Just after tax season ended in April, workers at a major accounting firm in Midtown got an interesting e-mail from their boss. He asked each employee to send him a list of three to five acquaintances who might make good additions to the company. As a reward for their insights, they’d be paid a $7,500 bonus for each one hired.
Not a small chunk of change for handing over a name, right?
The boss’s solicitation was part of a trend in recruiting — and one that cash-strapped workers might well applaud. Such referral bonuses are on the rise, with nearly half of companies surveyed recently by the Society of Human Resources Management saying they’re handing out cash and prizes to those who refer successful job candidates.
On the small end such prizes might consist of an Applebee’s gift card or an iPod. But they also include plum giveaways like a trip to Europe or, in one company’s case, a two-year lease on a Mercedes SLK.
And plenty of companies are paying cold cash, which runs anywhere from a few hundred dollars to $20,000 and even more. Jennifer McClure, president of the recruiting firm Unbridled Talent, says in “extreme situations” she’s seen bounties go as high as $50,000.
While some companies think of such bonuses as employee perks, more and more now view the payouts as key components of their hiring strategies, which increasingly involve actively seeking candidates for open jobs rather than passively fielding applicants.
“‘We want you to help us create our best team’ is the message we put out to our employees,” says John Campagnino, senior director of global recruitment at Accenture, which has 7,000 positions that are reward-eligible this year in the US. “At the end of the day, we believe partnering with our employees is the best way to recruit.”
In part, the rise in referral bonuses reflects the way widespread adoption of social networks has changed the recruiting game. Employers nationwide are talking about how they can better leverage their employees’ personal and social networks to find good job candidates, says Martina McAndrew, who sits on the Society for Human Resource Managers expert panel.
One reason is a growing belief that job candidates referred by employees tend to be of a higher quality, notes corporate recruiting coach Laurie Ruettimann, co-founder of Voice of HR. After all, they come pre-screened by the employee making the referral, so chances are they’ll be a good match in terms of both skill set and social/cultural fit.
Employers also say hiring through referrals helps their retention levels; the thinking here is that when employees recruit people into their companies and onto their teams, they’re more engaged and less likely to leave.
At the accounting and advisory firm Baker Tilly, where McAndrew is director of strategic recruitment, recruiters have been known to go into various departments to talk about the jobs they’re trying to fill. They sell employees not only on how great it would be to work with a trusted colleague, but on the possibility of landing a hefty referral fee — the firm typically offers rewards of $2,500 to $10,000. Though not every job opening qualifies for referral fees, a good many do, and the harder the position is to fill, the higher the fee.
For workers hoping to land such bonuses, referring candidates is easier than ever. Ten years ago, you had to troll through your rolodex or e-mail contacts list and take a stab in the dark as to who might be qualified for a particular job; after that came the awkward phone calls. Today you can simply log into a LinkedIn account and do a keyword search to discover who in your network might qualify for a particular job.
Some companies make this process even simpler, using software, such as Jobvite, that goes through your Facebook and LinkedIn connections, identifies job prospects against criteria you provide, and contacts them on your behalf. Last week more than 500 corporate employment managers met at Linkedin headquarters to talk about a new tool that will enable employees to selectively broadcast job openings across targeted segments of their LinkedIn networks with a few clicks of their mouse.
Given the potential payouts involved, it’s less than shocking that some are using referral programs a bit differently than intended. Exhibit A: the fellow who works for an international consulting firm who’s been targeting Internet-based user groups with a message soliciting resumes he can upload to the company’s database, promising, “If you get hired, I will give you part of the referral fee I receive.”
This is precisely what companies who pay referral fees don’t want to happen. A little assistance is one thing, but “we don’t want our employees to believe that recruiting is their job,” says McAndrew.
Follow the $
For those looking for work, the rise in referral bonuses carries a message, and one that can’t be repeated often enough: The best way in your next employer’s door is probably through someone you know; so quit spending your time on job boards and start getting busy on your network.
Figure out where you want to work, and then find a friend, or a friend of a friend, who already works there. Give him a ring, take him to lunch or read something he’s written on the web and comment on it.
And do a little research to find out if his employer pays employee referral bonuses. If the answer is yes, you might want to remind him that his bank account will get bigger if you get hired at his company. At the least, you can schmooze away knowing that you may be giving as well as taking. Who knows? You might even inspire someone to be your career steward.