All referral programs are more or less like lottery drawings.
The most effective versions of the game are played in close quarters (I recommend you to my friend in HR and you get the job). Like any process where actual dirt gets under actual fingernails, there is an astonishing intimacy that ties the reccomendation to performance in a very direct way.
When executives say that referrals are the best source of new employees, this is what they are talking about. Close, personal referrals in which everyone has real skin in the game. While there is some chance that your friend won’t get the job, the whole idea is that your recommendation improves the likelihood that she’ll be coming to work for the company.
Still, there’s always the chance that it won’t work out.
At the other end of the spectrum are mass efforts to increase the number of names that go into the top of the funnel. Each and every employee, regardless of performance or attitude, is asked to contribute friends and connections to the company’s talent pool (perhaps, talent cesspool is closer). There is little intimacy and even less chance that one’s recommendation is meaningful. All of the names collected in this sort of a program go into the same queue as the other people applying for jobs.
It’s just like buying your friend a lottery ticket and every bit as likely to pay off.
This new form of referral, divorced from all of its social intimacy, is the crap that many social media recruiting tools are peddling. Since Andresson-Horrowitz founded Top Prospect, there has been a rush of lemmings racing towards the nirvana of socia media generated referrals. For all of the supposed innovation in that segment, there sure is a lot of chase the bunny going on.
At any rate, the kinds of referral programs that work are the ones where all of the players have real skin in the game. A one in ten thousand shot at winning the prize, getting the job, achieving the recognition is not skin in the game. Investing one’s reputation to help a friend and the company is.
Since we no longer know what a friend is, it’s no surprise that we’ve forgotten what a referral is.