Is Web 2.0 just the job? - Zubka and the referral boom

Source: Exec Digital UK

Date :02/01/2008 10:11:40

After last month’s feature on the true value of social networking sites, we look at how the Web 2.0 craze is affecting the recruitment industry.

By Sam Wright

“You wouldn’t buy a TV without reading reviews, so why hire someone without knowing what their peers think of them?” When Real Business’ Charles Orton-Jones made this comment at the ‘Britain’s Digital Elite Awards’ last month, many nodded their heads in agreement. At the time, he was handing a commendation to online recruitment firm Zubka, a company that has been creating quite a buzz throughout the industry.

The Zubka website was launched last September, and in October the company was flagged up by The Guardian as a ‘dotcom to watch.’ That December, Benchmark Capital, the technology-focused venture capital firm behind eBay, Betfair and Bebo, stepped in to make a substantial investment offer. Now, the company is looking to court investment once again, and numerous big-hitters are thought to be interested, no doubt lured by the company’s impressive list of hirers - Bloomberg, the Times and Tesco are just some of the names involved.

Altruistic incentive

So what is it, and how does it all work? Simply, Zubka’s model is this: A user will log on to their website, see a job that they think that their friend may be interested in, and make a referral. If the friend gets the job, the user gets a fee. Zubka’s reward for placing someone in a £50,000 job is currently £3,600.

It’s not hard to see the appeal, even aside from the cash incentives. As Armando Ruffini, co-founder & CEO of Zubka, says, “People like the sound of it. They like the fact that it’s something altruistic.”

The paid referral idea isn’t new. In fact, the UK has been relatively slow to pick up on the referral boom. In the US on the other hand, where wages are ‘compensation’ and ‘turnover’ relates to staff numbers instead of income, it’s more or less part of the employment scenery.

“Their market is slightly more mature; people have more of an idea of how referrals work,” says Matt Burney of online recruitment magazine ONREC.

“It’s very much in company culture. If you speak to anybody that recruits in the US and they will tell you that referrals are a core part of how they run their business.”

With the US industry worth in the region of $20 billion, the potential is there to see. And Web 2.0 technology might just be the key to unlocking the market. According to the REC’s survey, “51 percent of recruitment consultants think that the MySpace / Facebook generation has the potential to reduce the number of candidate placements through a recruitment agency as workers use internet social networks rather than formal networks to find and apply for jobs.”

This figure could well rise sooner rather than later. Back in November, Google launched OpenSocial, a code that allows external applications…

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