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Proactively Acquiring Employee Referrals?

Posted by Eric Putkonen on 09/28/2015 in Recruiting articles |

Every year I see the CareerXRoad Source of Hire Survey and also recently I saw SilkRoad’s Top Sources of Hire 2015 Report, and I consistently see employee referrals as the top source of hire.

In reading a study published in The Quarterly Journal of Economics (Oxford Journals) called “The Value of Hiring Through Employee Referrals,” you can learn the following that were statistically proven:

  • Referred candidates are substantially more likely to be hired.
  • Referred candidates are more likely to accept offers when receiving them.
  • Referrals are substantially less likely to quit than non-referrals.
  • High-ability workers are more likely to make referrals.
  • Referrals from your most productive people get you more productive people.  Referrals from less productive people tend to get you less productive people.
  • It costs less to recruit through referrals.
  • Referrals do not get higher salaries than non-referrals (equivalent salaries).
  • When bonuses are offered for referrals, employees sometimes recommend unqualified candidates (the higher the bonus, the more unqualified referrals).
  • Referrals and non-referrals have no significant difference in productivity across several productivity measures (shattering or shedding doubt on the theory that referrals are more productive).
  • Nor is there an increase in productivity by the people making the referrals.

Profit curveIt is clear that referrals are more profitable hires (primarily due to the lower cost to recruit and lower rate of turnover).

And yet most companies (if they have an employee referral program), just have it on their intranet site and it is occasionally mentioned by some managers.  How will you get the most high caliber employee referrals with such a passive use of the tool?

We need to get employee referrals proactively.

Firstly, we should prioritize and focus on the hard to fill, high impact, and/or repeatedly needed jobs.

Once we know which jobs we will be targeting for employee referrals, there are a couple of things we should do:

  • We should find out which managers have these kinds of employees and get a list of employees.  Then we should then find out which are the top performing employees and approach each of them for 3+ names of people that they know are the best in their fields or people they would love to work with in their field…that are not currently looking for new jobs.  You just want the names of top performers in the field – not people looking for jobs (convincing them is the recruiter’s job).  Also, you can teach them to…
    • Proactively and regularly review their existing contacts lists.
    • Proactively expand their current connections
    • Keep an eye out for talent to give the recruiters leads
  • We should ask each new hire in these jobs during the onboarding process to recommend 3+ people…again, who is really good at this work and who they would love to work with.  Ideally, not currently looking for work.  They are very happy to be joining the company and excited about the prospects…this is the time to ask for referrals.

In both cases, we should encourage them to only provide names of good people that they know personally as a good fit to the positions or a top person in the field, and ask why they are such good people.  We absolutely need the reason why the person is being referred.  This will tell us if it is just a name being thrown out with little knowledge (for the potential bonus) or if the referrer really thinks that this person is a fit for the job or someone top in their field.  If the reasons are wrong, then you have a chance to correct their misunderstanding.

Thank you to William Warby (CC BY 2.0)

Thank you to William Warby (CC BY 2.0)

We should follow up with every referred person in a very professional and timely manner (within 48 hours)…and ask them if they are not only interested in opportunities but the names of other people they know to be some of the best in their industry (recruit and network with them).  This will get you even more names to call.  In this way, each contacted high performer leads you to other high performers and the list grows.

This list can then be used for pipelines of people to call in the future (and network again) and also to stay in contact with.  Try to get them into a CRM and narrowly segment them so they can be pulled out at will for phone calls, email campaigns, or even mailers.  Ask them to join specialized talent communities or groups, so that you can give them news about their industry, insights into your culture, and sometimes your new opportunities that are an exact fit for them (professionally, geographically, etc.).  You want to cater to them and make sure nothing is sent that would not be of interest to them or spammy.

Easy StreetWhen you have a referral who is interested in learning more, make it extremely easy for them to apply and get an interview with hiring managers.  You do not want to get someone willing to test the waters only to then ask them to spend an hour filling our their work history and information into your ATS.  Create a sub-system for referrals (if necessary).  What is the absolute minimum they have to do (for compliance reasons mainly)? Just ask them to do that…or possibly complete much of it for them.

In this way, you can get even more out of your employee referral program by using it proactively.

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