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Raising your employee referral program results to 50% of all hires


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Almost everyone agrees that employee referral programs routinely produce high quality hires with longer retention rates. Unfortunately, the typical corporate referral program produces less than half of its potential hires. The reasons for this underperformance can usually be traced to elements in the referral program’s design, and fortunately, most of these design flaws can be easily remedied. In times of high recruiter workload and limited budgets, it’s important for recruiting leaders to realize that modern employee referral programs have proven that they can contribute to over 50% of all hires. Reaching that 50% goal will not only increase the quality of your hires, but by leveraging your employee’s contacts and their peer-to-peer selling ability, you can free up your recruiters and recruiting resources so that they can be focused on your firm’s high impact openings.

This interactive webinar will be led by Dr. John Sullivan, arguably the world’s leading proponent of employer referrals programs (ERP). In this webinar, he will highlight the best practices that have proven to be effective in making referral programs the dominant corporate recruiting source.

Published in: Technology, Business
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Raising your employee referral program results to 50% of all hires

  1. 1. RAISING YOUREMPLOYEE REFERRALPROGRAM RESULTS TO50% OF ALL HIRES“50% is the new ERP target”ERE.Net, May 8, 2013© Dr John
  2. 2. 2My goals for today…1. To demonstrate the businessimpacts of referrals2. To expose you to dozens ofproven action steps that canincrease your ERP resultsto 50%
  3. 3. 3What are the business reasonsfor focusing on referral programs?Part I
  4. 4. Referrals produce the highest volume
  5. 5. Referrals are #1 in volumeSource popularity Volume1. Referrals 28.0%2. Job boards 20.1%3. Career site 9.8%4. Recruiter initiated 9.1%5. College 6.6%6. Rehires 4.3%7. Social media 3.5%8. 3rd party 2.8%9. Print 2.2%10. Temp to hire 2.1%11. Career fairs 1.9%12. Walk-ins 0.8%Source: CareerXroads 2012
  6. 6. 6Referrals are a high volume sourceReached 90% of it’s hires from employee referralsErnst & Young and Deloitte’s ERP’s both reachedapproximately 50% of all hires last year
  7. 7. Referrals produce highquality applicants
  8. 8. 8#1 in quality of applicantsIn a survey of 73 major employers… 88% saidthat… referrals are the # 1 best source for aboveaverage applicantsSource: 2006 DirectEmployers Association/BoozAllen Recruiting Trends Survey
  9. 9. 9High quality applicantsAlthough only 7% of job applicants came fromemployee referralsA whopping 40% of ERP candidates get hiredSource: 2013 JobVite Survey
  10. 10. 10High quality applicantsReferrals have the highest interview to hire ratioData analysis by SilkRoad reveals that 17% ofreferral applicants are interviewedAnd 25% of those interviewed are hired (#1)Source: Silk Road 2013
  11. 11. 11Referrals produce quality hires
  12. 12. 12Referrals are #1 in quality hiresSource effectiveness /quality of hire1. Employee referrals2. Large job boards3. Niche job boards4. Temp to perm5. Recruiters6. Trade media7. Staffing services8. College recruiting9. Career fairs10. Co-op education11. Mass media12. MilitarySource: 2011
  13. 13. 13Referral produce more profitReferral hires produce more profit Hires from referrals produce a nearly 25%higher profit… than hires from other sourcesSource: “The Value of Hiring through Referrals” (source: UC Berkeley by Burksy, Cowgillz, Holman and Housman
  14. 14. 14Referral hires havehigh retention rates
  15. 15. 15Retention resultsReferral hires have higher retention rates Referred workers are between 10% and 30% lesslikely to quit than workers hired from othersourcesSource: “The Value of Hiring through Referrals” (source: UC Berkeley by Burksy, Cowgillz, Holman and Housman
  16. 16. 16Benchmark firms that you canlearn fromPart II
  17. 17. 17Benchmark firms that you can learn fromAmTrust BankDeloitteEdward JonesAccentureErnst & YoungDaVitaAricentChildren’s HospitalOwens CorningAccoloCACI InternationalAcumen Solutions
  18. 18. 18Let’s start off with 4 high impactstrategic action stepsPart III
  19. 19. 19Strategic action #1Prioritize and focus your ERP effort
  20. 20. 20Strategic action #1Focus ERP efforts on high priority jobs including:Mission critical jobs and business unitsRevenue generating jobsJobs with a high previous referral success rateHard to fill jobs“Sudden” key vacanciesTip – begin with a shortlist of targeted jobs andthen add positions
  21. 21. Prioritize the employeewith the closest relationshipAccolo uses a referral community For every open job, it selects a few employeesbased on the likelihood that they will know theright person As a result, Accolo has averaged 8 referrals forevery job (#1)21
  22. 22. 22Be carefulHomer will referpeople also
  23. 23. 23Prioritize your employeesFocus on referrals from top performing employeesWhy? Because referral hires from top performers…produce nearly 3 times more profit… compared…to a referral hire from a below average performerSeek out and prioritize referrals from topperformersBut also… warn, restrict or ban employees thatroutinely make weak referralsSource: “The Value of Hiring through Referrals” (source: UC Berkeley by Burksy, Cowgillz, Holman and Housman
  24. 24. 24Strategic action #2Do not overemphasize monetary rewards
  25. 25. 25Strategic action #2Use “help the team" motivation (not $)The most effective referral motivation approachemphasizes the opportunity to work alongsidegreat people… because the team wins morefrequently… when it has the best players
  26. 26. 26Strategic action #2You can build a “help the team” mentality… byemphasizing these benefits to employeesHigher quality hires will improve business resultsand thus raise employee stock value and bonusesIt’s part of the responsibility of being a team playerYou will be recognized for “helping the team”You will learn more from higher-quality new hiresYou won’t have to work alongside slackersNote: A feedback loop is required to tell employeeswhether they made a “junk” or a “star” referralAlso show them the correlation between improvedbusiness results and a higher % of ERP hires
  27. 27. 272 examples… referrals don’t require $ bonuses Reached and maintained a +70% referral ratewith no $ rewards Edward Jones reached 55% with no bonus
  28. 28. 28Strategic action #3Be proactive in seeking out referrals
  29. 29. 29Strategic action #3Why you need to be proactive?“Great people know great people”, however mostemployees are extremely busy…so to maximize your referrals… you will need toproactively approach your top referringemployeesHere are 3 proactive ERP tools to consider
  30. 30. 30“Proactive” referral toolsA) Give me 5 – Proactively approach top employeesAsk them to identify and then contact the… Best manager they ever had Best team leader Best idea person or innovator Best person that "runs into" burning buildings Best problem solver Best sales person that beats you Best student in college that was so smart Best mentor Best technical skilled person Best international talent Best customer service person Best external replacement for you when you’re promoted
  31. 31. 31“Proactive” toolsB) Reach out to job references for referrals Identify top performing hires from last year Call their references that said accurate things Thank them Ask them “Do you know anyone else as good?” Ask them to be a future reference source
  32. 32. 32“Proactive” toolsC) “Most wanted list” for relationship building Executives identify… a list of gamechangersand potential “magnet hires” at the beginning ofthe year Employees are asked to seek out these highlydesirable individuals and to build a relationshipwith them over social media (Relationship recruiting) When they eventually agreed to consider becominga referral… speed hiring is required
  33. 33. 33Strategic action #4Broaden the programand expand it’s eligibility
  34. 34. 34Strategic action #4Broaden the programAdd on-boarding referrals – proactively ask newhires for referrals during on-boarding (Eli Lily)Add college referrals – the college population iswell connected through social networks, so add areferral sub-program for college hires and interns(Endeca, Intuit)Add referrals for executive positions – advancedERP’s also cover openings for executive positionsFocus on boomerangs – encourage youremployees to target your best corporate alumni…(also allow them to make referrals)
  35. 35. 35Strategic action #4Broaden the program Add internal movement referrals - have areferral program that is designed to encourageinternal movement. The best practice firm BoozAllen has a “Career mobility” team (Also MS,Cisco)
  36. 36. 36Expand program eligibilityExpand eligibilityExecutives are encouraged to refer - a “whiteglove treatment” recruiter can be assigned toencourage executives to make referrals (Deloitte)Managers and HR are made eligible – managersand those in HR are also well connected, so theyshould be eligible to make referrals (Accenture)Note: you can help minimize conflicts of interest byoffering the option of contributing any ERP reward tocharity. It can also be a significant motivator for thosethat are not driven by bonuses (Accenture, DaVita)
  37. 37. 37Expand eligibilityExpand eligibility to non-employeesOpen up referrals to non-employees includingFamilyContingent workersConsultants and vendorsCustomersBoard membersCorporate alumni(Internosis, Clearlink, CACI, Verinon)
  38. 38. 38Next: A long list oftactical action steps that candramatically improve results
  39. 39. 39Action stepsTips for improving referral volume
  40. 40. 40Best practices for increasing referral volumeHold referral events – hold physical referralevents and “virtual meetups” in order to garnerattention, to educate, and to get "spot" referrals(Alerts – send targeted alerts to the most relevantemployees with a successful referral track recordin order to make them aware of your current need.(CACI International and Quicken Loans)Competition – friendly internal contests betweenteams can dramatically improve results (Deloitte)
  41. 41. 41Best practices for increasing referral volumeHarness social networks – closely integratereferrals with your firm’s social media effortRecognize managers – set targets, make it apromotion criteria and then… track, report,recognize and reward individual managers forhigh referral rates within their team
  42. 42. 42Increase volume by requiring less upfrontAccept profiles – at least initially, allow LinkedInprofiles in lieu of resumesAccept just names – instead of requiring the fullresume, accept names only (Children’s hospital inDallas pay $100… just for name in key jobs…even if they are not hired… and 25% of the namesresult in a hire)
  43. 43. 43Action stepsEducate your employees
  44. 44. 44Education and helpProvide them with hands on help Provide virtual “referral coaches” Offer sample social media profiles and providetemplates that can guide employees on how todevelop contacts and relationships online Offer to critique their profile or their blog Provide them with stories – develop "storyinventories" that employees can access and thenuse to "sell" the firm to potential referees
  45. 45. 45Google has a story inventoryA story Inventory for recruiters and employees
  46. 46. 46Source: Whirlpool
  47. 47. 47Action stepsSet referral expectationsin order to minimize “junk referrals”
  48. 48. 48Setting clear expectations can limit junk referralsExpectations before an employee refers (guidelines)1.We are exclusively seeking superior individualsthat will make our firm significantly better2.Because we only want the very best… we expectno more than 3 referrals per employee a month3.Throughout the referral process… we expect youto put the firm’s best interests first4.Except in extraordinary cases, we do not wantreferrals from relatives or individuals thatapproached you and asked to be referred
  49. 49. 49We need the following informationProvide the following 6 pieces of information1. The job title or req # you are referring them for2. How you know or have assessed their work3. Assess and then tell us about their skills andknowledge… and how they are superior4. Assess and then tell us about their cultural fit…so we do not dilute our culture5. Assure us that you have sold them to the pointwhere they will accept an interview, if asked6. Honestly rate them with a A+, A, or B+
  50. 50. 50Action stepsReferral cards can have a high impact
  51. 51. 51Referral cards can be powerfulYour customer service just now was exceptional.I work for the Apple store and you’re exactly thekind of person we’d like to talk to.If you’re happy where you are, I’d never ask you toleave.But if you’re thinking about a change, give me a call.This could be the start of something great.
  52. 52. 52Electronic versions of referral cardsElectronic referral cardsAn alternative is to provide employees withelectronic referral cards to send to their socialmedia contacts (the cards can have a tracking codeto ensure that the employee gets credit for thereferral)
  53. 53. 53Action stepsUtilize high-impactbut low-cost rewards
  54. 54. 54RewardsAction steps for improving rewards Realize that the average bonus amount generallyfalls between $500 and $1,500…amounts above$1,500 have proven to have little impact The best ERP’s never pay "equal" bonuses andmost vary it by job, location and competitor $ "Grossing up" bonuses (so that they are in effecttax-free) really WOW’s employees Pay off quickly and consider a “prize patrol”approach to add excitement (Quicken)
  55. 55. 55RewardsInexpensive rewards to consider A referral dinner/luncheon held once/ twice ayear with the CEO to celebrate referrers A $25 gift / Starbucks card for your 1st referral A handful of free movie tickets for the family First choice at vacation, schedule or otherdesirable work items
  56. 56. 56An example… rewarding frequent referrersExpedia’s frequent hire club$1000 plus a travel coupon for each additional hire
  57. 57. 57Action stepsTechnology features to consider
  58. 58. 58Referral technology featuresImpactful technology features1. Referrals are tagged and prioritized in the ATS2. The referring employee gets an e-mail “thankyou” within 24 hours3. The referred candidate gets a “thank you”phone call within 24 hours4. The employee is notified via e-mail when areferral is scheduled for an interview5. Interviews can be scheduled by the candidateon a web site (Alaska Airlines)6. Relevant job openings are “pushed” to the rightemployees (With their permission)
  59. 59. 59Technology featuresTechnology features (continued)6. Employee referrals can be made directly fromtheir mobile phone7. Referring employees have a referral scorecard8. Employees and candidates can track progressduring the process (Accenture & Aricent)9. A+ and A “rejects are told what they must do toimprove their chances10.An e-newsletter is sent quarterly to A+ and Arated referrals that were not hired… in order tobuild a relationship
  60. 60. 60Action stepsAdministrative actionsfor improving program results
  61. 61. 61Administrative actions to consider Improve responsiveness – responsive is the #1critical success factor so… prioritize the handlingof referrals and develop service level timelines Dedicated recruiters – a dedicated ERPrecruiter can improve candidate relationshipmanagement (CRM) and much more effectivelysort and expedite top referrals (CACI) Expedited interviewing – make a commitmentto interview all A+ and A quality referralcandidates for key jobs within a certain number ofdays (Owens Corning)
  62. 62. 62Administrative actions to consider Measure quality of hire – measure the on-the-jobperformance and the retention rates of new hiresfrom referrals… and then use the information toimprove the ERP Conduct a follow up interview – after asuccessful referral, send a recruiter to interview theemployee in order to identify best practices and toask for additional referrals (Amazon) Develop a referral program SLA – increase theresponsiveness of both line managers and HR byinstituting service-level agreements that spell outexpectations. (Aricent)
  63. 63. 63Action stepsAvoid these 4 high impactERP program killers
  64. 64. 64The 4 most impactful program killers Do not allow executives to win the argument that…you don’t need a formal ERP program andmarketing effort… because “it’s part of their job” Do not withhold rewards during the new hiresprobationary period Avoid “referral spam” where a high volume ofmessaging causes your targeted employees toeventually ignore all referral messages Avoid sending employee referrals to apply onthe standard corporate careers website (not tagged)
  65. 65. Any questions ? 65Did I succeed giving you a handfulof useful ideas?