Venture capital is often referred to as an apprenticeship business because so much important learning comes from day-to-day experiences. Yet, as an article published by the Business Development Bank of Canada (BDC) explains, you can shortcut the learning process by learning from experts: “Your learning curve can be shorter—and your results better—if you learn from pros who’ve already mastered key … ... read more
The Wide-Reaching Power of Your Network Throughout Your Career
There are few things as impactful as the strength of our network. As the tile of Porter Gale’s—an internationally renowned networker and entrepreneur—bestselling book reads, “Your network is your net worth.”
It’s hard to deny that networking matters. But why and how exactly it matters is often unclear. What’s especially compelling about the strength of your network is that it can positively impact your trajectory through all stages of your career, whether you join a company or start your own.
Finding a job
A large body of research has shown that networking increases our chances of landing a top job. 85% of jobs are filled through networking. Referrals also lead to time savings. Research has shown that it takes a company an average of 26 days longer—almost an entire month—to hire a candidate through traditional hiring methods as compared to via a referral. What’s more, hiring through referrals can lead to substantial cost savings.
Why are referrals so powerful throughout the hiring process? Referring employees have a reputation to uphold. They have a vested interest in carefully vetting potential referrals and selecting only the top performers that they want to work with.
For startups one of the richest places to source talent is through their investor's network. Most venture capitalist have incredible networks and are willing to make the needed intros for their portfolios to top talent. One of the best ways to understand who your investor's know is by connecting to their investor's on Affinity's Alliances.
Staying at a job
The advantages of a strong network extend far beyond landing a job. The strength of your network also has a powerful impact on your job performance, including how long you stay at your job. Research has shown that individuals hired through referrals are more likely to remain at their companies as compared to people hired through traditional means. One study found that 46% of referred hires stay at their company for at least one year after they were hired, as compared to 33% of people hired through career sites and 22% of people hired via job boards. The cost savings are enormous, ranging from increased morale to lower training costs.
Networking also affects your job performance, especially if you’re in a customer or client-facing role. Referrals convert at a 3-5x higher rate than average. They also boast a 37% higher retention rate compared to non referred customers. And that’s not all. They also have a 16% higher lifetime value as compared to a non referred customer.
Why are referrals the most powerful way to sell? A major driver is trust. We trust our close connections not to lead us astray and to also know which members of their network are best suited for a particular offering. Ultimately, personal referrals and introductions are a form of precision targeting.
Starting a business
Referrals can also move waters for aspiring and current entrepreneurs. The most successful entrepreneurs tend to be embedded in a complex and wide-reaching network. This network affects not only entrepreneurial outcomes but also the decision to embark on entrepreneurial ventures in the first place. Research published in Management Science found that an individual’s likelihood of becoming an entrepreneur is enhanced if he or she has peers who were previously entrepreneurs.
As highlighted in a review of the entrepreneurship literature published in the Journal of Business Venturing, a large body of research has confirmed that the content flowing through entrepreneurs’ networks has a significant impact on a wide variety of outcomes. Perhaps most powerfully, network ties can enhance social capital and grant individuals access to information and advice. More subtly, research has shown that network ties can even provide emotional support for entrepreneurial risk-taking and even enhance an entrepreneur’s persistence to remain in business, even during difficult times.
Yes, even your decision to retire is impacted by your network. A 2014 study published in the Journal of Public Economics found that workers are more likely to retire in the same month as their coworkers in the same division! Network contagion is more powerful than many of us imagine.
Throughout our life and through our various career changes and aspirations, networking matters. The most successful networkers appreciate that network is a marathon, not a sprint. It’s worth the effort to not only strengthen your network but also to invest in tools like Affinity that allow you to pull back the curtain and truly understand how strong your network is and how exactly it is structured.