H3, a solution that lets employers offer cash rewards for external referrals, has recently changed its pricing structure. According to an anonymous source, “The minimum reward has been increased to $10,000 from $2,000 because higher cash rewards are working like magic to capture referrals and candidates.”
Of the change, H3 CEO Hans Gieskes explains,
What we have done per November 1st is fix the minimum reward customers can offer at $10k (optional: $15k, $20k and $25k) and we’ll now charge a $2,000 fee per hire, still offering 80% lower cost-per-hire than using traditional headhunters. All our existing customers can continue to operate on the old business model, i.e. set their own reward levels and only pay us $300 fee per hire. New customers who want to use lower rewards we try to channel to partners like AIRS, where they can use full H3.com functionality at set rewards as low as $1,500 or so.
Gieskes’ comment seems to offer flexibility in pricing, but their site’s own explanation of how things work leans heavily on the $10K minimum model. And some are apparently expressing disappointment from the move. Our source, a former H3 client, said:
I can tell you from talking to several recruiters and experts in various size companies. they will not use H3 now due to this change. It substantially reduces the overall value.
Right or wrong, perception rules and H3 may be losing the PR battle. Might be time for some damage control. Or maybe it doesn’t matter, since options are limited. As our informant put it, “With Jobster in a mess and price inflation/shifting biz model at H3, there is now not a good, easy solution to host an external referral program.”
So, anyone else want to start a low-cost external referral solution?
Popularity: 3% [?]
November 13th, 2007 at 11:56 am
Well, If someone has a great solution and needs a great domain name for it, I have http://www.jobreferrals.com I am not doing much with it these days so I would be interested in a partnership of sorts.
As far as what you wrote above, there are lots of reasons why 1500 referral fees don’t work. The first is just the plain old fact that people dont’ want to refer people. Yah I know that people want to help their friends but friends typically are not qualified.
Recruiters come to work in the morning to make referrals in order to get 20-33% of the referred candidate’s salary. For the most part 1500 bucks just does not work on a mass scale. what is interesting is that the companies themselves are starting to realize this.
For example, If you look at TalentHire.com and BountyJobs.com, the fees that companies are starting to offer to recruiters are much more in line and in fact resemble for the most part typical agency fees. It was not to long ago these fees were much lower and of course, recruiters and people themselves were not interested in working at these reduced fees.
The truth is, what H3 is doing with respect to increasing the minimum referral fee is not a big deal at all. If anything, it’s smart.
November 14th, 2007 at 2:40 pm
Actually, JobThread has a free referral solution…
While JobThread has expanded its offerings significantly over time, we do still offer our complete referral solution. In our latest release, just made available, employers and recruiters can get their own job site and post unlimited jobs for free (and have them syndicated to vertical search sites).
Referral rewards can be offered and the system tracks referrals automatically. You can even pay out the referral reward using the system if you want or manage offline.
There is no minimum reward and there are no fees.
You can also import your contacts and create email lists to manage referral campaigns easily.
To sign up and get started:
http://www.jobthread.com/jt/home/employers.php
And, it’s free.
November 14th, 2007 at 8:22 pm
I agree with the first comment. A 10k bonus is a pittance compared with what I’ve paid in the past for executive search fees. If the system is working (and I’m sure a 10k bonus helps motivate people to refer) then H3’s model is a very intriguing one.
November 14th, 2007 at 9:46 pm
Hey Cheezhead – what a bummer with Ohio State losing on saturday!
I love your invitation for others to “offer low cost referral solutions” – since H3.com (through its predecessor company jobrewards.com) invented this category back in 1999 we have seen many copycats, most of them well known to you too. And interestingly enough great majority of these copycats infringe our first patent (issued in nov 2005).
There’s indeed magical power in $10k referral rewards: high hiring rates and no resume spam. Offering such H3.com referral rewards enable our corporate customers to activate armies of external “Hidden HeadHunters” much more often than they usually can afford to activate professional ones, and at a modest fraction of the costs.
Want to earn some more referral rewards: click on this link, 7 jobs with $80,000 in referral rewards including one super cool VP HR jb with a $20,000 reward…!
https://www.h3.com/?mr=sn90iiLqBAxwps65Tu9qrfguGv0 (link from Hans Gieskes)
Go Bucks,
hans
November 14th, 2007 at 11:52 pm
I’m not so sure that companies have fully activated their internal referral programs much less an external one. That is a huge incentive, I admit. Too bad I don’t know anybody. This idea of a social network makes me uneasy. I can’t imagine approaching people I scarcely know or simply link to online and asking them if they want to change jobs out of the blue. It’s turning all of us into car salesmen. It’s another matter if the person already announced they are looking for a job. But how many people announce that on the internet, to their entire social network, especially if they are still employed somewhere?