How Social Networking Maximizes Referrals: Anne Berkowitch, CEO SelectMinds

Once Upon a Time* There was an Awesome Company (and Client) Called Select Minds. A Private Alumni Network. Here’s an Encore Podcast with the founder and CEO, Anne Berkowitch

*Select Minds was acquired by Oracle in 2012.

I decided to republish this interview from 2010 while working on a new Future of Work episode with Jeff Wald, the founder of WorkMarket. In his new book titled, The End of Jobs, The rise of On-Demand Workers and Agile Corporations, Jeff advocates for Alumni Labor Clouds. This reminded me of a once-great client of TotalPicture Media named Select Minds. I had covered their annual user conference for a couple of years and produced numerous videos and podcasts with their leadership and clients, which included Swiss Re, JP Morgan Chase, IBM, Lockheed Martin, Deloitte, and EY.


Anne Berkowitch Former CEO, Select Minds

INTRO: Referral networking helps companies leverage current and former employees as referrers of talent and new business.  For more than 10 years, Select Minds has created corporate employee and alumni networks that help create organizations recruit talent, enhance their brand, and develop new business by focusing on one key fact – good people prefer other people.

Welcome to an inside recruiting channel podcast on TotalPicture Radio.  This is Peter Clayton reporting from New York City.  Joining us today is the founder and CEO of Select Minds, Anne Berkowitch.

Anne, thanks so much for taking the time to speak with us.

I first met Anne a couple of weeks ago at John Sumser’s salon in New York at a very nice little restaurant – the Park Avenue Bistro.  We had a really great time there.

So, give us your elevator pitch, Anne.  What does Select Minds do and who do you do it for?

Anne:  I think you just gave our elevator pitch but I will try to do…

Peter:  With the introduction, yeah.

Anne:  With the introduction.  Exactly. We – as you very appropriately said – we help companies build networks of their current and former employees (employees and alumni) that companies do leverage to help drive referrals of talent, of new business, and that they use as general branding.

We started about 10 years ago.  Launched the idea of a corporate alumni network – this was before the days of social networking – really as a recruiting solution with the idea that in fact the former employees of a company provided a very rich talent pool, as counterintuitive as that is, either to rehire some of the best players or to leverage relationships of the alumni to drive referrals of other talent.

Then, over the 10 years we’ve been doing that have found that for many sectors, alumni could be clients.  They go to customer organizations as well.  So maintaining relationships with those alumni was very good for generally maintaining the brand and keeping former employees informed of the brand, but also to drive referrals of new business and of talent.

Peter:  I have to think that your approach to this business today is completely different than it was 10 years ago.

Anne:  It’s completely different.  Interestingly, the core idea isn’t any different.  It’s based on, as you said, I mean good people know good people.

Peter:  Right.

Anne:  It’s based on the notion that a company’s employees and alumni know other people like them that are of value to an organization either because they can become customers, or they could become employees.  But the way the companies are managing those relationships and leveraging those relationships is completely different, obviously, with the advent of social networking.

Today, it’s companies trying to understand the social web, trying to maintain these relationships online through these connections through social networks, and trying to build and manage and engage those relationships so that they could leverage them into a new business or recruiting.  But it involves the social web and that’s really scary for a lot of companies.

Peter:  Absolutely.  But back to the basic premise, which is the referral, right?  I do an interview every year with Gerry Crispin, our good friend at Crossroads, who does an annual source of hire survey.  Here’s a quote from their 2010 report.  “The most efficient way to hire someone or find a job?  Referrals, referrals, referrals.  Referrals make up 26.7% of all external hires.  Corporate plans for 2010 indicate a strong interest in leveraging referrals.”

In fact, one of my very favorite quotes from Gerry is never ever, ever go apply for a job again in your life without having a referral when you go through the door.  That’s the gold standard, right?

Anne:  It’s intuitive.  This goes back hundreds of years.  If you’re going to hire somebody, go find a referral.  But the data shows it.  The statistics show it.  I think there was actually an ERE report that said that a candidate that is submitted via referral are 54x more likely to be hired than a candidate that comes in from a job board.

Essentially what that says is a candidate who is referred in by an employee, or by an alumnus, of a company is much more likely to be relevant, to have a relevant background, and to be a good fit because they’ve essentially been vetted by the employees and the alumni.  That’s a big part of what we do with companies.

I was talking about how we help companies build these alumni networks and maintain relationships.  We have also launched a product called Talent Vine which automates the talent referral process, and which uses technology to suggest people from employees and alumni’s networks on the social web who might be good matches for openings at their company, at the organization.

Technology allows us to automate and to make referral much, much easier today than it was 10 or 20 years ago when it was just, “Hmmm.  Who can I think of that might be good for a job?”

So, yes.  I mean, referrals are absolutely the best way to hire.  They’re cheaper to hire.  Average cost per hire is 50% or less for a referred candidate than for a new candidate.  All the data shows that performance is higher.  If you look at the first three years of a referred candidate versus a new candidate, performance ratings are higher, retention is two to three times higher for referred candidates.

The data has shown that in fact if a company could fill 100% of its positions through referrals, it’s definitely the way to go.

Peter:  I’d like to talk a little bit more about this Talent Vine product that you’ve launched because a big complaint I hear from many people in HR and recruiting is all of these ATS systems and CRM systems,  they don’t talk to each other and everything is siloed on a spreadsheet somewhere, and no one has access to all of this data.  With Talent Vine, are you able to actually communicate with someone’s ATS system, for instance?

Anne:  We can communicate or we can integrate with HRIS systems, with CRM systems, with ATS systems.  Interestingly, our alumni solution and are Talent Vine solution obviously can be integrated as well also.

There, what we have is, in that suite of solutions, we are often integrated with a company’s HRIS in terms of getting information on who comes and goes from an organization, who becomes alum, who becomes an employee.  We integrate with the ATS to follow the referrals all the way through the ATS to see which candidates are hired through referrals or hired through the alumni network.  We integrate with CRM because in many cases alumni can become customers or target customers, or clients of an organization.  So an alumni network, an alumni database, wants to be able to interact with the CRM.

In some cases, we even integrate with contact management systems because to the extent that organizations have content that they’re sharing with employees and they want to share with alumni, rather than recreating content, they repurpose it.

You’re absolutely right that all of these tools that help manage relationships and connections need to be integrated with the business operating systems that they support.

Peter:  Yes absolutely, because otherwise they really don’t serve the purpose that they were intended for, right?

Anne:  Exactly.  When we look at and when we talk to our clients about managing these networks, we often say it’s about collecting, connecting, engaging, and leveraging.  As kind of buzzword-y as that sounds, what that means is to really drive value from a social network of any kind, you have to collect people – you have to actually create the network – and bring them together.  You have to connect them, so you need a technology or some way to actually build the connections.  You have to engage them because a mere connection doesn’t drive any value.

Unless you can engage people on the network, and unless you can engage your alumni and really create a dialogue and build a relationship, there’s no trust, there’s no social capital, there’s no relationship capital to trade on.  Then, once you’ve engaged them, then you can leverage them.  Then you integrate with the recruiting process, or the business development process, or some operating process that can leverage that relationship.  But unless you do all four of those, you might end up with a whole lot of connections on some social network but a company doesn’t actually derive value from it.  It’s got to be a very integrated system.

Peter:  I think would you just described is what Facebook and LinkedIn have been able to do.  Right?

Anne:  They have been able to that… well… to different points for companies.  Right?

Peter:  Right.

Anne:  What LinkedIn and Facebook do is they collect and they connect, and they certainly engage – I’d say more on Facebook than on LinkedIn.  I think companies are still trying to figure out how to use all of those connections and relationships on Facebook and on LinkedIn to benefit companies.

Peter:  There’s some statistic that the average amount of time most people who are engaged in Facebook spend on Facebook everyday is something like 28 minutes which is just – when you’re talking about the web, that’s an insane amount of time.

Anne:  Which is exactly why companies don’t want to open up to Facebook to their employees.  They say spend those 28 minutes at home.

Peter:  Well, speaking about companies, you have some really large companies as your clients – IBM and J.P. Morgan Chase and Lockheed Martin.  So, what are your clients – are they going to be hiring in the fourth quarter?  What’s your projection?

Anne:  We’ve seen – I think the numbers of hires aren’t what we have seen historically, necessarily, but we’ve seen a steady hiring activity especially for very specific positions.  So, when you look at how we work with clients – I mean clients really leverage alumni networks or these referral networks – to fill specific positions.  These aren’t necessarily where you fill hoards of entry level positions.

We’ve seen continued hiring at that level even through last year.  This year, we’re seeing more of it, for sure.  We’re definitely seeing hiring picking up.  Some sectors are going faster on that than others.  Financial services, for instance, is an example where we’re really seeing hiring.  But I think, in general, we’ve seen much more gearing up of the recruiting machine by companies for a couple of reasons.

(1) I think there’s a genuine need to replace or start to backfill behind all the cuts that were made.

(2) There’s the recognition that recruiting is going to happen differently.  It’s not going to be a question of just posting a whole lot of job openings to job boards.  Companies are really trying to figure out how do we do this recruiting thing right, and they’re investing in social recruiting tools and some new ways of recruiting.


(3) They’re a little concerned about attrition.  As the economy really does start to find its feet again, I think companies rightfully are worried that probably some of their best employees are going to be the first ones to go after suffering through no salary increases, no bonuses, more work.  When there start to be more and more opportunities out there, they’re going to see people jumping ship.  So, we’re seeing the recruiting organizations kind of gearing up to be ready to have to backfill against that attrition.

So, all of those are reasons why we’re seeing an increased level of activity in recruiting organizations.

Peter:  I certainly have heard this at all of these conferences this year that retention is a huge issue.

One interesting thing about that, Anne, as you know, everyone kind of focuses on these people who have been laid off and looking at the people who have lost their jobs, but the people who have been left – I mean, there’s been a huge psychological damage done to them as well as they’ve watched their good friends or departments and teams that have taken years to create get disbanded overnight.  There is a lot of emotional scars within these large organizations that have had to do these mass layoffs.

Anne:  I think retention is going to be a real issue over the next 12 months.

Peter:  The other thing that I keep hearing about now is boomerangs – people who are coming back into organizations.  Are you seeing that as well?

Anne:  Sure.  That’s really what we’ve been doing for 10 years.  It’s been really interesting to see how the whole notion of rehires has become – I’d say almost – a standard procedure at this point.  The percentage of positions that are being filled by rehires, some employees coming back, it has been steadily growing over 10 years.  It used to be very kind of ‘why on earth would we ever do that…’ and now I think there is recognition that the work force is extremely fluid and people come and go from jobs for all kinds of good reasons, and a lot of good people leave an organization for very good reasons.  No reason not to stay in touch with them and get them back at some later point.

That notion of – I wouldn’t say revolving door.  It’s not that bad.  But certainly, a permeable membrane is becoming more and more of a reality with companies.  Sure.

Peter:  When you look at the social networks, the major ones out there – Facebook, LinkedIn, and Twitter – which of those is really the most fertile ground for your clients when it comes to recruiting and going out and identifying those top performers that they’d like to bring in to their organizations?

Anne:  Recruiting kind of breaks down in different parts.  There’s recruitment of marketing, which is getting the employment brand out there.  Trying to make yourself attractive as an organization to the talent pool.  I’d say, probably, companies are looking to Facebook the most for that because the fan pages allow companies to actually have a personality, and to put their brands out there, and to create more dialogue and more interaction.

I think terms of candidate sourcing, LinkedIn is probably the first stop there because that really has become the resource to go find candidates.  There’s the most information in terms of their personal profiles.

So, if you’re really doing a direct sourcing, a search for candidates, they go to LinkedIn.  If it’s about promoting the company as an employer, promoting openings and opportunities at a company, Facebook is probably the better place to go.

And then of course, there’s Twitter that companies are using because they’re kind of want to be in the mix, they want to be in the conversation but I think that’s much more about – certainly about branding – just getting soundbites out there and being present in the discussion, whatever discussion is going on.  Also increasingly, advertising jobs on Twitter.  Just tweeting the openings as a way of just reaching a whole lot of people.

Peter:  I wonder how effective that really is.

Anne:  Not clear.  I don’t think very.  The statistics are that Twitter generates an awful lot of hits, people might actually come to a career page because they see something on Twitter.  Very, very low conversion of those hits to applications, let alone hires.

LinkedIn, way fewer hits but much higher conversion to applicants and eventually hires, which makes sense.

Peter:  Absolutely.

Anne:  It’s what you would expect, and Facebook is somewhere in between.

Peter:  One thing about Facebook, it’s sort of like a mini focus group because you can put stuff out there on your fan page and see how your community reacts to it.

Anne:  A limitation of Facebook, and one of the reasons that our clients do use our solution to manage these alumni networks, for instance, is that Facebook is still kind of one-size-fits-all.  A company puts itself out there as a brand and has kind of a one-way conversation, if you will, in positioning itself to everyone.

I think what a solution like ours allows companies to do is actually create different experiences for different segments of your audience, and to have a more fine-tuned discussion, to be able to position, to emphasize different aspects of the brand, or to position jobs for instance to different segments of – different candidate segments, or different alumni segments.  So I think Facebook is very good for broadcasting a brand and having a presence out there for sure.  It doesn’t really allow differentiation or fine-tuning to engage different types of candidates, or different populations, in different ways.

Peter:  There’s certainly a bunch of press out there about privacy concerns, especially as related to Facebook.  Speaking with your large clients, people like Lockheed Martin, are they concerned about privacy issues on these networks?

Anne:  Hugely!  Hugely, hugely.  Again, that’s one of the advantages a solution like ours offers them is that our platform which allows them, again, to manage these alumni and these employee networks, is a platform that’s essentially controlled by Lockheed Martin.  Very, very integrated with LinkedIn and Facebook and Twitter, so from the employee or the alumni’s perspective, they go back and forth very easily.  But at the end of the day, the companies can configure what information is – well, the individual members can configure who gets to see their information just like an any social network.  But companies can also configure business rules as to who can see what kind of information, who can talk to who, who can have different privileges in connecting with different types of people.  We get put through incredibly rigorous IT audits around data security, around privacy compliance, application security.

So ours offers companies a platform for managing a social network that interacts with the public social web but still happens on a platform where a company feels like it’s a more controlled, secure, private environment that has – it’s not the wild, wild West.  Because our companies are extremely concerned about privacy and data security.

We’ve seen enough press on Facebook, and any of the other social nets out there that are far from foolproof.

Peter:  Absolutely.  I think their concerns are well taken.

I want to talk to you about a white paper that’s on the homepage on The Select Minds’ website.  It’s called Referrals Program 2.0.  Your paper quotes extensively from Jeanne Meister’s book, The 2020 Workplace – How Innovative Companies Attract, Develop, and Keep Tomorrow’s Employees.  Can you share some of her predictions and some of her data points with us?

Anne:  One prediction she made, which I found very interesting and intuitive, is that she talks about the notion of reputation capitals that she feels is going to drive a lot of hiring decisions in the future.  She defines reputation capital as being a much more holistic view of a candidate that encompasses not only a candidate’s expertise and experience, knowledge, skills but also kind of their personal brand, a reflection of how connected they are, what the nature of their network is, how much trust credibility – essentially what the reputation of a person is.

It’s an interesting notion because if you think about how people are hired, I think those are all the factors that are indeed taken into account.  But it’s interesting as it relates to social networks is how people present themselves through social works.  The fact is when you look at somebody on Facebook, if they had a full professional profile there, you would get to see a much more holistic view of a person.

You would see skills, experience, education but you would also see – hmmm, or these person’s friends?  What kind of connections do they have?  How involved or how active are they in the social web?  You get a sense of a personality and a reputation, and what others think of this person, and how they interact.  So it’s a really interesting notion that is we, as recruiters, kind of historically have just done keyword searches for skills, that the way recruiting is going to happen is going to be much more holistic and social networks are actually allowing a much broader representation of candidates to come across which, frankly, it’s kind of a good and a bad thing because from an individual’s perspective, much harder to manage.  To think that your reputation is out there for everyone to see when it comes to an employment decision, is a little daunting.

Peter:  It is but what’s really interesting, from my perspective, is – back to John Sumser, an HR examiner, and all of these top 25 lists he’s been doing – the top 25 online influencers in leadership – where he goes to a company in Boston called Tracker.  He gives them 20 keywords and they go out onto the web and they use their little magic algorithms, and whatever, to spider the web and find out who are indeed, online, the most influential people in leadership.

To the point of what she’s talking about, this reputational capital, I think she’s really onto something and those are the people that really are – when people start Googling for a specific skills – they’re going to be right at the top of the list.

Anne:  That’s why, from an employers perspective, it’s actually a good thing that you can get to the people who really know what they’re talking about.  Certainly, this is especially relevant at senior levels.

Peter:  Right.

Anne:  Mid to senior levels, for sure.  But when you think, you know, you’re out there looking for a job, the only thing people do is pull together a resume today and that’s becoming kind of less and less relevant.  Just the pure resume is one piece of the puzzle but it’s only one piece.

It’s interesting from the flipside, as a matter of fact.  We conducted some research to understand how employees, or how candidates, make their choices of where to go work.  Not so much the recruiter picking a candidate, but the other way around.

Peter:  That’s interesting.  Yes.

Anne:  Very interesting what we found which is that the top sources of information the candidates seek are employees working at companies and what they’re saying about the company, alumni of that company and what they’re saying about company, and third is the corporate webpage.

So, we see that word-of-mouth and reputation of a company, as shared across these social networks, is really, really important.  From a company’s perspective, they’re saying, “Man, oh man.  How do we influence what our employees and our alumni are saying about us as an employer because their voices are becoming louder and louder, and carrying more and more weight?”

When you think about a company managing an employment brand, managing their reputation out on the web, it’s not just having a great PR agency anymore.  It’s really thinking about how do we engage our employees and our alumni in real relationships, trusting relationships, and really arm them to go represent us out on the social web.  It’s a whole new set of challenges both for candidates and employers to represent them.

I think that’s right.  Jeanne’s concept of reputational capital, it’s kind of a fancy word for reputation but much, much harder to manage in this era of social networks.

Peter:  Absolutely.  From a company’s standpoint – you can go on to or – and you can read exactly what employees think about that organization.  It’s all right there.

The stuff that Tracker looks at –  they look for reach, they look for relevancy, and they look for resonance when they go out there.  So  those three things.  Reach doesn’t really mean much if you don’t have the relevance or the resonance with the people that you are trying to communicate with.

Anne:  Yes, I know.  Absolutely.  It’s interesting, again – coming back to from a company’s perspective, leveraging the social web – just having a social network, or just being plugged in to the social web gives you the reach.

Peter:  Absolutely.

Anne:  Right?  Kind of gives you the connections.  But that doesn’t do a lot for you, so when companies are managing these – building these – alumni networks or these employee networks, it’s not enough to just put the technology up that enables a whole bunch of people to connect.  That doesn’t really do anything for them.

What really helps them drive value through these networks is to engage the members, is to engage the alumni, engage the employees so that they’re having conversations there, not necessarily on vault.

The way to engage them is really to very actively manage those communities as networks.  It’s interesting because I think we’re seeing the role of community managers.  I think we’re going to see a growing importance of community managers because when companies think about how do we build all these relationships online through social networks, how do we engage people?  How do we build trust?  How do we have a dialogue?  How do we really influence word of mouth?  You can’t be routine.  You can’t be mechanical about it.

These community managers are super effective in driving engagements so that the companies have their ears to be able to give them their messages.  We offer community manager services when we work with clients and it’s incredible when we see all the metrics around engagement just shoot right up when we actually put a community manager on one of these networks to help manage it because these managers are totally focused on what do people want to hear?  What are they talking about?  We’re going to put more of that content.  It’s the real dialogue.

I agree.  Reach is the first element of the benefits of the web but that alone, if it’s not relevant, if it doesn’t resonate, it doesn’t engage, it’s just a bunch of connections.

Peter:  I am seeing more and more companies now hire community managers.

Anne:  Yes.

Peter: It’s really becoming a very important role within an organization.  I have one client, Onward Search, who just hired a community manager and it’s really made a huge difference in the way they’re able to go out and work with their clients.

Anne:  It makes a huge difference.  It’s somebody who is really trying to – who’s completely dedicated to engagement and having the dialogue.  Absolutely.  I think we’ll see that to be a growing role.

What’s interesting is that a lot of the people who do community management now tend to be maybe a little bit younger, creative, very comfortable on the social web, really good at bringing content and having discussions and blog posts that generate interactions.  But what’s interesting is there’s an analytical component to it too.

Peter:  Right, and a strategic component.

Anne:  Very strategic.  So, we monitor all of that activity and say what content is being looked at.  What are the searches that people are conducting?  What kind of search results?  Are they finding what they’re looking for?

So there’s an analytic component that says understand what the data is telling you about where people are engaging, and what you should do more than what you should do less of, give that to your community manager, and it steers the community manager as to what content to go get, what discussions to initiate, who’s to pull in to various discussions.

I think it’s going to become a really robust practice.  The practice of community management is going to become critical for companies to really effectively manage these networks and engage their members.

Peter:  I think at this point a lot of companies are going out and say, “Find me some 20-year-old kid who knows something about Twitter,” and I think that’s completely the wrong approach to take to this.

Anne:  Absolutely.  Yeah, agreed.

Peter:  This has really been a fun conversation.  Is there anything that you like to share with the audience that we haven’t discussed?

Anne:  No, I don’t think so.  I think what Select Minds really focuses on, as I started out by saying, is helping companies navigate that tension of wanting to be in the conversation in the social web but trying to understand how to do it in a protected and somewhat controlled way.  It’s a big struggle for companies.  They’re really trying to work it out and figure out how to do that.

At the core is the recognition for organizations, as I said, that business is best conducted through people.  Here’s a phenomenal opportunity to connect with a lot of people but it’s got to be, at the end of the day, based on some kind of relationship and trust and credibility.

I think it’s a fascinating problem that companies are going to be very focused on over the next many years.

Peter:  I agree.  We will stay in touch because as you said this is constantly changing.

Anne:  Yes.

Peter:  So, I want to keep in touch with you and keep up with what’s going on out there in the social networks with your clients.

Anne:  Great.  Love to.  Thanks.

Peter:  Thanks again.

Anne:  Thank you.

Close: We’ve been speaking with Anne Berkowitch, the CEO and founder of Select Minds.  We welcome your participation in the conversation.  Visit Anne’s feature page in the inside recruiting channel of TotalPicture Radio – that’s – to voice your opinion.

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