Thursday, April 16, 2009

Why referral based job sites are failing

In the last post we saw how and why referral works. We realized that in order for referrals to work:
1. An employee of the company has to be involved.
2. A disincentive for recommending incompatible, unqualified people must be in place.
3. A monetary incentive is not mandatory but can help in making more people participate actively.

Let's now evaluate the current online referral based job sites on the above three criteria.

1. Do they mandate employee involvement?
Most sites do not. They give everyone an option to apply for a job or forward the job to a friend.

2. Are there disincentives for recommending a non-qualified candidate?
Typically not. Since the referrer is not part of the company, his reputation is not adversely affected if the referred candidate is sub par. This also means that there is no incentive for the referrer to do any pre-qualification of the candidate.

3. Is there a monetary incentive?

That's one out of three, at best! No wonder most online referral sites don't work!

Lesson learnt: An additional "refer a friend" button does not maketh a referral jobsite.

Next post, we'll look at what is required to make a good referral site.

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