Making The Marketplace Work For Employment Referrals

Referrals are the gold standard in corporate recruiting – more than 80 percent of hiring managers note a strong preference for hiring job candidates that come from employee referrals as they tend to be better qualified and more likely to stay longer in the job.

But, notes former recruiter Dakota Younger, most hires don’t come from employee referrals. Hiring managers may want referral candidates, but only 22 percent of all new hires are from referrals.

“I don’t think anyone is going to argue that hiring or recruiting is working at maximum efficiency right now. Whether you are a candidate, a company or even a recruiter it is pretty obvious there are some very glaring holes,” Younger told Karen Webster on this week’s episode of The Matchmaker Is In.

Holes that Younger said cost everyone in the ecosystem with a process that is expensive and inefficient and that doesn’t deliver success all that often.

“A good recruiter has a 10 percent success ratio. And that’s not just a good recruiter, that’s a world-class recruiter.”

Working within a system where millions were spent to achieve a world-class 10 percent success rating left Younger fairly certain that there had to be a better way to expedite the hiring process, which led him to look at ways to use technology to generate more referrals from inside the companies that were looking for new hires.

Boon – a platform to connect hiring managers to candidates from their employees’ network – is the matchmaker Younger co-founded to capitalize on that opportunity.

The Trouble With Referrals

Boon has its roots in an attempt to boost Younger’s own success rating in recruiting: bringing in more candidates that were going the 90-day distance in their placements (90 days being the duration that recruited candidates have to stay with their firms before their recruiters get paid) – quickly grew into something that Younger realized could be a tool that might help the rest of the industry.

“We saw that there really was a much bigger opportunity at play here.”

Boon is a SaaS platform that companies pay to access (and give their employees access to) plus– at this point – invited members of interest to the platform. For access to the platform, companies pay $5,000 per position they list. When someone refers a candidate into a position successfully – i.e. they are hired and stay onboard for at least 90 days – the person who did the referring gets the $5,000 bonus.

This, Younger notes, overcomes the essential problem with collecting referrals, it is a time-consuming process that is not at all rewarding.

“Business people are busy,” Younger said, “and don’t have the time to fully digest the needs of an open position someone else is trying to fill, nor do they have the time to fill out a complicated series of forms to refer a candidate.”

Boon greases those skids by not only offering a generous cash incentive, but automating a lot of the pain out of the referral process.

Boon’s platform enables permissioned access to the referral source’s social networks – Facebook, LinkedIn, Twitter, etc. – and uses sophisticated algorithms to suggest an appropriate job candidate. That referrer sends an email with the job specs to that member of their network, and if they are interested, the match is made to the referrer’s hiring manger.

Moreover, Younger noted, Boon makes the process transparent to most of the participants – people who are willing to go to the trouble of finding a referral often don’t know if their efforts were for any useful end.

“The complaint we hear most often is that referrals as a process is like sending a recommendation into a black hole. They don’t know what happens after they send it. And if you think about it, that is a really good way to de-incentivize people. Because when you don’t hear anything back, the natural assumption is that no one used it because nobody cares – and surprise, surprise people don’t want to do it anymore.”

So Boon, through rewards and automation, allow the candidate and the referral provider to see that the referral went through and was seen – all without making a new task for HR departments.

The point, Younger notes, is to actually give employees across the spectrum a reason to make referrals – first by taking away the hurdles to doing it, and then by actually creating an experience that rewards and encourages it. Which, he notes, also means keep an open mind about rewards. Getting $5,000 for a referral is nice, but particularly for high-level recommendations, there often needs to be more in play than money.

“We see that motivating participation is complex. Competition motivates people. Recognition. Self-Improvement. People assume money or material incentives alone are the key to motivation, but honestly they have an increasingly diminishing return – the more you have, the more it takes to motivate. Trying to pay an executive to send a referral is going to cost a lot more than using someone lower ranked in the firm. But the recognition of other people seeing what they are doing – and that action having an effect – that has a much better chance of stimulating the behavior.”

Finding The Market And Building The Network

At this point, he noted, Boon is an invite-only network at the moment – meaning if one’s employer isn’t using it or one hasn’t been invited as a candidate directly – the service is not yet open for general use.

But even as the platform opens up, he noted – it is structured to keep the quality of results high – both with the AI-controlled matching of candidates to positions, and by allowing employers to customer screen what types of referrals they are willing to take down to specific Zip codes, key words and skill sets.

And, while Boon rewards for good referrals, there are also consequences for not so good ones.

“The platform has the Boon match score, which is a bit like an eBay score. It ranks based on how many referrals you send, and how many gain traction, lead to interviews and hires. If you send a lot of things out and get no response, you will have a bad score.”

The objectivity, he noted, is critical, particularly for professional recruiters who can actually have an objective metric to point to when asked about their skills.

“In my recruiting days I would have to look people in the eye and tell them that I am very good – despite the fact that I could offer no numbers to prove that, and the last person that told them that has not been at all good.”

And Boon does not penalize for not making referrals. A user can sync their networks and never make a single referral – only they can see their data, the platform can’t make connections on their behalf – and not making referrals costs users nothing.

Employers are better served by employees that come from referrals, but right now the marketplace for them isn’t really structured to generate them. Boon thinks it’s got the incentive secret sauce to overcome that and offer access to a world of better outcomes for employers everywhere.

“The reality is top talent often isn’t officially on the market – and a service like this gives companies an entirely new way to connect to that talent anyway.”