We are really keen on Referrals in recruiting. The business case for Referrals is excellent and our systems support the process really well. We participated on a webinar in the USA on Friday on this subject and there were some great examples and evidence shared. This post looks at the benefits it can deliver, and some of the things that can really ensure it supports your HR and Recruitment. Note - this post is not just about systems and technology. Once you have the basics, a good referral programme is mostly down to management and commitment. So if you are looking for something that can make a real difference - read on.
However, there is a big difference between those who do Referrals well and those who don’t. We think for many - including some of our own clients - Referrals are a missed opportunity. If you are expecting to hear about some wonderful new technology that can help you with this - We are going to disappoint. Whilst systems like ours can certainly help. They make it easier for people to refer and also for you to manage the referrals that come through. Especially if you use Referrals in conjunction with your Talent Portal. However, making Recruitment Referrals work, really comes down to; management, time, energy and commitment. However as we will outline, the rewards - at least for most employers we can think of - are well worth it.
You can pick up all sorts of evidence and examples on how good referral programs have delivered excellent results for employers. We will mention a few here, to share some of the techniques that have generally worked for others.
Why focus on Referrals?
Simply because - a well designed and managed employee referral programme - can deliver the highest impact out of all other options...
That is a big statement, so let's look at some evidence on sourcing candidates:
- A study by Stagging.org in 2011 showed Employee Referrals were to No 1 source of quality new hires.
- Aberdeen Group 2013 found Employee Referrals were the most effective source of generating the best new hires.
- Forbes - March 2014 - “Over 93% of the top performers in their field do not find their job from a job posting”... “Instead, they are referred by someone they know, such as a friend or networking contact”.
- UC Berkeley - "a top performer referral that is hired... will produce 90% more profit than the average referral"
Hopefully you are getting the message. Employee Referrals have one of the highest ROI (Return on Investment) metrics of all the programs you could run, to make your recruitment more efficient and effective.
So how do you go about Referrals?
There is really no single magic bullet. You can certainly find some internet tools that purport to do most of the work for you. However, from what we have seen, and certainly from the experience we all shared in the webinar - technology is at best an enabler. You will almost certainly need a good recruitment system to manage the process. But the rest is down to management and activity.
- Especially if you are a small business, widen the programme to include “friends”. By this - we mean other people who know your business - such as suppliers, customers and the family of your employees.
- Use your employees to scout for talent. Get them to think of this when dealing with others and at conferences etc. Make it part of their job - measure how well they do.
- However - evidence does suggest that your top performers will deliver better “quality” referrals than your more average performers. As the saying goes “like goes with like”. Or as is generally attributed to Google: “great people know great people”.
- Referrals can contribute to your diversity programmes. Just switch the focus to matching your diversity goals.
- Do give your employees a helping hand. Give them some training and tips on: how to find people; how to build relationships; give them some easy to use and remember information on the key messages they should give a referral prospect. Don’t just assume they will know how to pitch your business.
- In general, money is not the motivator. Plenty of programmes are very successful without dangling large rewards. Arguably it can even be counter productive, encouraging a vested financial interest may result in a larger number of poorer quality referrals being made.
- Set expectations. You don’t want just anybody. Be clear that you want; quality, superior individuals who will make the business better. Ask for some evidence and rationale as to why a person being referred would be good for the business. Being family member should not be enough. Also do make sure that the person being referred is someone who the person referring actually knows. Otherwise they are just another candidate and it will water down your results.
- Lastly - it needs both management from HR/Recruiting and commitment from other management within the organisation. You will need to engage the business to make it a success.
Proof is in the pudding...
We have kept this till last - it's what the best in class companies achieve from their Referral programmes. On Friday we heard results from Google, Yahoo, Facebook, Twitter, HP and others . They all claimed over 50% of their Hires came from referrals. However we also heard from a couple of public sector organisations and even a small charity who also were getting over 50%. This was born out by a survey by Yesgraph who looked at top firms i.e. those assessed as being good recruiters. They found on average they delivered 46% of their Hires from Referrals. In our view, almost all the businesses we see, could if they wished to, get above 50% (and indeed quite a number either do or get close) with a well crafted and supported programme. In effectiveness terms, this way outstrips Agencies and Jobboards. So if you are not doing it already why not give it a go...