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It's long been said that who you know is the single most important factor in landing a job. Nowadays, it could also land you a check.
That's the idea behind a new online recruitment service that uses social networks to track down job candidates. Founders are betting that cash payments will inspire people to reach out to their friends' friends and colleagues to find promising applicants for hard-to-fill positions.
"Between close friends, there is a great overlap in network. They know the same people," said Hans Gieskes, founder and CEO of H3.com, a Cambridge, Massachusetts, startup that is launching an online recruiting service incorporating financial rewards at this week's DemoFall conference in Los Angeles. "But if you ask someone who is a new acquaintance, you've gotten into a new network."
H3.com -- which was founded last October and completed a beta test this summer -- is one of several startups turning to online social networks as recruiting instruments. Other services, like Jobster, LinkedIn and Accolo, are employing tools such as e-mail hiring campaigns, software for tracking prospective employees, and systems to measure how connected an applicant is to an employer, in an effort to modernize recruiting.
"The truth is that most people prefer to hire someone who is known by someone whose opinion they value and trust," said Konstantin Guericke, director of marketing for LinkedIn, a networking site for professionals that publishes job listings. "But there was never before a systematic way to identify inside connections to the hiring manager."
The recruiting sites are all about connections. Most share the goal of helping employers reach the coveted "passive" job applicant, which is recruiter lingo for the qualified person who is already gainfully employed and thus not maniacally reading job boards. Such people are often the best new hires, but are hard to reach through conventional advertising.
"Access to people who aren't looking for a job is something you don't get with job boards," said Jason Goldberg, CEO of Jobster, an 18-month-old company that sells a service for employers to manage networks of potential employees and referral sources.
Jobster customers, which include Cisco Systems, Starbucks and Nordstrom, typically pay between $5,000 and $15,000 a month to use the service, Goldberg said. People who refer new hires commonly don't get a reward. It's up to each company, Goldberg said, to decide how to shower appreciation upon employees who refer successful job applicants.
LinkedIn charges employers $95 to post job listings for 30 days. People who search for jobs on the site can immediately see if they are connected to the hiring employer directly or through a mutual acquaintance.
H3.com's service lets employers send messages about job openings to a list of trusted people. Those who refer a candidate who is eventually hired receive a cash reward. Typically, the amount ranges from $1,500 to $2,000, although it has been as high as $10,000. If more than one person is involved in the referral, the reward is shared.
H3 makes its money by collecting an additional 10 percent of the referral reward from the employer.
Gieskes, formerly president of job-listing site Monster.com, claims that using H3 is generally much cheaper than hiring a recruiter, particularly for senior-level positions. For hard-to-fill executive and managerial posts, headhunters sometimes collect a percentage of first-year salary or even stock options. (The recruiting firm Heidrick & Struggles, for example, netted $129 million cashing in stock options it received from Google for finding its CEO, Eric Schmidt.)
Gieskes doesn't expect H3 or another online recruiting system to entirely replace traditional headhunting firms or job boards. However, he believes employers will gravitate to recruiting services that collect a fee only when they succeed in locating a qualified candidate.
For job seekers who like to network, the introduction of more referral-based online recruiting services sounds like it ought to be a good thing. But David Teten, co-author of The Virtual Handshake, a book on social networking, says such services can work better for unsociable types who are dedicated to their jobs.
Who you know does matter, Teten noted, but what they think of you matters more.
"If you know 100 people, and they all think you're mediocre, then you really don't have a great network," he said.
