In Delhi, a measure of your importance is how many links you need to get through to the Prime Minister. If you can phone him directly, you are the cat’s whiskers. Or you might have to call your friend at the India International Centre, who can ring his friend the minister, who rings his friend the cabinet minister, who has the ear of the PM. You are still the bee’s knees, but some distance away.

“Everybody is somewhere on a network, related to everybody else,” says Mumbai-based HR consultant D. Singh. “It was commonplace earlier to ask your friend if there was a job available. Today, with the arrival of the Internet, you can network with strangers and end up in a company which nobody but the last link in the chain knows much about.” Referrals are coming of age.

A referral is when you recommend a person for a job. Yesterday it was done on personal contacts; you actually knew the person you were recommending and probably knew somebody at the other end — the company offering the job. Today, the web has proved it is not always necessary.

Look at WhoToTalkTo. It was started in 2004 as a classical-style social network. It didn’t click. Says co-founder Brian McCullough: “We learned that classical social networking does not work for word-of-mouth job search.”

In its new avatar WhoToTalkTo claims to be the first job referral exchange. “We bring jobseekers together so everyone can share and exchange the inside scoop. All you have to do is contribute a referral you know of, and you get to search the referrals posted by everybody. You can find out who’s doing the hiring, what they’re looking for and how you can contact them directly.”

Such internet referral sites are not limited to the US alone. NDTVjobs has announced a referral programme in association with Yellojobs. The highlights are the huge rewards. If you refer a person for a job and he gets hired, you could pocket up to Rs 1 lakh. In most cases, it is much lower, of course.

How does this work? The career networking site TechTribe, which recently launched FrontFoot, a referral service for mid-level professionals earning in the Rs 8-10 lakh bracket, explains how. First, employers post their jobs on TechTribe. Second, you invite your contacts and friends to join TechTribe where they can network. Third, you find a job that would be great for one of your friends. Fourth, you refer your find for the job. Finally, if he gets the job, you get Rs 10,000.

FrontFoot estimates the market size for referral jobs in India at US $400 million. In the US, a recent survey shows that 98 per cent of US companies use referrals as a recruitment device. The payments can range from a simple dinner for two to a fee of US $50,000, and that’s big money in anybody’s book.

Though these amounts may seem high, the referral system is actually the cheapest form of recruitment. If you take the traditional route, in-house efforts are far more expensive and take up too much management time. A headhunter could easily charge 25 per cent of the annual salary of the new hire. And that means much bigger bucks.

There is one subset you must beware of, however. That’s recommending someone for your own company. (For a contrarian view, see box.) A bad choice will raise questions about your judgment. “Yes, your HR department has to do additional vetting,” says Singh. “But unless the candidate is found to have a criminal record or something like that, there are unlikely to be any bars to entry. Remember that your referral means that you have given your approval; it is more than just passing on a name.”

There’s another reason. Complains Kamlesh, who brought his friend Govind into his erstwhile company: “When they had to downsize, I was shown the door. Govind was promoted.” The moral: don’t count your chickens, if you allow a wolf into the henhouse.

THE WHY AND THE HOW

The benefits of employee referral programmes and the proactive approach

lAlthough these programmes do incur costs, they are typically less expensive than other sources of candidates.

lGood employees know other good workers; so the quality of the candidates is likely to be high.

lThe relationship between an employee and a candidate can make it easier to sell a prospect to a new organisation.

lReach into the workforce at multiple touch points and on a regular basis.

lAggressively solicit the names of prospects, even when openings do not yet exist for them.

Source: Adapted from Weddle’s, an Internet HR newsletter