Employers Pay for Job Referrals. Now Job Seekers Can, Too.

Future of Work

Employers Pay for Job Referrals. Now Job Seekers Can, Too.

By Rebecca Koenig     Feb 13, 2020

Employers Pay for Job Referrals. Now Job Seekers Can, Too.

Getting hired can feel like a game of chance, but it’s actually one of strategy. And one of the best ways to improve the odds of landing a particular job is to ask an employee at the company to recommend you as a top candidate.

Traditionally, job seekers have asked friends, family and former classmates and colleagues to refer them for open positions. Or they’ve put in the time and effort to network with people who might become useful connections, usually through in-person informational interviews or attending industry conferences.

But in an era of dating and ridesharing apps, it was only a matter of time before someone devised a modern update for today’s workers.

Now, you can pay strangers on the internet to refer you for jobs.

This week, a software engineer in Atlanta is willing to pay $40 for a referral at IBM, Microsoft, or Warner Media. An app developer is offering $30 for one at Twitter and Uber. And a recent graduate from a French university will pay $20 for a good word at Google—ideally for a job in Paris, London or Berlin.

These offers are posted on Rooftop Slushie. The website is named for a scene in the satirical TV show “Silicon Valley,” but there’s nothing ironic about its platform. It’s a cross between a career coaching service and a gig economy marketplace that connects job seekers directly with employees at top technology companies.

Here’s how it works. Job seekers offer modest fees, ranging from $5 to about $50, to employees at corporations like Facebook and Amazon in exchange for advice about how to tailor their resumes, prepare for interviews and evaluate salary offers. Since the platform launched in May 2019, it’s attracted about 20,000 tech employee “advisers,” who have answered about 10,000 employment questions to date. Rooftop Slushie takes a cut of all transactions.

The job referral service is new as of January, and so far, the platform has processed about 1,000 referrals.

The ethics of this kind of arrangement are questionable at best, say human resources experts, not to mention likely unnecessary, given today’s low unemployment rates, high numbers of unfilled technology jobs—and LinkedIn’s button that allows job seekers to request referrals for free.

“There’s really no reason for a job seeker to ever pay for any inside information,” says Tony Lee, vice president of editorial for the Society for Human Resource Management. “It’s unethical, and in many cases illegal.”

But the temptation to pay a stranger for a referral at a corporation with a coveted brand name makes some sense, acknowledges John Sullivan, who advises technology companies on recruitment.

“People are looking for an edge,” he says. “If you do want to work at Google, you do need an edge, because the odds are so small.”

Big Referral Incentives

Between a third and two-thirds of all new jobs are found through employee referrals, according to research from the Federal Reserve Bank of New York, which shows that referred applicants are significantly more likely to get hired than people who apply online or are recruited through other means.

Examples abound of companies that rely on employee recommendations to fill half or more of their job openings, a practice they use because “data show the best hires come from referrals,” Sullivan says.

This makes the benefit of referrals pretty obvious to job seekers. And employees also have an incentive to make recommendations. Many companies offer their workers big bonuses for helping to hire talented new employees, usually around several thousand dollars. But for hard-to-fill positions, bonuses can hit $10,000 and even $25,000.

At big technology companies, where Sullivan says hiring is “truly a vicious war,” referral bonuses can get extreme. For example, in 2013, software company HubSpot announced it would give employees who successfully referred new developers and designers a bonus of $30,000.

Runaway bonuses may encourage less thoughtful referring, Sullivan says: “You would sell your mother for $25,000.”

Generous referral rewards may help explain why employees at tech companies are willing to make referrals through Rooftop Slushie for relatively trivial fees.

“These people already have six-figure salaries,” says Daniel Kim, director of operations at Rooftop Slushie. “Getting paid $20, that’s like a free lunch.”

Examining Ethics

Human resources leaders caution employees and job seekers to consider the potential downsides of exchanging cash for referrals. Employees who recommend people they don’t know risk damaging their reputations, especially if the candidate turns out to be a poor match. And because employers may view the practice as unethical, job seekers who pay for referrals may ruin their chances of getting hired.

“If I was a recruiter or hiring manager, and I found out, I would drop you,” Sullivan says. “Your reputation is probably more valuable than $40.”

Lee, from the Society for Human Resource Management, agreed, saying he is “not a fan” of the concept.

But Rooftop Slushie’s customers seem to have a different philosophy. When the platform surveyed users about whether it’s “morally OK” for job seekers to pay for referrals, “overwhelmingly, everybody thought it was fine,” Kim says.

The results revealed an opportunist sentiment. “The company is trying to profit off of you,” Kim summarizes, so “you should use these programs to your advantage.”

There’s one element to Rooftop Slushie’s model that may actually give it an ethical edge. One critique of traditional referral systems is that, if a company is homogeneous to begin with, relying on referrals can make it even harder to diversify, since employees tend to recommend people like themselves. And a PayScale study found that white men are most likely to receive job referrals.

So in theory, the Rooftop Slushie pay-to-play model could make access to the right networks less relevant in hiring.

“Someone who wants to work for Facebook and is graduating out of Tennessee might not have the same connections as someone living in the Bay Area,” Kim says. “If that person can pay $20 to get a referral and get their foot in the door, they should have access to equal opportunities.”

If it turns out that paid job referrals help companies identify good hires, Sullivan says the tech industry could ultimately take a pragmatic approach to them.

“Good hackers are always looking for ways to beat the system. You want those people,” he says. “People will stretch their ethics.”

That makes sense at Rooftop Slushie.

“As long as the company gets great candidates or employees,” Kim says, “the company won’t be complaining.”

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