LinkedIn’s “talent solutions” service, which gives recruiters and hiring managers the ability to post job ads and hunt for candidates, is the fastest-growing and most profitable portion of LinkedIn’s business. The talent solutions homepage saw an update last week that involved several design changes, but it was the addition of the “People You Might Want to Hire” tool that’s sheds the most light on how LinkedIn makes money.

At this point, most professional people are at least aware of LinkedIn, and with the company boasting 200 million registered users, a good number of people now have profile pages listing their work experience and other relevant information on the social networking site. But the consumer-facing side of LinkedIn that you might see is not the portion of the company that brings in the most revenue — or, at least not directly.

The talent solutions portion of LinkedIn brought in 53 percent of the company’s revenue last quarter. The basic service allows corporate recruiters and human resources employeees to post job ads for the company, search for relevant candidates, track responses, and monitor people they might like to hire (yes, a recruiter can put an alert on your profile and know when you make updates or switch jobs.) Companies pay for access to those recruiting features, and the more accurate the data LinkedIn can provide, the more value the companies will derive from the service.

The new feature on the Recruiter page is an intelligent recommendation engine that suggests to recruiters people they might want to hire. It sounds simple enough, and with similar features all over sites like Facebook and Twitter, maybe not so novel. But the feature is huge for LinkedIn on the consumer side already, where the company reports that 50 percent of job seeker engagement comes from the recommended jobs tool, with the other 50 percent coming from people typing into the search bar. Users who are actively looking for jobs might be willing to put in search terms. But people who aren’t actively looking to switch jobs — which LinkedIn estimates is about 80 percent of the current workforce —  are far less likely to search.

“Recommendations have fundamentally changed the trajectory of Linkedin.com,” said Parker Barrile, head of product for talent solutions, in an interview this week. “The recommendations technology that suggests things for members totally change the game. Because we’ve realized how important it is not to expect consumers to actively search for things.”

My colleague Derrick Harris recently wrote about the engineering shift at LinkedIn over the past five years that now allows the company to put significant resources behind engineering projects like recommendations, and Barrile said that refining and perfecting the suggestions has become critically important.

“We’ve invested a lot into the technology that works on those recommendations,” he said. “All of these recommendation technologies learn from the way users interact with them. And LinkedIn’s recommendation technologies have become especiallly responsive because they’re so important to the business.”

The “People You Might Want To Hire” tool takes into account past behavior on the part of the recruiter, as well as data signals from within the job ad, to put together a list of candidates who might be a fit based on a variety of signals. For instance, let’s say you’re an tech company looking to hire for a PR position. The tool won’t just surface people working in technology PR. Instead, it might surface people working in technology who list writing and editing as their skills, or have a number of endorsements for communication or working with a team. Or, let’s say you’re hiring for a venture capital position in San Francisco — the system might also suggest relevant candidates from New York, since it knows people in venture capital are likely to move between the two cities.

Potentially creepy if you start getting a lot of messages from recruiters asking you to move to New York? Maybe. But for people who end up with job offers out of the process, there’s a strong upside to that technology.

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I’ve strived to create an environment of happy, productive people who are excited to show up to work in the morning (or afternoon, as appropriate!). I’ve found that this environment, while being extremely positive in its own right, also gives us a competitive advantage in recruiting. The following points are the most important takeaways that I’ve learned while heading up recruiting.

1. Only hire people who make others want to be around them.

We apply what we call the “Sunday test” to every candidate. If this person was alone in the office on a Sunday, would that make you more likely to come in just to hang out with him? We only make a hire if the answer is a strong yes. Not only should working with your coworkers be tolerable, it should be something you actively enjoy.

This principle is easy enough to espouse, but it took me a long time to become comfortable with sticking to it in practice. We have often needed to make a hiring decision on an otherwise great engineer who failed this test. And I sometimes have to remind myself that no matter how talented an engineer might be, if I know in my gut that our team would be less happy with this person on board, then it’s not worth it. Bringing someone on board who isn’t a good fit will only make it harder to hire other talented engineers in the future.

2. Each new hire should increase the team’s quality.

Every additional hire has the ability to slightly increase or decrease your team’s quality. By always pushing forward the quality, you can make a good team great. (See the Lake Wobegon strategy for a detailed discussion of this technique.)

Early in Stripe’s history, we ensured that each new hire had a skill set that was missing from our existing team. I brought my experience designing and running large-scale systems to the team; one of our subsequent employees had negotiated deals with all the major record labels. Now that we have about twenty people on staff and have covered most of our needed skill sets, the standard has shifted towards making sure the candidate can do some task better than anyone currently at Stripe.

3. Never make a hire simply for an immediate need.

As a fast-growing company, we often find ourselves with pain points that feel increasingly urgent. For example, after Stripe came out of beta, the company had to deal with skyrocketing support requests from users. I knew we had to hire fulltime support engineers, and it was extremely tempting to lower the bar. But if I had, our culture, happiness and team quality would have suffered. Ultimately, making short-term optimizations at the expense of long-term goals does more harm than good.

4. Take time to integrate new team members.

For a long time, I didn’t think we needed to do anything special to integrate new employees. But as we grew, I noticed that new hires were spending an increasing amount of time trying to figure out how our internal processes and structures worked. And even worse, I would often talk to a new hire and find that she had accumulated a slew of questions, and she wasn’t sure whom she should ask.

Now, when a new hire starts at Stripe, we put a lot of work into helping her acclimatize and become as happy, productive and effective as possible. From day one, she is assigned an experienced employee to serve as a mentor. We ensure that lots of team members spend time with her, even if they don’t work directly with her. We aid her in exploring the space of possible projects she could work on, as well as spinning her up on the skills and tools needed to do the job.

5. Be willing to let people go, but hate it when you do.

Occasionally, a hire doesn’t work out. Sometimes, the issue isn’t with the hire directly — it’s just a problem of fit with the rest of the company. In these cases, I’ve found that you need to summon the will to part ways. When we’ve done this, we’ve always felt much better about the long-term prospects of the company afterwards.

At the same time, a firing should never be regarded as a positive outcome. They are painful for everyone involved, and indicate a miscalculation made somewhere along the way. So whenever you let someone go, you should go back and determine how you could have avoided the situation in the first place.

6. Everyone gets a veto.

As the number of participants in the Stripe hiring process has grown, it’s become increasingly difficult to achieve unanimity on hiring decisions. However, we’ve been careful to preserve the principle that a single person’s strong objections are sufficient to result in not hiring a candidate. This forces us to make sure we’ve addressed all of the issues on the table, rather than simply sweeping one person’s criticisms under the rug. Additionally, we ensure that we don’t sacrifice the happiness of an existing team member for the sake of a potential new one.

We’ve worked hard to build the kind of team we’ve always wanted to work with, and I’ve been extremely happy with the results to date. We’re still learning and adjusting our principles with every additional hiring decision. But I’m convinced that building an amazing team takes discipline and strategy far beyond the ability to hire talent.

The good news about building a great team is that it’s really easy to determine if you’ve been successful. If you love working with the team you’ve built, then chances are other people will feel the same way.

Greg Brockman works on recruiting and infrastructure at Stripe, a San Francisco-based startup focused on online payments.

Image courtesy of Flicker user aka Kath.

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Startups want to lure student interns from universities like MIT (pictured).

Exclusive. If you’re a college student, a summer internship at a top Silicon Valley tech company can be a pretty sweet deal: The pay is good, the perks are many and perhaps most importantly, you get a reputable name to anchor your resume — which at this point in your life, is probably pretty short.

Of course, there are lots of great technology startups that offer great internships as well. But top engineering students often pass those opportunities because they want the money and name recognition that such companies as Google and Microsoft can provide.

That’s why Kleiner Perkins Caufield & Byers is lending its startups a hand with a new initiative aimed at attracting top-tier engineering students to summer internships. The storied Silicon Valley venture capital firm has partnered with InternMatch to launch a new program called the KPCB Fellowship.

Leveling the playing field

Essentially, the KPCB Fellowship aims to provide students with all the benefits they would receive from a summer internship at an established tech company — but while working at a startup. The fellowship will accept up to 25 graduate and undergraduate engineering students, and each will be employed for the summer at one of Kleiner Perkins’ portfolio companies (Flipboard, Groupon, Chegg and Klout are among the startups participating). In addition to their day jobs, the summer interns will be assigned an industry mentor and receive invitations to private speaking events with people in Kleiner Perkins’ impressive Rolodex. The students will all receive competitive wages and housing relocation assistance.

InternMatch is helping to promote the KPCB Fellowship on its website, which is focused on giving students an in-depth look at the internship opportunities available to them. The deadline to apply for summer 2012, the inaugural season of the KPCB Fellowship, is approaching fast: Applications for the program are due on Oct. 31.

What’s in a name? A lot.

The Kleiner Perkins name serves as a huge draw in itself, InternMatch co-founder Nathan Parcells tells me. “Startups like Klout have great brand recognition in the Silicon Valley community, but that doesn’t always reach to top schools that great engineers are coming out of, particularly the ones on the East Coast like MIT. This fellowship offers the full Silicon Valley experience, and it also says you can get the great brand name recognition of having one of the top venture capital firms in the world on your CV.”

Now, Kleiner Perkins is not the only venture capital firm to do such a thing: True Ventures, for example, has held a similar program called True Entrepreneur Corps for the past few years (please see the disclosure below). InternMatch also has a partner page with Sequoia Capital to help it promote internship opportunities at the firm and its partner companies.

In all, I think, initiatives like these are positive any way you slice it: They can help startups recruit top-notch young engineers as full-time employees — and ultimately foster more innovation in technology overall.

Photo of MIT Building 10 and the Great Dome courtesy of John Phelan via Creative Commons license

Disclosure: True Ventures is an investor in the parent company of this blog, GigaOM. Om Malik, the founder of GigaOM, is also a venture partner at True.

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In a stiff hiring environment like this, once-uncommon perks like free lunch, snacks, massages and foosball tables are practically required. How can a startup, or even a larger tech firm, attract top engineering talent? Here are a few ways that companies are trying to set themselves apart:

• Matchmaker, matchmaker: Anyone who applies for an engineering position at online dating site Zoosk between August 3 and September 30 and gets hired will be put into the running to win a date with either Samantha or Steve, two actors who starred in recent Zoosk TV commercials. Zoosk says it will cover all of the costs of the date, including a round-trip flight to Los Angeles, a chauffeured limousine and dinner. Sure, it’s gimmicky, and it plays into the stereotype of the dateless programmer — but it does sound like fun.

• All vices welcome: Remember the days when hosting an open bar was enough to get a roomful of tech industry talent? Nowadays, event organizers have upped the ante significantly. Take the super luxe party Silicon Valley event planner 50Kings is throwing the night before the Techcrunch Disrupt conference opens in September. From the invite: “We’re taking over the home of a prominent member of the Paypal Mafia and turning it into our very own private casino. Real tables, pro dealers, cocktail waitresses, strict security and high-stakes play. Serious tech players are flying in from Seattle, LA, Las Vegas and we even have an RSVP from an NBA All-Star. The party is on us, but there is a significant minimum table commitment.” Work hard, play hard, indeed.

• Entrepreneurship 101: It seems counter-intuitive, but several startups have taken to providing their employees with classes on starting their own companies. The New York Times has reported that real estate website Redfin gives regular classes on entrepreneurship at its headquarters in Seattle. Similarly Jack Dorsey, Twitter’s co-founder and the current CEO of mobile credit card processing startup Square, gives his employees regular talks on topics such as how to raise venture capital. The thinking is, savvy engineers are likely to get the itch to start their own companies. Giving them the tools to learn how to do so in house may entice them to keep working as employees for as long as possible before they strike out on their own. And in this environment, whatever keeps engineers on your team is a good thing.

Of course, nothing lures in potential employees quite like cold hard cash. Financial incentives such as high salaries, solid stock option packages and lucrative bonuses are a given — and they’re getting bigger by the day. This infographic from Focus.com provides a great snapshot of today’s salary situation:

Feature image courtesy of Flickr user Tess Aquarium.

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But do people get an accurate picture of others’ personalities from their social networking profiles? Is the practice of trawling through online profiles particularly subject to our biases and prejudices? Two psychologists from Auburn University have published a paper looking into the issue.

The study by Victoria Brown and E. Daly Vaughn in Journal of Business and Psychology was written up recently on the British Psychological Society’s Research Digest blog and suggests that while a quick look at a candidate’s profile may feel harmless, there are actually pitfalls to the practice.

Previous research has found, perhaps somewhat surprisingly, that when it comes to our level of extroversion and openness, social networking profiles actually give visitors a fairly accurate portrait of our personalities (though we hide our neuroticism). But that accuracy depends on seeing a fairly long slice of our activity history, and Vaughn and Brown warn that with quick looks “we can also fall prey to drawing conclusions on the bases of a small sample of ‘recent activity’.”

Even more troubling is the likelihood that getting a look at the person you’re considering hiring may bring out your unconscious biases, according to the BPS blog.

The authors also worry that SNS [social networking site] screening may be very prone to biases, given that SNS data gives ready indication of race, age, disability and other factors that shouldn’t be considerations in screening decisions.

The final conclusion? Though it might be tempting to take a look at a potential hire online, the authors argue that you should probably resist, recommending companies forbid “opportunistic online reviewing of some candidates but not others, and listing appropriate criteria,” such as viewing work samples on a graphic designer’s profile. They conclude “it may be better for organizations to ban the practice entirely.”

Is sneaking a peek at a candidate’s social networking profile helpful, or invasive and prone to bias?

Image courtesy Flickr user Robert S. Donovan

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This conclusion sounds a little counter-intuitive. After all, if you’re sharing the same space, there seems to be more likelihood for a team member’s grating personality to drive co-workers up the wall. Who cares if the designer half-way across the country has an abrasive sense of humor or lax attitude toward personal hygiene?

But thinking like this fails to take account that physical distance multiplies the chances of miscommunication and demands workers who are sensitive to others’ needs and moods, as the MIT Sloan Management Review points out:

Many companies make the mistake of staffing [dispersed] teams primarily (if not solely) on the basis of people’s expertise and availability. Instead, managers must also consider social skills — a major prerequisite for good teamwork — as a much more pivotal part of the catalog of requirements.

Groups with increasing levels of dispersion are also progressively more dependent on their level of teamwork, specifically, their ability to perform key processes such as mutual support, communication and coordination. In order for virtual teams to achieve their greater potential … managers need to consider teamwork skills as a necessary attribute when selecting the members of a virtual team.

And it’s not simply an ability to keep in touch and stay friendly that’s key, according to a report by author David Bollier for the Information Roundtable at the Aspen Institute’s Communications and Society Program. Managers of dispersed teams need to look deeply at employees’ temperaments, weeding out those who are incapable of flexibility, continual learning and speedy critical thinking, he argues:

In the networked environment, the mindset and disposition of workers will matter more than ever. Employers must recognize that they are not just hiring a set of skills, they are hiring people based on their personal  temperaments.

Have you been giving personality short shrift when hiring for your dispersed team?

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As you proceed, be mindful of these potential pitfalls to make the process as painless as possible:

1. Not minding the legalities. Is the person you’re hiring a contractor or an employee? Both options have advantages, but you need to weigh the pros and cons and then consult a lawyer to make sure you’ve got your legal Ts crossed and Is dotted.
2. Not hiring for “soft skills.” Working as part of a virtual team presents emotional and communication challenges that being the best copywriter or software developer can’t help with. Soft skills like tact and emotional control enable web workers to coordinate and share feedback with co-workers without ruffling feathers. And, of course, without self-discipline, motivation and problem solving skills, no worker, no matter how technically gifted, can get the job done. Consider if your candidates have not just the skills but also the temperament to cut it as part of your team.
3. Not working your network. Obviously, you know more people in your home base than you do in the many locations great web workers could be lurking, but that doesn’t mean you shouldn’t use every tool at your disposal to locate talented candidates. Update your LinkedIn status telling everyone what you’re looking for, and email your contacts across the country. You should be engaging your network the same way you would be if you were looking for local talent.
4. Hiring when you needed a new worker yesterday. Finding the right person to join your virtual team takes time. Don’t leave your search to the last minute when deadlines are looming and end up not having enough time to search broadly and evaluate candidates thoroughly.
5. Being fuzzy about how things will work. Communication is key to successful remote teams, so start off with the clearest possible understanding of logistics, the role and your expectations. When Zach Rose, CEO of Green Education Services, set out to hire remote workers, he “created a 40-page document that lays out everything from our maternity leave policy to our non-discrimination policy. If one of my instructors is unsure if he or she should be taking cabs or the bus in any given city, the handbook explains company protocol.”

What other pitfalls should managers hiring web workers look out for?

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Here are a few tips to help you land that dream job.

1. Proofread everything. From the earliest days of mailed-in resumes, this has always been good advice. However, despite the availability of spell checking tools, I still see resumes and emails from job seekers with typos. I’ve seen otherwise great candidates not make it past the first cut due to an unfortunate mistake. Take your time, and recruit a friend to proofread your submissions.
2. Get recommendations. Your best chance of getting a job with a company is to get a recommendation from another employee. Talk to your friends and past coworkers who have jobs at companies where you want to work. Even if they don’t have a job posted that you are interested in, you might get an inside lead on a job about to open. If you know the job you want and the company, see if you can find a current employee who can put in a good word for you.
3. Network. The best time to network is when you aren’t looking for a job, since it takes some of the pressure off. If you are looking for work, the easiest way to start networking is by finding some local meetups in your town that are attended by other people in your industry. Spend the time getting to know people and learning about companies where you might want to work. After you establish yourself and take the time to get to know people, then you can mention the job search, but don’t be slimy about it, and don’t be that person who only calls people when they need a job.
4. Refresh your LinkedIn profile. This is true even if you don’t use LinkedIn very often or don’t care about LinkedIn. At some point during the hiring process, it’s likely that someone will search for you on LinkedIn, and you want them to find an up-to-date, professional profile.
5. Have a web presence. With the tools that allow anyone to spin up a blog in a few minutes, there is no reason not to have some kind of web presence. At a minimum, put up an about page that has a short bio, link to your resume, portfolio content and links to anything else you want a prospective employer to read about you.
6. Blog regularly. Ideally, you would have a significant number of blog posts demonstrating expertise in your field when a prospective employer visits your blog. If you don’t already have a blog, I really do recommend it for anyone looking for a job. Blogging is one of the easiest ways to demonstrate your expertise to prospective employers. Having recent blog posts shows that you are interested and passionate enough about your field to go above and beyond the typical job seeker.
7. Search for yourself. Pick your favorite three major search engines and search for variations of your name or any online handles you use to see what a prospective employer might find out about you. Knowing what an employer might find will help you proactively address any questions they might have. If you have a web presence and you aren’t coming up very high in the search, you might want to brush up on a little search engine optimization to see if you can improve your ranking (but don’t resort to any tricks).
8. Do your research. Before going into that first interview, learn everything you can about the company, the job, the manager and anyone on the interview team. They won’t expect you to know everything, but they will expect you to be prepared and already know the basics. I try to include a couple of questions about the job and about me just to get a feel for whether they took the time to do their research. With almost everything online, doing your research has never been easier, but neglecting this simple task can get you eliminated.
9. Have answers to standard interview questions. This is another one of those pieces of advice that hasn’t changed over the years. There are plenty of lists of standard interview questions online, and they include things like top strengths, top weaknesses, why you want this job, what attracts you to this company, etc. If you have ready answers for some of these standard questions, you’ll be in much better shape when they throw you a really hard question.
10. Be professional. In all of your communications with prospective employers, you want to be professional. Ditch the unprofessional email addresses, swirly fonts and emoticons. Think about it … would you hire someone using “sexydude” or “hotmama” as an email address, or someone who emails you in purple comic sans? Ideally, your email address should include your name and your email should be in a standard, boring black font. Don’t forget to dress appropriately for that interview, but keep in mind that appropriate means different things depending on the company. While a suit might be expected on Wall Street, it might be less apporopriate for an interview at a local technology startup.

What are your tips for job seekers?

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Many jobs now require someone who can collaborate with people online who might be spread out around the world and across time zones. What better way to get real examples of a potential candidate’s communication style and collaboration skills than to see how they interact with people online?

1. Use your network. When you first open your application for a new position, reach out to your social network and have your co-workers or employees do the same. You’re much more likely to find someone who is a great fit for the position and your company if you already have some connection to that person. Hiring and training a new employee is expensive; having another team member or connection who can vouch for their work makes it more likely that you’ll end up with a good hire.
2. Ask for links. When you first contact a potential candidate for an interview, ask her to send you a few links that demonstrate how she works, thinks or communicates. This could include blogs, social network profiles, online community participation, articles and more. You should use these links to find out more about the candidate. I would focus on writing and communication style along with examples of collaboration and interactions with other people online. You should also use what you learn here to come up with some interview questions tailored to that person’s online presence and get more information about any apparent strengths or weaknesses.
3. Do your research. We all like to show ourselves in the best possible light when interviewing; I usually assume that most of what a candidate sends me will be favorable, so I do some of my own research. A simple search on their name using your favorite search engine is a good start, but for people with common names, you may not be able to find much. I usually broaden my search to include name plus city, name plus last employer, name plus occupation or job title, screen names, etc. With any luck, you’ll find some of his writing and can get a better feel for how he interacts with other people online. On the negative side, this might uncover some things he didn’t want you to see. You should also find out if you’re connected to the candidate in any way. If you have some common connections, you might be able to reach out to some of those connections (see the “don’ts” section below for some caveats).
4. Show your talent. Have a website, blog, Facebook page or other online presence for your team, and use it to show how great it is to work on your team. A great way to attract the best candidates is to look like you’re a better place to work than your competitors. Include a mix of fun work activities, testimonials from happy employees and interesting projects. Making a video of your employees talking about why they love working at the company or on the team is a nice visual way to demonstrate how much people enjoy the work environment. People want to do really interesting work with smart, awesome coworkers in an environment where they can have fun while they do it.
5. A few “don’ts.”
   • Don’t ask for access to password-protected sites or other private online social networks that the candidate might participation in. Stick to public content only.
   • Don’t discount a candidate for a small lapse in judgment. We all have something embarrassing posted about us online, and if looks like an anomaly or an outlier, treat it as such and politely ignore it.
   • Be careful not to jump to inaccurate conclusions. When in doubt, ask the candidate if what you found is accurate.
   • Don’t reach out to common connections before checking with the candidate first. The candidate may be quietly searching for a job and you should respect her privacy by not revealing that she’s looking for a new job.

What are your favorite tricks for using online tools while hiring people?

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Hiring activity in the technology sector is heating up rapidly, according to the Wall Street Journal and other sources in Silicon Valley. Companies such as Google, Intel and LinkedIn are adding staff at a rapid clip, and say that they intend to continue doing so over the next year. That’s good for the tech sector, which has been struggling to rebound after a downturn caused by the recession, and it’s good news if you’re an unemployed engineer or developer. If you’re a startup, however, you now have to worry about competing for staff in a rising labor market, along with your other concerns, such as staying in business, paying your phone and power bill, and so on.

On Thursday, Google told analysts on its earnings conference call that it hired 768 new employees in the first quarter, and that it expects that rate to continue, if not accelerate. “We expect to continue hiring aggressively through the year,” Google Chief Financial Officer Patrick Pichette said. Intel has also said that it plans to hire between 1,000 and 2,000 people this year, its first major hiring wave in five years, and Cisco is planning to expand its workforce by 2,000-3,000 employees as well.

On a smaller scale, LinkedIn said it’s already hired 154 people so far in 2010 after adding 184 people last year, and Twitter has boosted its headcount to 170 from about 45 in just the past year and says it plans to continue hiring. Technology recruiting firm SC Palo Alto, which places about 100 candidates a year with small and midsized companies in Silicon Valley, told the Journal that right now “it’s common for us to have an engineer with the right skills talking to three or four companies at a time.”

Is this a sustainable move in the job market? It’s a little early to say for sure. As recently as February, the economy in Silicon Valley was said to be “sputtering,” according to a report by two Valley non-profit groups. “We show no evidence that the recovery has arrived,” Russell Hancock, chief executive of one of the groups, told the New York Times. But a report released today by the Silicon Valley Leadership Group said that hiring is definitely picking up, according to the San Jose Mercury News. Over half of those companies surveyed said they expect to see job growth in their sector, compared with just 17 percent the previous year.

For startups, however, that not only puts the squeeze on the available talent pool, but also pushes the price of labor up. Which is fine if you are Google, or Facebook or even Twitter and you have lots of venture capital dollars to spend. But for those still crammed into a two-room apartment with the server in the kitchen, the days of finding talent easily — and cheaply — could soon be over.

Post and thumbnail photos courtesy of Flickr user vlauria