Two paradoxical things are true about the new generation of referral tool.
The addition of data from the social graph tends to reduce the level of intimacy (and therefore the effectiveness) of individual referrals; and
Empowered with data from the social graph, an individual referral can be a good deal more effective than an old fashioned referral.
The variations in referral effectiveness can be simply understood.
The temptation to ‘spam’ is one of the industrial weaknesses of the integration of Internet technology into society. One way of thinking about spam is to notice that every good idea has an embedded limit to its effectiveness. All ideas do.
Where a little bit of pepper makes a dish, a pound of pepper can ruin it. Where a small fire heats a house, a large one burns it down. A glass of wine a day reduces stress; a bottle a day increases liver damage.
The trick in any problem solution is to find the balance point, the place between ineffectiveness and disaster, where the tool has optimal benefit.
When I vouch for your ability to do a job as both a favor to you and a favor from the hiring manager, each of the three of us are bound into a relationship that depends on the others for success. By investing our reputations in each other, we leverage performance. The risk for each of the three of us is that the deal doesn’t produce results.
In volume referrals, risk (the fundamental facet of the programs that CEOs love) goes missing. By eliminating personal accountability, the highest volume referral programs lose all of the ‘oomph’ that makes the basic approach work.
As long as the referral simply gets the referred candidate into the same pool as everyone else, the hiring manager’s ability to invest is not available. If the referrer (the employee pushing jobs to the network) is not held accountable for the performance of the referred person, the tool is simply a sourcing mechanism.
Referral programs work in direct proportion to the investment required of the individual participants. Most of the current offerings are simply new interfaces for volume sourcing.
Another important variable in referral programs is the actual time investment required by the members of the organization. Most people don’t know their friends as potential coworkers. Their relationships are friendships, not business development opportunities.
This means that any effort required to reframe the friendship as a potential employment opportunity requires time, thought and interest. That’s a lot to ask from someone whose attention is focused on doing their job. The reason that even the best referral programs have limited participation is that the referrers are usually busy working.