Referral Program Best Practices
It is the potion of knowledge that the most influential source of hire by some distance is employee referrals, with 28% of jobs last year being filled through employee referrals (from the CareerXroads Source of Hire study), 8% more than the next popular source of hire, Job Boards, and 24.5% more than social media, which accounted for 3.5% of hires, (although one suspects that social media is instrumental in the referral process.)
But, this is only half the story: staff that join a business as a result of employee referrals have a higher retention rate than those from career sites and job boards. On top of this, you also find that employee referrals get hired 55% faster than candidates from career sites. In general, we’re looking at a faster recruitment process that results in high-quality, long-term employee hires.
The stats speak for themselves; the most effective tool in a recruiter’s current arsenal which will enable them to provide their business with real advantage in the talent war is an effective employee referral strategy. Below, I have set out some tips on how to make the most of this powerful recruitment channel.
1. Offer A Referral Bonus
If you are serious about your employee referral program then you really should include a generous referral bonus. Do I hear groans? While I said employee referral programs are powerful sourcing tools, they are not free, but console yourself with the fact that although overall costs may be comparable to other recruitment methods, the return may be better.
It is very much the norm to offer a referral bonus, with 69% of US employers surveyed and 93% of UK employers surveyed offering a referral bonus. If you don’t offer a referral bonus, then it is likely that your competitor’s employees will be working harder than your employees to find top talent for the company.
Also, 47% of employers appear to wait until the end of the probationary period before paying out bonuses to protect themselves from paying out for referrals that do not work out. The risk of this approach is that you may receive less referrals. A possible alternative is a back loaded 2 stage payment, with 25% paid on appointment and 75% paid on completion of the probationary period, or some variation of this theme.
2. Ensure The Rules of Participation are Simple
A survey from the Referral Network showed that one of the main reasons that employees do not refer friends is ‘that the referral process’ is painful ‘. Therefore, ensure that your employee referral program is clear and is easy to both comprehend and participate in; think about working closely with the marketing team to ensure that the communications element of the document is optimized. Try and fit it all into one page!
3. Make sure the referring employees know they are not at risk
The Referral Network survey also revealed that another key deterrent to employee referrals was ‘fear of the consequences, if it does not work out’. Therefore, make it clear to the employee that they are only a referrer, and that they are not responsible for actually selecting the employee nor providing assurance that the candidate will be a great employee. HR and the hiring manager are responsible and accountable for assessment and selection of the employee, as well as any ongoing performance.
4. Create an attractive working environment that encourages employee referrals
The Referral Network Survey showed that 42% of employees refer candidates in order ‘to help a friend’ and another24% to ‘help the company‘. Both of these motivations rely on the employee having a strong sense of goodwill toward the company. Why would an employee want to help a company that they did not value and appreciate and why would they want to refer their friends to a company that was not a good place to work? Therefore, as a vital part of your employee referral strategy you must develop your employee value proposition and ensure your business lives and feels its brand so employee engagement levels are high. Also, the employer value proposition should be referred to in a concise, and attractive way in the employer referral scheme document. Give your employees an easy (and of course, truthful) “sales pitch” to give prospective candidates about the company.
5. Leverage Social Media
One of the main ways that employees will contact potential job applicants will be through social media, so if you are a company that does not permit its employees to access social media at work, you may be severely limiting the potential reach of your employee referral scheme. Therefore, unless you have good reason not to, do allow your employees to access social media at work.
Also, ensure that all your jobs can be easily shared by employees through social media by ensuring the job adverts have ‘share’ buttons for LinkedIn, Facebook and Twitter. By doing this, you will be making it as easy as possible for employees to spread the word about your job and you will be maximizing the power of you employee network.