New Tool Helps Employers Give Cash To The Right People In Job HiresNew Tool Helps Employers Give Cash To The Right People In Job Hires

For many employers, the most successful job hires are often the people who were referred to the company by other employees or their acquaintances.

Now there's a new way for employers to motivate their employees--as well as workers' circle of friends and acquaintances, and those people's network of contacts--into finding new employees. Venture-backed startup firm H3.com (H Three Inc.) on Monday unveiled a Web-based "cash-reward-based referral-hiring tool," which helps companies track all the individuals involved in the successful hiring of a job candidate so that each of those people can be monetarily rewarded by an employer.

"Many corporations believe that 30% to 60% of their new hires come from employee referrals," says Lisa Rowan, program manager for human-resource management and staffing services at research firm IDC. The H3 service "can enhance this by motivating employees and others to spread the word about a job opening," she says.

Hans Gieskes, president and CEO of H3, says that while a friend will often suggest to another friend someone who might be a good potential candidate for a position an employer is looking to fill, mere acquaintances often need more incentive to put on their thinking caps for job-candidate suggestions.

H3's system aims to help employers get their workers--and their acquaintances--to shake the tree for good job candidates.

Here's an example of how H3's system can work. Say that "Kim," an HR manager of Company XYZ, needs to hire someone for a new IT manager position.

Kim would go to the H3 site to create the job requirement information, including the $2,000 reward Company XYZ is willing to pay for a successful referral. Kim clicks on a button that allows her to use her own company's E-mail system to create an message containing that job information. Kim can send the E-mail message to other employees or contacts, asking for candidate suggestions. Those E-mail addresses are not entered into the H3 system, so those recipients' identities are protected.

If, for instance, Kim sent the E-mail to 60 people, and "Craig" was among 12 people who are either interested in the job or know someone who might be qualified, Craig clicks on a link in Kim's E-mail that directs him to the H3 site. Using the H3 system, Craig can now create an E-mail about the job opening that he can send to his acquaintances and friends using his company's own E-mail system.

If Craig's friend "Tim" is among those receiving that E-mail, he, too, can click on a link for the H3 site and send this job info to his friends. If Tim's friend "Maria" is interested in applying for the job, Maria clicks on the H3 site, which would then instruct her on how to get in touch with Kim at Company XYZ. H3 would also send a message to Kim, informing her that "Maria" is interested in the job.

If Maria is hired by Kim, Kim's company receives an invoice from H3 for $2,200. That covers the $2,000 reward paid by H3 that will be split between Tim and Craig for their referrals that led Maria to Kim's company. The additional $200 paid by Kim's company represents a 10% fee for H3.com.

H3 pays the reward to Tim and Craig only after Maria has been on the job for 90 days. If Maria leaves the job before 90 days, Kim's company gets a refund of $2,200. Also, if no one ends up being hired using the H3 job referrals, H3 doesn't charge the employer.

"There really is no risk to a company to try our product," Gieskes says. H3 is aiming its service particularly at "the 8 million companies in the U.S. who have fewer than 1,000 employees," he says.

IDC's Rowan says H3's focus on employers with fewer than 1,000 employees is smart. There are fewer services and tools available to help such companies effectively find new workers, she says.

Depending on the job that an employer is looking to fill through H3, referral rewards can range from a minimum of $500 to several thousand dollars, Gieskes says. That's generally less expensive than headhunters, who often charge a finder's fee equal to 17% to 33% of the person's first-year salary, Gieskes says. Also, many headhunters, especially "retained search" recruiters, don't typically take search assignments for job positions paying less than $150,000 in many markets, he says.

Gieskes founded the startup, which received $3.5 million in venture capital last October, of which only $650,000 has been spent, he says. H3 has five employees and a number of contractors, he says.

Directory M, an online marketing company, has been using H3's services for about a month to help reach its goal of expanding its sales force from 90 account executives to 3,000 over the next 18 months, says Pete Lamson, Directory M's chief operating officer.

"We're looking for a high volume of highly qualified people," he says. Although Directory M is also using other methods of recruiting, including posting jobs on online job sites, online newspaper ads, open houses, and more traditional internal referrals, so far the company has found that H3's referral service can help solicit "good-quality candidates quickly," he says.

That's because unlike online job-site postings, in which Directory M often ends up receiving hundreds of resumés from unknown candidates that must be evaluated, the H3 service helps in "candidate filtering." Information about the job opportunity is passed on by people who know of someone who's likely to be a good fit, he says. Already, for each job posting, the service is saving Directory M hours of time sifting through resumés to identify the best job candidates, Lamson says. In addition to account executive positions, Directory M plans to use H3 to help fill other jobs, including possibly some senior-level posts, Lamson says.

IDC's Rowan says some online job sites, including Jobster, have networking tools to help elicit candidate referrals for employers looking to fill job positions. However, "what's different about H3.com is the focus on rewards not just for employees, but for acquaintances helping in the referrals as well," she says. "This formalized the process."