Tuesday, March 15, 2005

JobThread - referrals and more

I have been having an email exchange with Eric Yoon, the CEO of an innovative young company called JobThread Inc.

The idea behind JobThread is a simple one (aren't all the best ones?). JobThread automates the referral process, in a similar way that many of the referral modules of the big application tracking systems do, but with one big difference - the motivation is built into the chain, not just at the first point.

One of my big projects last year was designing a company wide referral system for a big corporate. Referral programmes are great when they work - they reduce cost per hire dramatically, and motivate staff. In fact there is quite some evidence to show that by just selling their employer to their acquaintances it reiterates to them why it's such a great place to work. If you can get the programme right you should expect around 35% of all hires to come from this channel.

What's more, there seems to be little evidence that the level of payment is a big determinant in the likeliness to refer. Over a certain level - let's call it an administration cover - increasing the payment won't dramatically increase the number of referrals. Let's face it, if you'll refer for £2500 but not for £250 you don't really believe in what you're trying to sell.

There is also a widely held belief that 'our senior people should just do it' or 'they don't need the cash'. I see no evidence to support this. They still have the administration cover, they still want recognition. Just because someone earns £100,000 doesn't mean that an extra amount won't be noticed. You'll find plenty of your senior staff struggling with the bills, though in their case the worries might be school fees not the electricity bill.

The key factor for making a referral programme work is not how you reward but making sure that you do. In other words it's getting the process right, making it simple to understand and resilient. The people who refer are likely to be you most motivated members of staff - the ones most eager to tell their acquaintances. If your process, both the referral process but more so your recruitment process, isn't great you'll annoy them, annoying your most loyal staff.

A new system can't force you to treat candidates with more respect, but it can automate a process ensuring everyone gets paid, which brings me back to JobThread.

JobThread is one of the first systems that I have seen which is a stand-alone referral system. As a hiring manager, or staffing manager, you put in your jobs and send them through it to a range of contacts. There is nothing to say these contacts couldn't be everyone in your firm, or even include people outside the firm. If any of these contacts recommend someone they get the payment.

However, what is innovative with JobThread is that if one of your contacts sends it to someone they know, who then sends it on to one of their contacts and the hire is made then both referrers share the fee. It motivates down the chain as well.

At the moment using JobThread is free. You will have policy issues to overcome but given this is I would suggest giving it a go. It will work as well, if not better, for senior level talent as well as junior roles due to the deeper professional networks these people often have.

In the future there is even the real possibility that JobThread could charge on success, making it the only pay-for-performance online recruitment tool I can think of.

Why else do I think this is a great tool? Well one reason is that unlike many other network based tools it does not depend on a huge installed network to start being useful. The network effect is important, but it is the individual's network, not the tool's.

Who do I think will get the most out of this? My guess is that the big users will be staffing firms and medium sized organisations. Getting large organisations on board could depend on how it links to the big ATS - the reality is that an organisation with 2500 active roles won't want to re-post on two systems. However Eric has indicated that he's eager to set this up as necessary. Again, the advice would be to get in there early and negotiate to be a test user if you're interested.

For a medium sized firm JobThread could offer a very simple way of implementing the process automation needed by a referral programme.