
Most companies of sufficient scale are likely to generate a few bad reviews from disgruntled employees, but some managers create more disgruntled employees than others. It’s impossible to tell from even the best CVs what someone is like as a manager of people – for that, you need proper referencing and good, open interview questions, assessing values as well as core competencies. If a candidate knows exactly what you want from a manager, they’ll tell you what they think you want to hear. If they don’t, they’re more likely to tell you what they really think.

Candidates know what they’re worth
Glassdoor collects a vast amount of salary data, readily accessible to jobseekers who are able to do a lot more due diligence than they used to. This means they increasingly know their market value, making it harder for hiring managers to get away with offering as little as they can get away with. Meanwhile, paltry pay increases and low potential for development tend to feature prominently in negative reviews. Our advice to clients has always been not to lowball candidates, and instead to make offers that are genuinely attractive to them, and that’s even more true now.

Job boards remain a blunt instrument
I’ve lost count of the number of business leaders (both clients and otherwise) who have told me they’ve put up adverts on LinkedIn, Reed or Monster and received a vast number of responses, all of which turn out to be completely irrelevant. Advertising tends to get you the best of the unhappy, the unqualified and the unemployed, and a lot of the best people just won’t see it. And a bad or indifferent Glassdoor review may stop them applying altogether, or see them withdraw interest at a later date. It remains necessary, if you want to be sure of getting the best people in the market, to go out and proactively approach them, to ensure that the right messages about your company are getting through, and for your signal to cut through the increasing amounts of noise on the internet. New managers, who are looking to put their company’s house in order, will increasingly be required to explain to sceptical candidates that they are changing, and how and why they represent and exciting place to work. Or alternatively, get someone they trust to do so…

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Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.