What is your network worth?

Posted by on May 25, 2011 in Jobs

Several years ago, I hired a summer student enrolled in university for some general office administration. Before the start of the next summer, she called and asked if I was hiring for that summer. For a variety of reasons, we did not need help that summer. However, I asked her if she could forward her resume to me in case someone I knew was looking for help. In such an event, I could quickly pass her resume along with a kind word.

She said no.

This to me was a head-scratching move. Summer jobs are hard enough to come by even if you know the employer. But to turn down a chance to have a resume passed along with a reference is tantamount to ensuring your summer spent unemployed or in summer school. Not surprisingly, I have not heard from this summer student since.

We often use the phrase “it is not what you know but who you know” to emphasize (both positively and negatively) that your network is sometimes more important than your credentials.  Yet, when confronted with an opportunity to expand one’s network, some of us turn down these opportunities.

The notion of human capital, often called the most over-looked aspect of personal finance, is traditionally seen as an output of education and experience. However, one could argue it also encompasses the power of one’s network. After all, the foundation of desirable personal finance outcomes- getting a good job, being invited to invest in businesses/products, listening to experts give advice- are often an outcome of people you know.

Every single job I have been hired to do, except for my entry-level lawyer position (done through a formal recruiting process) was someone connected to someone I knew (sibling, boss, friend, professor, client and colleague in my networking group off the top of my head). The investment advisors who gave me the greatest advice and/or tips are/were advisors with whom I had drinks or dinner with- they weren’t my investment advisors but they offered free advice as a friend. Best tax advice? In a gym locker-room with my accountant. Best ways to obtain new clients? Have clients introduce you to their friends.

(complete tangent here- want to get invited to high-net worth investment advisor lunch and/or dinner and learns? Befriend a lawyer or doctor. Every other week they get hit up with offers to attend seminars. Having attended some of these, they are pretty good and the advisors are pretty realistic about only getting 1 to 2 follow-up meetings so there is no hard sell).

We often have negative connotations of networking. Think of politicians glad-handing, pointing at VIPs in a room, kissing babies etc. It is not like that at all. To paraphrase Woody Allen, it is about showing up. To mix metaphors, networking is like dating. The other side is just as nervous as you so just be yourself.

Who do you network with? Anybody. The conventional analysis is to find the VIP and become part of their network. But everyone is doing that already. The power of networking actually lies in the power of the weak link. Think of your group of close friends. You all know the same people. You all hang out at the same place. But find someone outside your immediate circle and one is introduced to new opportunities.

If you are looking for a job, I would suggest that not only you engage in traditional job search strategies but also volunteer for a worthy cause. It is a good way of meeting new people, expand your network and show people you are just not in it for yourself. If you are in school, I would take every opportunity to meet people outside your immediate circle; I was once told by a successful entrepreneur that his first external investor was his dentist who he had befriend as a teenager. Don’t know anyone? Join a club or association where there are structured opportunities to meet people.

The point is that net worth is not only a function of assets and liabilities but relationships which fulfill both personal and finance needs.

3 Comments on What is your network worth?

By Money Beagle on May 25, 2011 at 9:26 am

Interesting that she said no though maybe she had her reasons. Maybe she’d been burned in the past by giving it to someone she thought she could trust but was then inundated with undesirable contacts. There’s two sides to every story and I’m sure there’s a logical reason.

I agree that having a good network is important, though. When I lost my job in 2005, the first thing I did within hours of getting the boot was to start contacting people I know. When I got the job in 2006 that I’m still at, it was because of having networked with a prior colleague who knew my interests and skill sets.

By Robert on May 25, 2011 at 11:35 am

Excellent advice. Some places I’ve had success meeting people are: at church, joining the community (or homeowners) association, Toastmasters, an advocacy group, school council and a political party. Those weren’t all me and they weren’t all at once. The key, I think, is to choose things you are genuinely interested in or care about.

By Support Spy on May 27, 2011 at 1:09 pm

Each of my 5 jobs in the last 15+ years have come through my network and not some random interview. The value of the trust and respect that I have earned from my network continues to build and the referrals are almost priceless.

I have been approached many times for job interviews through my connections. Although I am quite happy in my current role, the connections I have built from being open to interviews has provided me further opportunities. There is nothing to lose but a small amount of time.

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