A Match Made in the Market: Using Tech to Improve College Graduate Hiring
What if your dream job out of college was 300 miles away at a company that never recruited at your campus?
Garrett Lord had the same problem. In 2013, he founded Handshake – a startup focused on empowering the intermediary, universities, with an intuitive platform to better engage and connect employers and students.
Addressing Gaps in the College Recruiting Model
Handshake is in the highly competitive $25 billion job listings market which includes players like LinkedIn and Monster.com. It differentiates itself through its focus on an overlooked segment: colleges and universities.[1] Rather than solving around the shortcomings of postgraduate institutions in matching its students with employers, Handshake aims to develop deep partnerships with institutions to improve their capabilities.[2] In doing so, it provides value to its stakeholders (i.e., universities, students, and employers) in two main ways:
- Reducing labor market search costs associated with mismatching.[3] Students are looking for the right jobs and employers are looking for the right people. Yet information about the nature and availability of jobs and interpreting signals of candidate skill (academics, activities, etc.) are asymmetric. Moreover, resource constraints limit employers and students from optimal matching – students may be in remote locations relative to the locations of available jobs.[4] Handshake widens the funnel for students and employers, allowing greater optionality, clearer signaling, and ultimately improved matching in the hiring process.
- Equipping universities with better data to prove the college “investment.” With tuition costs rising higher than median family incomes, Obama and other key policymakers are putting pressure on postgraduate institutions to improve transparency of student graduation, hiring, and earnings outcomes.[5] Handshake allows its institutions to collect, track and analyze a broader dataset of its own career practices – something very few colleges have done historically and so methodically.
(Student dashboard. From Company Website)
Handshake: A Three-Way Solution
- Student Value: convenient access to better job opportunities. Students and recent alumni have access to a wider array of job opportunities from a broader set of employers. Similar to LinkedIn and other platforms, they offer online, mobile, and social features. However, students have the increased convenience of having basic data (university credentials, contact information, major, courses, etc.) and career activities (campus job fairs, administrative contacts, etc.) already pre-populated as a result of Handshake’s university partnerships.
- Employer Value: lower recruitment costs and wider talent pools. Companies and nonprofits can save money while now recruiting at Michigan Tech, Stanford, John Hopkins and other schools using the same standardized interface and communicating directly with students. Additionally, they can query for key skills and majors across hundreds of candidates and post positions across dozens of schools at a click of a button.
- Institutional Value: More engagement and measurable career outcomes. Colleges are able to collect and analyze more robust data on their hiring processes as more employers and students are using the same platform. Moreover, they can better utilize limited career staff that can now focus less on job search support and more complex advising activities.
Handshake is currently free for employers while career departments at colleges and universities pay an annual subscription fee to use the software system. The fee depends on the level of customization and size of the student body.[6] Handshake’s success depends on the buy-in of educational institutions as well as strong network effects of sufficient growth of both students and employers engaged on the platform.
So far, so good: 100,000 employers — including 95% of Fortune 500 companies like Amazon, Goldman Sachs, McKinsey – recruit on Handshake and over 3 million students and 170+ universities use the platform.[7] The company boasts that colleges see a 2-3x increase in relevant job opportunities within the first 6 months and a 50% increase in student engagement during the year.[8]
Future Considerations
- Implement supplemental pricing model for employers. As a viable and valuable platform now, Handshake should rollout a pricing scheme for employers, leveraging currently observed behaviors to match desired system features with a company’s willingness to pay. Handshake could split profits with colleges for allowing employers to build their brands on the platform or to utilize premium search tools for better screening. An added indirect benefit of pricing should be the reduction in fake job postings.[9]
- Automatically embed Handshake in company HR and college platforms. Handshake has already expressed a desire to improve linkages with college alumni databases and student data systems but it should also consider company HR management systems. The benefit of deeper data integration on both ends is not only an improved platform, easier use, and higher engagement, but also increased stickiness of institutions – reducing the risk that colleges or companies decide to build out their own platforms later on. The challenges include developing codes to standardize data retrieval and update processes and building trust among companies and colleges to share sensitive data. Handshake can leverage their strong partnership track record to propose pilots to demonstrate the benefits of such access.
- Data analytics. While Handshake has proven its scaled impact, it has yet to prove its impact on college-to-career outcomes. Handshake could building a consulting practice to help partners analyze and improve their hiring processes. Leveraging data from their diverse platform, they can offer benchmarking of institution- and industry-specific progress and sell research knowledge of generalized best practices. To the extent Handshake has access to student data, the company could even provide predictive analytic services to support major selection and career counseling.
[1] Here I use colleges and universities synonymously in this blog post, although states define them differently.
[2] Business Wire. February 3, 2016. “College Career Network Handshake Secures $10.5 Million in Series A Funding” http://www.businesswire.com/news/home/20160203005570/en/College-Career-Network-Handshake-Secures-10.5-Million
[3] Mismatching in the labor markets is considered among economists as a driver of unemployment. Moreover, it is cited as a reason behind delays in hiring as employers hold out for better candidates. See Federal Reserve Bank of St. Louis July 2011 Publication “The Mismatch Between Job Openings and Job Seekers.” https://www.stlouisfed.org/publications/regional-economist/july-2011/the-mismatch-between-job-openings-and-job-seekers
[4] Ibid.
[5] Alyssa Davis, Will Kimball, and Elise Gould. “The Class of 2015.” Economic Policy Institute. May 2015 Publication. http://www.epi.org/publication/the-class-of-2015/
[6] Business Wire. February 3, 2016. “College Career Network Handshake Secures $10.5 Million in Series A Funding”
[7] Ibid.
[8] Handshake company website. https://www.joinhandshake.com/universities/
[9] Purdue University Northwest explicitly warns against fraudulent job postings on their website: http://www.pnw.edu/career-center/avoid-fraudulent-job-postings/
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This is a great example of how a company has made a business as an intermediary by providing value across the entire supply chain.
I was surprised to see that only colleges are currently being charged for the company’s services. To me that pricing structure seems to leave Handshake vulnerable to colleges developing their own in-house platforms in an effort to circumvent a costly middleman. I think colleges could relatively easily develop a platform like this themselves and have employers want to communicate through it. On the other hand, employers wouldn’t be able to make a platform like this themselves, so charging them wouldn’t push them towards developing their own technology. Consequently, I agree with your suggestion to “implement supplemental pricing model for employers.” And I’d potentially push that a bit further and recommend that Handshake shift almost all of the burden away from the colleges and onto the employers.
Many schools (Harvard included) differentiate themselves from peers through the quality of their post-graduate network and the career offerings that stem from that exclusive community. As Handshake arguably standardizes this process across universities and makes, what I understand to be, moat of the same job opportunities available across schools, will this decrease the competitive advantage of the Harvards of the world? Lord primarily invented this software to minimize “the challenges students from lesser-known schools faced” in the job search process– is he helping these sorts of institutions at the expense of others? And should this even matter?
http://www.wsj.com/articles/handshake-now-in-170-colleges-raises-20m-for-student-job-search-1479385800
I think it is great that this company has found a way to increase hiring rates for recent university graduates. That being said, I am confused how this platform truly differentiates itself from other job search platforms except for in it target market. How can Handshake further utilize data to extend the connection between companies and potential hires and ensure that the recruiting process is seamless and produces a good match?
I really like your idea to implement a supplemental pricing model for employers. Perhaps employers could pay additional fees to have the highest ranked “suggested” job listing for top candidates.
Interesting post. I actually have a friend who goes to a college that uses Handshake and based on their experience of the tool, I am not sure whether Handshake is truly valuable to the students currently. From my friend’s perspective, it is not too different from LinkedIn or any other website that offers job postings. Perhaps the tool is more valuable to schools that do not already have their own software to deal with career-related items or for schools that do not have the resources to invest in a similar tool. Moreover, how is student-employer matching improved? What criteria is the company using to differentiate from competitors? Finding the right talent appears to remain a challenge for employers. Therefore, assuming Handshake has a competitive advantage to solve such a challenge, I agree with your suggestion on the pricing model change. I actually think the biggest value resides in the “employer value” portion. Per your post, employers have the benefit of using only one interface to search and find potential student candidates for jobs, and have the added convenience to post positions across all the schools. So I think Handshake should’ve charged employers instead of using a freemium model (their current pricing model seems backwards to me).
Handshake looks like a shining example similar to ITC eChoupal, in which the middle man is providing value to various stakeholders within an ecosystem (though the true value delivered to employers will be tested when they eventually put a price tag on this!)
While it is clear that they are providing efficiencies that did not exist in the job search market, I wonder whether there are simple ways to make this process better if we take a look at other “matching” companies. Specifically, I wonder whether anonymity, or a degree of this could be beneficial to all the stakeholders involved. Consider any dating website (eg. eharmony.com, okcupid.com), in which it the company facilitates more direct and open conversation by protecting its users with a username/degree of anonymity. People are more comfortable filling out their profiles honestly. I think that anonymity on their platform could enable a higher degree of interaction between job posters and job seekers who have questions that they may be unwilling to ask in a public setting.
Marcheta-
This is such a cool company! I remember the pain of being a college senior and not having any website that was particularly helpful in terms of finding a good job opportunity or knowing where to put your recruiting time. Indeed.com and Monster.com are not very helpful and oftentimes leave a student feeling more stressed and confused than when they began.
Two words: big data. I am a huge believer in the value of big data, having watched my former boss, the U.S. Secretary of Commerce, create a Chief Data Officer for the U.S. Department of Commerce to manage all of the data we receive via the Bureau of Economic Analysis and U.S. Census. The Obama Administration has done a wonderful job at leveraging big data to its advantage and attempting to unleash Government data for private-sector use. Similarly, Handshake could, and should, unleash its data and sell it to company human resource departments so they can analyze it and improve their targeted hiring practices. The data they store is useful to all parties involved: students, universities, and hiring companies. This is a company where its value will increase exponentially because once they have the initial data they won’t just be about selling the actual website for hiring purposes, they will be about creating revenue from their data.