February 27, 2014

Use Non-Employee Referrals for Hiring Success

Businessman giving his card to female coworker in officeIt’s a common practice to have employees be rewarded for referrals to help in the recruitment process. But what about non-employees – should you reward their referrals as well?

You should in the view of John Sullivan, a noted human resources expert from the Silicon Valley. He calls it an emerging trend and one that should be embraced because it “expands the number of individuals who are looking for top talent for your firm beyond the traditional employee base.”

Sullivan offers these advantages to the non-employee referral concept:

  • More talent scouts
  • Using “other people’s time”
  • High-quality referrals
  • A proven approach
  • A different set of prospects
  • Increased speed
  • Low-cost
  • You may strengthen your relationships
  • Friends may also become prospects

As Sullivan notes, many employers say using employee referrals increases the speed of hiring. Also, people doing the job hunting for your company may end up wanting to work there. He also adds that companies and organizations like Verizon Technology, Internosis, Clearlink, the U.S. National Guard, and the information technology company CACI are already embracing non-employee referrals.

Any non-employee referral program needs to supplement current employee referrals. Sullivan said a framework should be established to make the program succeed.

  • Set quality expectations
  • Require friends to provide detailed information when they refer
  • Provide a referral toolkit
  • Provide “ownership” and motivation
  • Take advantage of every opportunity to ask for referrals
  • Minimize administrative roadblocks

The last point is important, Sullivan says, because referrals should be expedited in the human resources process and any payments for referrals shouldn’t be delayed because it could hurt your company’s brand and discourage further referrals.

A company or organization shouldn’t start off with grand rewards for non-employee referrals, Sullivan advises. “Rather than offering a large reward, initially try low-cost rewards like free product samples, a booklet of movie tickets, a Starbucks coffee card, or a drawing for a fun vacation trip,” he says, adding some referrers might like to see a donation made to a charity, which helps your business, too.

Sullivan suggests the following folks could make good non-employee referrers, or as he calls them “friends of friends.”

  • Contingent , seasonal, and part-time workers who are not considered as full-time employees
  • Members of your board of directors
  • References provided by your quality hires
  • Major vendors
  • Close family members
  • Consultants
  • Long-term individual customers or the employees of corporate customers
  • Your college interns
  • Top quality job applicants or finalists
  • Corporate alumni (former top employees) who can refer.

Sullivan admits his idea may not be perfect. He says, “As with any program, the friends program can carry with it some potential issues. The most common one is that if you are offering a reward of over $100, the administrative burden of having to issue non-employees 1099 forms to cover tax. Even though it is not proved to be a problem in well-designed programs, executives may also worry that friend’s referrals won’t be of a high enough quality.”

The Wall Street Journal tackled the issue, too. In her “At Work” column,  Lauren Weber calls them “amateur recruiters.” She says, “Companies have long used bonuses and other rewards to get employees to recommend their friends for jobs. About 25% of all new hires come from referrals and 90% of those are from current employees, according to HR consulting firm CareerXroads. Now, thanks to a labor market where the demand for people with hot technology skills outstrips supply, some firms are expanding beyond their employee base.”

One New York firm offers a roundtrip airline ticket to New York City as a reward (but apparently no lodging or food). “Other reward programs give cash to off-the-street referrers. In 2012, Cedars-Sinai Medical Center in Los Angeles sought IT professionals who were certified in a healthcare application called Epic and offered a bounty of $5,000 to be shared by the person hired and the non-employee who referred him or her,” she added.

Read more in Employee Referral

Keith Griffin is an award-winning business writer and editor with more than 30 years experience as a journalist. His work has been published in The Boston Globe, Medical Economist, Good Housekeeping, About.com, the Hartford Courant, CT Law Tribune and numerous other regional publications.
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