It's relatively common for tech companies to try to encourage employees to recommend people, with a ~$500-$2k bonus if you refer a friend who ends up getting hired. Not sure if it's actively taken into account on the hiring-decision side, though, or if it's just seen as a way of getting in more applicants.
The last company I worked for (hot startup in NYC) was offering a $10k bonus for referring a friend. Or at least that was what it was up to when I left, for all I know it could be higher now.
I was talking about the second part of the equation, i.e. taking it into account on the hiring-decision side. I know refer-a-friend schemes are common, but I think most companies (including Google?) don't give any weight to the fact that someone referred a friend.
In fact, considering the incentive structure (you get lots of money to bring in friends), companies shouldn't take into account recommendations. It would have to be done differently in order for the recommendations to actually mean something, which I'm guessing is more common in startups than large companies.
From my perspective, most referral bonuses aren't big enough to make it worth my while to try to get a friend in the door. When I know that my referral saves them $20k on a headhunter fee, getting < 10% of that rubs me the same way a nickel-an-hour raise would.
I got done over with this. When I was leaving a job (for geographical reasons) I found a friend, convinced him to apply for my job, and then organised the interview, etc. They gave him the job pretty much on the spot. When I asked for my referral fee, they refused on the basis that I was a 'contract employee'. Nobody of course mentioned this when I was busy organising the interviews. I found out later that the agent who was busy trying to place the job leaned on the HR people to make sure I didn't get the money, because he didn't want to lose out. Yes, I occasionally went to the pub with the HR people also. Well I did him in, I instructed my incoming friend that the agent wasn't to be trusted and so my friend never put another job through him again. The guy probably lost 50k in commission over the next year or two, all because he didn't want someone to get 2k of someone elses money.
Why so many employment agents have to act dishonestly and sneakily, I'll never know. It's as though they think they can control every conversation that happens within the company.
Not only that, but some companies' HR departments are best buddies with the headhunters and agencies. As a result, their candidates tend to be preferred (intentionally or not) over the "refer a friend" candidates you refer as an employee. I know it's a serious accusation, but several years ago I had statistical evidence that this was happening at a certain company where I referred more than 20 highly qualified candidates at a time when they were struggling to fill positions.
>some companies' HR departments are best buddies with the headhunters and agencies.
Considering the average quality of the candidates brought in by the agencies, this is the only rational explanation I can think of as to why companies still use agencies.
At the risk of sounding like a marketing guy for TopProspect.com (I don't work for them, own any stock etc.), they solve this problem too. You get paid what a head hunter would be paid for recommending a friend who gets hired.
Really? I'd expect a startup employee to be more interested in, ah, 'extracting value' than a regular employee. I mean, you've gotta have /some/ reward for all that risk.
(I mean, it's different if it's a company that wouldn't have paid a headhunter anyhow; but I think the grandparent was objecting to the difference between what you are paying the headhunter and what you are paying the employee, more than the absolute amount you are paying.)
Extracting (appropriate) value, yes, but how and when becomes the issue. If the company is going through a cashflow issue - far from unheard of in a startup - insisting on extracting the full value of your pound of flesh there and then would be counterproductive. Equally one's startup should be increasing in value by more to than the cost of the hire so again it could very well be in your interest as that sort of employee not to extract the full value if to provide the lead for free could permit a far earlier hiring than would otherwise be the case.
eh, if you can afford to pay a headhunter $18K, you can afford to pay your employee little more than a grand. (Most programmers, rightly or wrongly, once they judge a few recruiter-arranged candidates, believe that recruiters bring no value, so the very idea that you are using a recruiter implies waste.)
On the other hand, like I said, if you can't afford to pay the headhunter, then your employee shouldn't whine about not getting a recruiting bonus. I've personally referred many people who got jobs, and I don't think I've ever gotten more than a free beer out of the deal.
Fair point, and I'd agree. My career goals aren't particularly amenable to most startups, and with a child I have little interest in the risk/reward profile of startups. Further, I have little interest in mixing my personal and professional relationships - that seems like a needless complication for little gain.
That said, my point still stands. $2000 isn't worth it for me to do my company's dirty work and knowingly save them $18000 in the process.
That doesn't make any sense. The primary benefit of referring your friend is to help your friend get a job. I would do it even for free. Someday your friend will return the favor.
Assuming you have friends in the field looking for work, maybe. However, maintaining a barrier between my personal and professional relationships is worth more than a pittance to me. It's worth $500-2000 to me to keep that barrier in my life and avoid poisoning the friendship if the professional side goes sour. I'd rather help my unemployed friend find work in other ways or even loan them money to help keep them afloat while this was going on (and yes, I've done both).
More to the point, my understanding of these referral programs is that companies want to poach talent from other places on the cheap. It's never couched in terms of "help your unemployed friends and get paid" - it's always phrased as "know someone sharp? why not convince them to work for us!" Why should I help them do that? If they offered me some substantial fraction of what they would pay a headhunter for the EXACT SAME SERVICE (actually it's inferior service because I am trained to know who's good - they have no idea), I might be more flexible. $10,000, even after tax, would be enough of a positive impact on my life that it's worth the risk to the friendship. $500 means I'll pass.
The biggest problem you have to watch out for is that good friends aren't always good coworkers. And the fact that someone is a good friend can cause people to purposely overlook things that might make them a bad fit.
So that said, I personally would be hesitant to hire someone solely because they're someone else's friend.
I'm guessing it's because, in sivers' case, he didn't really need extremely skilled labour? Or maybe people just try to overoptimise when "good enough" will do very well.
Everywhere I've worked, the first step to hiring a new developer is to ask all the good developers if they have any friends that are also good and interested in work.
It's done in nearly every business too small to hire a head hunting firm or spend 100 man hours conducting interviews.
Contrary to popular belief, most companies, even tech companies, are not google and do not need geniuses and PhD's to write their web apps or stock their shelves.
Most of the time someone skilled who needs money to pay bills will show up and do a job pretty well. This is an old and not-very interesting concept and doesn't lead to blog hits though.
Google still prefers to hire through employee referrals. I guess they figure that friends of geniuses and PhDs tend to themselves be geniuses and PhDs...
