Climbing TheLadders: One Rung Short For A Lawsuit?

Some time back in 2011, then CEO and founder Marc Cenedella for TheLadders snuck in a brand reversal. Instead of focusing on premium jobs, the niche job listing site opted to expand its services to everyone.

“We’re expanding, and today we say ‘bye bye’ to helping only those over $100,000 and ‘hello’ to helping all career-minded professionals," he wrote. "TheLadders now takes all salary levels and shows the right jobs to the right person.”

Back when it happened, the announcement drew 139 comments. Most of them were negative. And the entire story, that TheLadders had decided to become another job site, was mostly over. Or was it?

TheLadders faces a lawsuit that could shutter it. We'll see.

Lurking largely behind the scenes was the next chapter in crisis for the company. TheLadders is now facing a class action lawsuit in New York federal court. Specifically, the lawsuit doesn't look at 2011 as a rebranding expansion. It looks at an old post as an admission by TheLadders.

According to the suit, many of the jobs offered on TheLadders were scraped from other sites with no attempt at verifying how much they paid or even if they were current before the company made the switch in 2011. You can read the complete lawsuit filing here, but the crux of it is that the company simply changed its language in 2011 to match what the service had been all along — a premium payment job site (and not necessarily a premium salary job site).

The suit, filed by the New York class action firm of Bursor & Fisher, was also reported by recruiting consultant and blogger Nick Corcodilos. I recommend this read, as Corcodilos has posted a summary. There is another interesting piece by the ERE here, especially because it reads like a foreshadow to the September surprise (even if David Manaster stopped short of calling the service a scam).

Loud complainers want to be customers. Watch out for everyone else.

Manaster then went on to dismiss the ruckus by saying something he has said before. "When people have a beef, they can be counted on to complain loudly. When people are satisfied, they tend to … well, be satisfied." He seems to have been wrong on that point then and remains equally wrong today.

When people have a beef, they tend to leave quietly because they've already given up. The complainers, on the other hand, tend to be people who still want to be your customers, even if your company is built on a questionable model. And then there are those who will be heard, not with words but with actions — like anyone who piled on with the class action lawsuit that alleges fraud.

Interestingly enough, it wasn't only the people who were paying for "hand-screened" job selection that have been frustrated by TheLadders. Employers weren't really happy either. Along with mapping out most of the history, the article sources a direct quote by Cenedella, admitting that as many as half of all listings were culled from the web. Basically, staffers guessed at salaries as opposed to verifying that the listings truly paid $100k or more.

Exposure is good, unless it leaves you exposed to unnecessary risk.

Several years ago, I wrote a story about a company that hoped to go head to head with TheLadders public relations machine. At the time, both wanted to dominate a subscription-based job site niche that focused on jobs starting at $100k. The other company, RiseSmart, eventually shifted its focus to outplacement because it couldn't really compete in a niche against a competitor that possibly cheated.

Those stories were written more than five years ago. Even then, people were saying what they are saying today. Most (if not all) premium job listing sites aren't worth the money they charge. Ironically, in one of the articles I sourced then, executives from TheLadders said that $100k jobs weren't listed on free sites but only premium payment sites like TheLadders. This "fact," it seems, couldn't have been true if 50 percent or most of the postings were culled. Culled jobs had to be listed somewhere.

And therein lies the rub. TheLadders unquestionably dominated the space and ran others businesses out of the niche with an overwhelming barrage of paid television commercials and public relations. But, at the same time, the crisis that TheLadders may face next is being framed up by all that coverage.

Every quote by company spokespeople that reinforces an overinflated marketing statement prior to 2011 carries the potential to become an exhibit. And although I'm not sure, the company seems to know it. Its current strategy seems to be burying lawsuit stories with anything and everything from Spring Cleaning job searches to launching a new ELITE program to JobMobile, an event that will bring industry thought leaders together in Atlanta, Chicago, New York City, and San Francisco.

That might not be all that surprising for the public relations heavy site. But what is surprising is that the company isn't talking about the suit. It hasn't made a statement anywhere on the site to date, but did issue a statement about the lawsuit to The Business Insider, making this a living case study.

Shifting Niche: RiseSmart vs. TheLadders

Almost one year ago, two companies set out to differentiate themselves from other job search sites within the same niche: TheLadders and RiseSmart. Each wanted to dominate a subscription-based job site niche that focuses on jobs starting at $100k.

However, with the economic downturn, pursuing qualified employers or qualified candidates in a race toward a shrinking middle seemed increasingly futile. As TheLadders entrenched itself in offering employer-driven job search resources, RiseSmart set out to find a bigger court by adding outplacement to its core services.

Play From A Bigger Court To Win A Niche?

"Traditional outplacement services have simply become too expensive in the minds of many companies," Sanjay Sathe, founder and CEO of RiseSmart, said in a release. "Employers are frustrated with these services, because they cost a lot but typically don't demonstrate measurable results for employees. During a time of financial pressures, they've become a target of budget cuts."

The move makes sense. Whereas outplacement consulting firms represent a $3 billion industry to provide transitioned employees with career counseling, RiseSmart expanded its business model to include outplacement services that directly targets employers without giving up its candidate-focused service. For RiseSmart, it establishes a beachhead in the outplacement industry and nurtures employer relationships when the economy eventually reverses course.

The move benefits employers too. Rather than funneling employees to outsource companies that sometimes emphasize new careers, RiseSmart clients are directing laid off employees to a service that finds them jobs. If job placement can be expedited, former employees who have relationships with coworkers at the their former company boost morale despite layoffs.

Outplacement Services Can Improve Employee Relationships.

"Businesses sometimes forget that employees who are laid off are still part of the internal culture," one human resource executive, who recently managed several hundred layoffs, told me. "Just because they pack up their desks doesn't mean they break off all the relationships they made while working at a company. The morale of former employees and their ability to secure new jobs directly impacts the employees that remain."

While it's not formal communication, the message resonates with internal audiences. It shifts the focus from internal rumors back toward satisfying customers because employees know even if they are laid off, there is a plan to place them. Providing a sense of security may be critical during economic uncertainty.

Companies that do not provide a sense of security may jeopardize their own future. While the recession has temporarily lowered employee turnover, as many as 40 percent of employees at companies mishandling layoffs could seek new employment when the economy improves. High turnover rates typically cost between 150 to 250 percent of an employee's annual salary, with high-performing employees being among the first to go.

Relationships In Bad Times Create Opportunities In Good Times.

RiseSmart might not be the largest subscription-based job site that focuses on jobs starting at $100k, but it is playing smart. If it continues to cater to qualified candidates while developing relationships with employers during an economic downturn, it may overtake some middle ground as the economy improves. The move positions the company as a link.

Contrary, TheLadders added 400 new companies and recruiters in the fourth quarter, reinforcing its employer model. The number of candidates hoping to secure these jobs spiked 63 percent last year. The move positions the company as a middleman.

In reality, both companies are still battling for premium position in a niche market. RiseSmart may have expanded its court, but it still pokes fun at the competition. Recently, RiseSmart pointed out that as clever as the commercials from CareerBuilder, Monster, and TheLadders can be, none of them reinforce human side of job placement.

Other Voices Taking Note Of The Extended Matchup.

Mashable: RiseSmart is Job Hunting for Lazy, Laid-off Execs

Cheesehead: RiseSmart Gets $3 Million In Funding

AlarmClock: High End Job Search Site RiseSmart Raises $3M

Battling For Niche: TheLadders vs. RiseSmart

“Marketing is too important to be left to the marketing department,” once said David Packard, Hewlett-Packard, who worked hard to combine research and development with marketing, with the knowledge that marketing does not end with the marketing department.

The concept, in part, was tied to an understanding of how marketing can help differentiate products in the marketplace. Specifically, when two companies enter a similar niche, message differentiation can mean the difference between winning and losing. Considering HP was founded with an initial investment of $538 in a garage and later became the first IT company to exceed $104 billion in sales two years ago, there might be something to that.

Two job sites take aim at the $100k+ job niche.

Today, in the recruiting industry, there are two companies attempting to differentiate themselves from other job search sites, but within the same niche: TheLadders and RiseSmart. Each is hoping to dominate a subscription-based job site niche that focuses on jobs starting at $100k.

Based upon marketing messages, they seem to be operating from different sides of the same equation. Don’t let their similar identities fool you. Their communication suggests one is pursuing qualified employers whereas the other is pursuing qualified candidates in a race toward the middle.

Currently, TheLadders benefits from better brand recognition after launching a national ad campaign. The campaign features a championship tennis match in which madness ensues when everyone in the stands attempts to join the game. While clever, the campaign seems to target employers despite being “representative of the challenges job seekers face on other sites.” The distinction is more apparent in print, with one headline saying “Quick, Find The Most Talented Player.”

RiseSmart, which recently called TheLadders campaign elitist, is looking to cater to candidates by offering what they call a “RiseSmart Concierge” program that adds a human presence. The idea is to have someone help the candidate further narrow the job search beyond the algorithm.

The human assist comes at a price. RiseSmart currently offers its services for $54.95 per month (or $43.95 with a new member discount; $109.95 for three months). TheLadders is offering candidates a subscription-based service for $30 per month (or $180 per year). The Ladders also has a free “limited access” to job listings feature, enticing employers with 2 million members. RiseSmart aggregates several other listing sites, enticing candidates with 1 million jobs. So who will win? First one to middle court.

Some other voices taking note of the $100K+ niche market:

• The Recruiting Fly
• SpringWise
• Forbes