Alumni & The Recruiting Process

Scholars Jason Greenberg and Roberto Fernandez have conducted an interesting new study about job searches and MBA recruiting. They studied approximately 600 students from a top MBA program over two years.  They conducted the research from a sociological perspective, comparing students who landed jobs through connecting with alumni at various companies (search through social networks) to those students who were hired through formal on-campus recruiting programs (formal search).   They refer to connections with alumni as weak ties (i.e., the students did not necessarily know the alumni prior to the search process; they connected with them through a variety of networking activities).  They found that MBAs are much more likely to accept a job offer landed through alumni networking than through formal on-campus recruiting processes.   That's true, even though the compensation tended to be higher from offers derived through on-campus recruiting programs.   Why is the networking so influential and effective?  Those conversations and connections help the students understand the growth potential associated with a particular job, and that proves to be very important to many talented students... more important than compensation perhaps.   Here's an excerpt from the abstract of the academic paper that the scholars published:   

We find that contrary to conventional wisdom, search through social networks typically results in job offers with lower total compensation (-17 percent for referrals through strong ties and -16 percent for referrals via weak ties vs. formal search). However, our models also show that students are considerably more likely to accept offers derived via weak ties. They do so because they are perceived to have greater growth potential and other non-pecuniary value. On balance, our tests are consistent with Granovetter’s argument that networks provide value by facilitating access to information that is otherwise difficult to obtain, rather than providing greater pecuniary compensation.

What's the implication of this study?   Greenberg puts it this way:  “Based on our findings, recruiters earn a higher ROI when spending time and money on facilitating connections between current employees and potential recruits from their alma mater.   Students look to and trust an alumnus from their school who ‘looks like them in three years’ to provide inside information about growth opportunities within the firm. And that powerful association is a huge influencer when it comes time to accept or reject a job offer.”