New York-based Monster Worldwide, the parent of Monster.com, appears to lack immunity to the mounting pressures of a Securities and Exchange Commission investigation into alleged backdating of share options at more than 140 companies.
On Monday, the company’s chairman and chief executive officer Andrew J. McKelvey resigned due to a belief that he could “no longer dedicate the number of hours required” for the company’s review of its stock options grants.
The SEC Takes a Bite Out of Monster ?
In July, Monster Worldwide said it might restate financial results for the year ended December 31, 2005 and previous years.
However, Peter Weddle, HR author and commentator, says any hypotheses that the resignation is a precursor to something significant at the company is unfounded. He says McKelvey’s resignation is related to health-related reasons, not the SEC probe.
“I don’t know how his resignation would change the nature of the investigation or make a difference to the deal one way or another. There is no logical connection between the two,” says Weddle.
As far as whether this signals a Monster acquisition on the horizon, Weddle says the employment space on the Web is undervalued because organizations do not see it as a large marketplace.
“Five billion is a big market but not a hot market. Until that changes, I think it’s hard to think of a buyer willing to take that big of a gulp,” says Weddles. “McKelvey remains the largest stockholder, so he is clearly going to be the one to decide whether the company is being sold.”
Weddle contends that employment websites are one of the most successful areas of e-commerce on the Web, and a shakeup at Monster won’t change that line of thinking any time soon.
Weddles mentions a survey conducted in July 2006 that asked 708 people where they found their current job.
“We listed every possible method. The largest single source was job boards at 31.2%, the next highest source dropped to10.6%, which was sending your resume in to the company, 9.6% responded to a newspaper ad, and at the very bottom, social networking was 0.4%,” he says. “Business networking sites are more progressive, but so far down in the noise levels they are almost laughable ? Social networking sites are great to find a date, but to find a career, job seekers will go to a professional site.”
(A?recent?ERE study delved into the effectiveness of job sites, niche boards, and other recruiting sources.)
RiseTrends president Barbara Ling agrees and says Monster’s future would be brighter if the new leadership focused its attention on maximizing value to its customers through state-of-the-art career and client services via Web 2.0 services, wireless, and other mechanisms.
“This would simplify the often-tedious process for companies to network with quality candidates in a seamless and rapid fashion,” says Ling.
She suggests that Monster — which she says shines in candidate networking and for individual job seekers — could take better advantage of blogs, wikis, networking, and online seminars because recruiting is not just a form-based mechanism anymore.
Others agree that this may push Monster into expanded new directions.
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“I could see Monster acquiring other companies, which will add content. With their base of clients, I could see Monster growing into areas that are not just associated with staffing,” says David Adler, president of Don Allan Associates, Inc.
In the next six- to 12-month period, he says it could have something to do with video. “I am sure they are not 100% thrilled with LinkedIn or Facebook. Could they set up something like that? Sure. The days of looking for revenue just from job postings are going to be over,” says Adler.
“It’s funny that a word I used to associate with Halloween has now become an empire. When I first heard it I thought, what a stupid name; but now, I would have been so lucky to have that URL,” he adds.
The End of an Era??
Not all agree that new leadership at Monster is a positive sign.
“I have been at this 20 years, and I think Monster’s time has come and gone. Many years ago, Jeff [Taylor] announced that Monster was in business to put recruiters out of business. I think that was circa 1998. While the job-board industry has grown from $97 million in 1996 to $4 billion in 2005, the recruiting industry has gone from $10 billion to $410 billion worldwide. My point? Jeff missed!,” says David Perry, co-author of Guerrilla Marketing for Job Hunters.
Perry alleges that “Monster turned on the industry that built it — recruiters. Recruiters were the pioneering users and recruiters have long memories. Consequently, many third-party recruiters abandoned the use of job boards many years ago. Most prefer to source directly. Now that everyone in the universe who’s on a job board can be found, the real hard work or calling and profiling employed people has returned. Recruiters once again rule the world. Nothing happens until a recruiter calls.”
Passing the Torch
Though McKelvey has resigned, he remains on the company’s board of directors and was elected chairman emeritus.
“As the company’s largest individual shareholder, I remain extremely positive about Monster’s future, and look forward to serving as chairman emeritus, remaining on the board, and contributing to Monster’s category leadership in the years ahead,” McKelvey said in a company news release.?
The company promoted William M. Pastore to the position of chief executive officer and appointed him to the board of directors, effective immediately.
Prior to joining Monster Worldwide, Pastore held senior roles at Cigna Healthcare and Citibank.