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When Amir Farhi, CEO of Netotiate, a company that conducts online merchandise negotiations, was seeking to fill a key inside sales representative job, he didn’t turn to job boards or a career website for help. Farhi instead looked to hire for the position through referrals from his employees’ network of friends and connections on social media sites LinkedIn and Facebook.

Using the technology platform of vendor Zao, Farhi was able to conduct automatic matches of the job description with the skill capabilities of contacts listed in his employees’ social networks.

“The person we ended up hiring was one of the first [contacts] that a connection in our network referred to us,” Farhi said. “The process also is proving to be an efficient way to leverage all of the second- and third-degree contacts in our social networks, or the trusted friends and business associates of our first-degree connections.”

Do Social Referrals Work?

Zao is among a growing group of industry vendors seeking to fill a niche it believes is largely untapped by applicant tracking systems—automating and facilitating employee referrals through social network connections.

Referrals have long been considered one of the most cost-effective and expedient ways to fill job openings, and the growth of social networks has created new opportunities to tap into employees’ online connections for referrals.

The effectiveness of this type of recruiting, however, is a matter of debate.

Jobs2Web, a recruiting technology company that’s part of San Mateo, Calif.-based SuccessFactors, conducted a recent study of some of its biggest customers to review the efficacy of making referrals through employees’ social media connections. Doug Berg, the company’s chief recruiting officer, said of the 220,000 referrals examined between 2010 and 2012, the majority of survey respondents—96 percent—claim to have made only one referral from people in their Facebook, LinkedIn or Google+ networks. The remaining four percent provided only two referrals.

“Those small numbers were a revelation to us,” Berg said.

Berg believes one reason for the limited referrals is that the system is still geared more toward candidate-initiated, rather than employee-initiated referring. Often, busy employees don’t have the time or proper incentives to recruit from their networks proactively. When one Jobs2Web customer in the study examined how 1,000 of its employee referrals were hired, it found more than 80 percent of those initial contacts were made by candidates, not employees.

“It wasn’t an employee reaching out to a friend or connection, it was a candidate reaching out to an employee in a company to say, ‘I just applied. Can you help me get the job?’ ” Berg said.

Gerry Crispin, SPHR, a principal in the staffing strategy firm CareerXroads in East Brunswick, N.J, said most of the thinking around facilitating employee referrals remains “one-way,” which limits its potential.

“Companies focus primarily on getting employees to identify what their social media Rolodex looks like in terms of finding good referrals, but that eliminates the other side, which is, ‘How do we make it easier for job seekers to find referrals inside the organization?’ ” said Crispin. He said companies could help themselves by, for example, creating distribution lists of their employees broken out by colleges attended. Job seekers from those same schools could then peruse the lists posted on career sites to seek referrals.

“If I know more about who is working inside a targeted organization as a job seeker, I’m more attuned to finding someone who could champion my cause, which greatly improves my odds of being hired,” Crispin says.

Facilitating Candidate Contact

One company that is focused on making it easier for job seekers to find referrals inside its company is Accenture, the global management consulting and technology services firm. Employees are encouraged to share open positions through their social and professional networking sites, said John Campagnino, Accenture’s senior director of global recruitment.

One company program, called “Get Referred,” is designed to make referrals as easy as possible for both job candidates and employees, Campagnino said.

A Get Referred button is placed on each job advertised on Accenture’s career site, enabling job seekers to identify Accenture employees who might be in their LinkedIn and Facebook networks, said Campagnino. They can then send a referral request to the employee.

“It’s always the employee’s choice of course to refer someone or not, but Get Referred helps connect our employees with job seekers in their networks,” he said.

Campagnino said Accenture employees and their networks are the “No. 1” source for talent at the company. “Our goal is to recruit 40 percent of our hires through social networks and we believe it’s the future of talent acquisition for Accenture,” he said.

Cliff Stein, the CEO of Reputation Changer, an online reputation management company, said the LinkedIn connections of his own employees have produced “at least 20” new hires at the company over the past few years. “Reaching out for referrals in social networks has proven very relevant at our company, as well as in many other industries,” Stein said.

Power of Incentives

Some believe the best way to get employees to be more proactive in referring connections from their social networks remains the almighty dollar—paying a bonus—or providing other forms of recognition. Jobs2Web’s Berg believes companies should award a set fee to everyone involved in helping recruit a referral that is hired eventually.

“Our study suggests it should be more of an advocacy program than a candidate identification program,” Berg says, meaning employees might be paid a fee for having influential conversations with referrals, rather than simply for identifying them.

Stein said employees at Reputation Changer are compensated for referring qualified candidates from their networks. “We’ve had success with that, and it also puts an onus on the person making the referral, because they feel a sense of responsibility to deliver someone who can really do the job and be a good cultural fit,” Stein said.

Some social referral vendors such as Zao use game-like techniques to spur employee participation, awarding points to employees who forward a job opening to friends in their network, for example, or who recommend someone who is interviewed or hired eventually. Points can be redeemed for prizes such as gift certificates and are tracked on a leaderboard.

Dave Zielinski is a business journalist in Minneapolis, Minn.  To read the original article, please click here.