How LinkedIn Makes Money Off Your Resume — And Why That’s Good For You

Today LinkedIn serves hiring managers as much as it serves job seekers. Companies are paying big bucks for the right to look at your profile, whether you’re on the job market right now or not.

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Photo Illustration by Justin Sullivan / Getty Images

Everyone knows that they’re supposed to have a LinkedIn profile. We all have a vague awareness that it might somehow help us get a job some day. What you might not know is that over the last several years LinkedIn has quietly redefined  the nature of job recruiting. Today it serves hiring managers as much as it serves job seekers. Companies are paying big bucks for the right to look at your profile, whether you’re on the job market right now or not.

LinkedIn has undergone a subtle but significant transformation under the leadership of Jeff Weiner, who took over the company in December 2008. In that year, the company launched LinkedIn Recruiter, a premium service that allows businesses to view and search through every single profile on the network.

Recruiting through LinkedIn, once used mostly in the technology sector, has gone mainstream — 82 of the companies in the Fortune 100 use LinkedIn Recruiter, according to LinkedIn spokesman Richard George. More than 10,000 companies worldwide use some of LinkedIn’s recruiting products and services, dubbed Hiring Solutions. “Hiring Solutions is now our largest and fastest growing business line, which I think kind of illustrates the market demand for what we can offer companies,” George said.

The influence of LinkedIn recruiting has reached companies both big and small. Aaron Aders, the CEO of search engine optimization consulting company Slingshot SEO, said all the recent hires at his 100-person organization have been found through LinkedIn. “We basically haven’t even used our recruiter for the last year,” he said. His company reduced its expenses per potential hire from $7,000 to less than $1,000 by eliminating expensive recruiter fees. “It’s absolutely necessary,” Aders said.

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What’s a value proposition for businessmen like Aders is a financial boon for LinkedIn. The company charges as much as $8,000 for a log-in to its Recruiter program, and big companies pay for dozens of accounts. Now the biggest money driver for the company, Hiring Solutions brought in $103 million in revenue in the first quarter of 2012. Premium subscriptions, which the everyday user is more familiar with, pulled in only $38 million in comparison.

As Facebook and other social networks struggle to maintain user privacy, LinkedIn draws a userbase that actively wants its information put in front of the right eyes. And as the number of users grows — it currently sits at about 161 million — so too does its monetary value.

David Marr, a recruiter who has worked with Fortune 500 companies, has watched the industry change dramatically in his nine years in the field. He said job boards and cold calls to potential hires were heavily used before LinkedIn. Today the social networking site is his primary tool.

“It definitely makes it easier to communicate with people,” he said. “It allows the communication channels to flow broader. It’s viral.”

Most critically for potential job seekers, both Marr and Aders noted that they don’t only use LinkedIn to find people actively seeking jobs. They’re also looking for qualified people who aren’t job hunting.

“The most valuable employee is typically one that already has a job,” Aders said. “So the nice thing about LinkedIn is even if people are currently working, you still have access to their profile. We call it having a deep bench — having a list of people for key positions in our company so that if someone’s let go or they’re transitioning, we’ve made some contact with [people] that we can call on and possibly pull the trigger on to hire.”

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This recruiting tactic of seeking out “passive candidates” has changed the very nature of the job search. Marr said the currently employed are much more receptive to a LinkedIn connection than a cold call. “When I’m identifying the talent, I’m networking with them,” Marr said. “It doesn’t necessarily mean they’re interested in the role, but I’m having conversations and engaging in dialogue about what their interest might be for future opportunities.”

For recruiters, every LinkedIn member is a potential employee, and today’s workers are more likely to keep their eyes on opportunities in a volatile job market. Increasingly, the passive job search has become an ever-present part of working life. “You have to plant your seed today for your harvest tomorrow,” Marr said. “The days of working for a company for your entire career, for 50 years, isn’t realistic anymore. While it still exists, the average life cycle is 18 months in a position. If you’re not growing, you’re going to be looking for the next place where you’re going to grow.”

To harp on an old point, having a LinkedIn account isn’t just a good idea — it’s becoming the primary point of information exchange on the job market. But as LinkedIn’s prominence in the professional world grows, so too does its responsibility to protect its users’ virtual identities. In June six million users’ passwords were stolen, and the New York Times reported that the passwords were only lightly encrypted.

But the users will keep rolling in, and the recruiters will keep finding them. As Marr says, “If you’re not on LinkedIn and you’re not using LInkedIn as an avenue to connect and follow and really be informed, you’re really doing yourself a disservice.”