Understanding The Value of Referrals
I think every job seeker knows that the very best way to get one’s foot in the door at any company is via a referral; but, it is important to understand — from the hiring perspective — what is valuable about an employee referral, or even an industry business referral.
An employee referral (from either a manager or an IC — Individual Contributor) is valuable if the referrer knows your work professionally.
In order of preference from a recruiting perspective:
1. A hiring manager referral of someone they have managed directly in the past
2. Hiring manager referral of someone they worked with but did not manage directly
3. IC referral of someone they have worked with (professionally) in the past
4. Referral by either an IC or hiring manager for someone they know professionally outside of a formal employment relationship — ie volunteered together, have spoken on panels or attended professional events together, have worked on non-work related projects together
5. External business referral — ie a former/current professional colleague referring a candidate to the hiring manager/recruiter of someone they have worked with professionally
6. Business referral of someone they have worked with in a non-professional (employment) setting
Notice that personal referral from social contacts are not on this list, nor are people that reach out to someone “inside the company” on this list. The reason for that: there is absolutely no basis for context. A referral is only valuable if the person making the referral has professional experience to draw on. The further away the referral is from someone inside the employer, working together in a professional capacity, the less valuable it becomes.
Many companies have employee referral bonuses for individual contributors (hiring managers are generally exempt from referrals for their own teams, sometimes at all, and recruiters are always exempt from referral bonuses.) It may seem like a great way to make extra cash; send someone through the recruiting process using your name and if they get hired, sit back and watch the money come in. But here’s the reality: if you refer someone that gets hired and they end up being a poor employee, you are putting your own credibility and internal reputation on the line. I have recently (last couple of years) worked at a company where one person made so many “dud” referrals that they were barred from making ANY. When a candidate is a referral, generally the hiring manager/recruiter will reach out to them to inquire how they know the referral, and on what basis they are suggesting this candidate for the particular job. Most companies have processes for following up with a referrer about their referrals, and even may have a separate contact protocol.
Think about your employee referral process along the lines of setting two friends up on a blind date. You want to make sure they will be compatible on the basics, and hope they hit it off. Would you set up your best friend, or your sibling with someone you didn’t even know? You should consider an employee referral no differently. One of the few things you have professionally that will follow you all your days is your reputation — and the more people you interact with, the more people will remember you as both you and they move to new roles at different companies. Hiring managers and recruiters remember you based on your professional interactions with them, so keep your reputation clean.
