Job seekers aided by ‘employee referral’ programs

February 8th, 2010 | by Admin |

SAN FRANCISCO (MarketWatch) — With job openings few and far between, it’s more important than ever that job seekers’ strategy is on target — and networking should be the basis of that strategy.

Rather than sitting in front of a computer, searching online postings and blindly sending out dozens or hundreds of résumés, job hunters have a better chance of success through networking. The old adage, “It’s not what you know, but who you know” is more accurate than ever.

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The more time you devote to networking, the higher your probability of finding that elusive job, corporate insiders and job-search experts say. One reason for that: Companies often fill positions by making internal employee referrals part of the company culture. Some firms even make hiring new workers through referrals a strategic goal.

That’s a development job hunters can leverage to their advantage by honing their networking skills. For companies, having current employees recommend new hires gives them access to pools of talent they might not normally attract. And current employees get the opportunity to recommend skilled newcomers and reap cash bonuses and internal recognition.

‘Talent ambassadors’

“Prudential has always viewed their employees as talent ambassadors. Our employees are an excellent source for referrals,” said Peter Price, director of global communications for Prudential Financial Inc. /quotes/comstock/13*!pru/quotes/nls/pru (PRU 48.36, +1.34, +2.85%) .

Prudential employees earn between $500 and $2,500 for each successful referral, depending on the job level. Hiring managers are not required to hire a referral over a more qualified candidate — decisions are based on skills, experience and qualifications. But “serious consideration is given to those candidates who are referred by Prudential employees,” Price said.

At Vistaprint, the company’s “Everyone Here is a Recruiter” program, launched in late 2006, offers a $1,500 referral award for each successful hire, and a home theater system for the employee with the most referrals hired.

“At the end of that first year of the program, employee referrals jumped from 19% to 42%,” said Kevin Murray, director of recruiting at the firm. Vistaprint USA Inc., a print company focused on business cards and brochures, is a subsidiary of Vistaprint N.V. /quotes/comstock/15*!vprt/quotes/nls/vprt (VPRT 54.69, +1.44, +2.70%) .

“By 2008, employee referrals had grown to 48% of all new hires. The program is on track to pass that number this year,” he said.

Will Robinson, a job coach in Arlington, Mass., said in this economic downturn he’s seen a growing number of new hires coming from employee referrals

“In some companies, as many as 75% of placements are done through networking,” Robinson said. “Employee referrals are hugely important to companies. They are even more important in a soft economy, when companies are flooded with résumés, and many of them are bad résumés.”

From the organization’s perspective, employee referrals are extremely valuable, said Alexandra Levit, author of “New Job, New You: A Guide to Reinventing Yourself in a Bright New Career.”

“Not only do you receive a steady stream of qualified applicants without having to spend big dollars on recruiting, but those applicants come with built-in, trusted references,” said Levit, who is working with the Labor Department on a plan to make American workers more competitive in the job market.

Many companies consider employee referrals so important they mandate a specific percentage of positions be filled by referral, and human-resources representatives have to meet quotas, Levit said. That creates opportunities for anyone wanting to work at those companies: Networking with the right people can help get your résumé in front of someone who actually wants to see it.

Employee referrals also help cut the cost of finding candidates, said Prudential’s Price. “In most cases, the awards that are paid out for an employee referral will be significantly less than the cost of other sourcing methods, like advertising.”

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