

Employee Referral Bonuses Are Pants on Head Stupid - JasonPunyon
http://jasonpunyon.github.com/blog/2012/05/11/employee-referral-bonuses-are-pants-on-head-stupid/

======
tocomment
I would agree with him but this only applies to the 1% of companies that are
"awesome" and only hire "awesome" employees (and where the existing employees
think like founders and only have the good of the company in mind). Most
companies aren't like that, and also most employees are not awesome, they're
average.

Referral bonuses are a great way to save money on recruiters while at the same
time getting better employees.

~~~
JasonPunyon
I already save money on recruiters by not using them :)

------
josephmosby
This type of post is really easy to say if you have some sort of personal
equity in the business. The larger the business, the more that equity gets
diluted.

I work in a MegaCo, which has these sorts of referral bonuses. In addition,
teams in the company are spread out over individual clients. If I refer
someone, it is more likely than not that I won't ever work with this
individual. I'm paid by salary (not profit-sharing) so I don't have a
financial stake in the efforts of the firm. I'm not management, so many
decisions about what this new employee would be doing are removed from me.

If I don't get to work with my referral and I don't stand to gain equity from
their work, a referral bonus makes the economic seesaw balance. Saying it's
"pants on head stupid" is short-sighted and only applicable to extremely small
companies.

------
byrneseyeview
One good reason to have this kind of bonus: you're more likely to end up
hiring people who existing employees have already worked with. Having a common
culture is hugely valuable, and outside recruiters/random applicants don't
have this quite as often.

I haven't heard of situations where someone refers a bunch of garbage
applicants for the referral bonus--and I'm sure the usual referral agreement
has some legal caveats that allow the company to cut off particular referrers
if they're abusive.

It's not necessary for every company, but it's not as toxic as it sounds. From
working as an actual recruiter: _recruiting is really hard_. Doing part-time
recruiting for a fee well below the industry standard is a waste of effort; if
you can make good money doing that, quit your dev job and start recruiting
full-time.

~~~
tocomment
I've always wondered about doing recruiting on the side. How does one get
started? I guess you don't need a license or anything, but what officially
makes one a recruiter?

------
JoeAltmaier
Um, most of us already have a job. We don't think about doing HR's job most of
the time, we're busy. And there's an emotional hump to get over, to beg a
friend to consider moving jobs to work at your place.

$10,000 does a lot to realign folks' attitude. I'll go to my old colleague
John McGinty (actually he referred me :) and say "Sococo is a great place to
work, we're ramping up and getting new customers daily, the work is exciting
and we need you!"

Maybe I'd go to somebody less able too. But we're looking to grow lots, folks
don't all have to be architects. Its not black and white who is a fit and who
isn't and its essentially not my call anyway - its the hiring managers'.

------
maybird

      This third category is made up completely from the people
      the employee wouldn’t have referred if the bonus didn’t
      exist.
    

Maybe the candidate has multiple options and the person referring them will
give them a kickback for taking the job.

