Wednesday, March 01, 2006

How not to get a referral bonus

This was inspired by a great post by Fred Wilson about “hiring from within”.

I couldn’t agree more with using personal networks to find new hires. At my present company I was able to recruit a great analyst and receive nice reward for it.

Where did I find such a great candidate?

Through B-school, he was a team member of mine through all of the core classes. I experienced his work ethic and skills first hand.

What made him a great fit?

1. His career goals fit with a new role created in our company.

2. His personality and work ethic was a perfect match for our culture.

So everything is great right? Referrals work? Not Always.

Anytime you create an incentive for something you need to remember the potential side effects. Compensate people for new hires and you might end up getting lots of resumes of poor candidates because people are looking for the $$$s. With this in mind I have a few points of advice.

1. The interviewee is a reflection on you. If you recommend someone who is a bad cultural fit it illustrates how little you understand about the company’s culture. People might question your motivation.

2. The new hire is a reflection on you. You recommend someone who isn’t good and he/she gets hired. Great you’re on your way to getting a referral bonus, but if that person turns out to be a real problem it will reflect poorly on you.

3. Remember the people who are interviewing your candidate value their time. If you knowingly bring someone in who is a poor fit you’re sending the message that you don’t value their time.

How can you make sure you don’t make any of the above mistakes? Ask yourself the following two questions:

1. Would I want this person working for me on a critical project?

2. Would I want this person to work on a critical project for my CEO?

If you can’t answer “yes” to both of these questions be careful because you might be damaging your reputation.