The Corporate Recruiters Blog

According to an article written by Dr. John Sullivan employee referral programs are the most powerful corporate recruiting tool, bar none.
Firms with well-designed referral programs can tune them to produce over 70% of hires (AmTrust, for example, has reached 78%). If your referral program is struggling to produce a mere 30% of your organization’s hires, it is likely you have more than one of these 15 killer elements as part of your program design. Some of them mentioned below:

Responsiveness of the program. Nothing kills a well-designed program faster than slow or no response rates to employee referrals. If the person being referred doesn’t hear something unique to their submission within 72 hours, they will become discouraged. If the employee making a referral doesn’t get a similar rapid response, they will also begin to wonder about the program. If nothing ever happens, they will simply stop referring. This happens in a majority of referral programs.

Excluding senior managers and HR people. The idea behind a referral program is to get as many people as possible scanning the streets and talking up your firm. To exclude anyone, especially highly visible individuals like senior managers and HR professionals, is not advised. Excluding them makes them feel like they are second-class citizens, and they will not refer at the same rate if they are excluded specifically from the program and the reward. If you’re worried about these individuals referring people who are qualified just to get the money, then these individuals should be fired on the spot. The best programs allow hiring managers or anyone with a perceived conflict to “opt out” of the bonus or donate it to charity.
Failing to continuously refurbish. Referral programs are essentially marketing programs and as a result, they lose their effectiveness over time. In fact, even the best designed programs begin to produce significantly lower results in as little as six months if the marketing materials and approach are not updated. So refurbish and re-energize your referral program at least once a year.
No ATS marking. If all individuals being referred are required to visit the corporate website in order to apply, there is a significant chance that the source of the resume will not be “marked” as a referral. In fact, some HR technology does not allow referrals to be “marked” so that they can be given higher priority. And without prioritization, the slow response rate will quickly degrade program participation.
Equal rewards for all jobs. All HR programs should reward performance, and referrals are no different. Referrals for hard-to-fill jobs and mission-critical jobs should get a bigger bonus than easy-to-fill jobs. In addition, there should be a supplemental bonus if someone turns out to be a top performer after they are hired. If you fail to include reward differentials, your key jobs will be filled more slowly or not at all. In fact, the best programs allow referrals only for jobs that are high impact or are hard to fill.
Paying a miniscule reward. Do not embarrass yourself by paying a ridiculously small bonus. Yes, you can pay nothing or just have drawings for prizes and still have an effective program, but don’t pay $50 or $100 for something that if you had to hire an external consultant to do would cost thousands of dollars. If you’re paying significantly lower than the market standard, you will get push back from your employees who compare what your firm pays to what is paid by close competitors.
Underestimate efforts to create effective program
Most managers in HR and recruiting view employee referral programs as simple to design and maintain. After years of research and studying over 600 companies, I have concluded that the exact opposite is true. It’s important to realize upfront that there are factors that lead to program success, but more importantly, there are factors that seem innocent on the surface, but when present, they can literally kill your program results in a very short period of time.

In another Dr. John Sullivan article you can find more details about how using Messaging Campaigns to Spur Employee Referrals.

Tags: Employee Referral Program

This entry was posted on Monday, June 23rd, 2008 at 10:06 am and is filed under Employee Referral Program. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.