Getting Paid to Connect Employers With Workers
Job boards and recruiting marketplaces connect employers and workers, charging to make the match. They face the marketplace challenge of balancing both sides and the threat of disintermediation once a match is made.
Matching Two Sides Who Need Each Other
Job boards and recruiting marketplaces connect employers seeking workers with workers seeking jobs, charging to make or enable the match. They sit between the two sides of the labor market, providing the place where employers post jobs and workers find them, or where the platform actively matches the two, earning from facilitating the connection.
Like any marketplace, they face the fundamental challenge of attracting both sides at once, since employers come for the workers and workers come for the jobs, so the platform must build both simultaneously. And they face a specific threat: disintermediation, since once an employer and worker find each other through the platform, they can complete the hire directly, potentially cutting the platform out. These challenges, balancing both sides and the risk of being cut out, shape the business of connecting employers and workers.
Employers come for the workers, workers come for the jobs, so you need both before you have either. And the moment the two find each other, they can shake hands without you, which is the job board's permanent problem.
The Marketplace Challenge
The job platform must build both sides of its marketplace, attracting employers and workers simultaneously, which is the classic challenge of a two sided marketplace.
| Side | Comes for | Needed |
|---|---|---|
| Employers | The workers | Enough workers to find hires |
| Workers | The jobs | Enough jobs to find work |
Each side comes for the other, so the platform needs both to be useful, facing the cold start problem of building both from nothing, since employers will not come without workers and workers will not come without jobs. Once established, the platform benefits from a network effect, since more jobs attract more workers and more workers attract more employers, creating a reinforcing cycle. But building to that point requires solving the two sided challenge, and the platform must maintain the balance, since too few workers or too few jobs makes it less useful to the other side, which is the ongoing challenge of running a labor marketplace.
The Disintermediation Threat
The specific threat to job platforms is disintermediation: once an employer and worker connect through the platform, they can complete the hire directly, without the platform, potentially avoiding its fees. Unlike a marketplace for repeated transactions, a job match often results in a single hire, after which the ongoing relationship is between the employer and worker directly, with no need for the platform.
This makes it hard for the platform to capture the full value of the match, since the parties can transact directly once connected, and the platform must find ways to earn from the connection before or as it is made. Platforms address this by charging employers to post jobs or access workers, earning upfront from the access rather than the completed hire, or by providing ongoing value that keeps the parties using the platform. The disintermediation threat means job platforms often charge for access and posting rather than taking a cut of hires, since the hire happens off the platform, shaping how they monetize the connections they enable. Managing the threat, capturing value from the connection despite the parties ability to transact directly, is a central challenge of the model.
The Segmentation and the Models
Job platforms segment by the type of work and worker, from general job boards to specialized platforms for particular industries or skills, to platforms for temporary and gig work, each serving a different part of the labor market with a different model. General boards serve broad hiring, specialized platforms serve niches where their focus adds value, and gig platforms facilitate short term work with ongoing transactions that reduce the disintermediation problem.
The gig and staffing models, involving repeated or ongoing work, capture more value than one time hire boards, since the platform facilitates ongoing transactions rather than a single match that leads to disintermediation. Higher end recruiting, for specialized or senior roles, can command higher fees since the matches are more valuable and harder to make, while high volume general hiring competes more on access and price. The segmentation reflects the different value and dynamics of matching different kinds of work, with the models adapting to the value of the match and the disintermediation risk, from access based general boards to fee based specialized recruiting to transaction based gig platforms, each fitting its part of the labor market. The variety of models reflects the range of labor matching needs and the different ways to capture value from connecting employers and workers.
The Bottom Line
Job boards and recruiting marketplaces connect employers and workers, charging to make the match, and face the marketplace challenge of building both sides at once, since each comes for the other, along with the specific threat of disintermediation, since the parties can complete a hire directly once connected. The disintermediation threat, from matches often resulting in single hires completed off the platform, leads platforms to charge for access and posting rather than taking a cut of hires. The market segments by type of work, from general boards to specialized recruiting to gig platforms, with models adapting to the value of the match and the disintermediation risk, reflecting the range of ways to capture value from connecting the two sides of the labor market.