4 Reasons Your Employee Referral Scheme is Failing

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male professional worried about poor business outlook Countless studies, including those from the likes of Jobvite and CareerXRoads, show that the most effective source of hire is through word of mouth–that is, an employee referral. As well as this, further analysis from the Jobvite Survey  reveals that word-of-mouth hiring can be faster (55% faster), cheaper and deliver higher-quality candidates with a better cultural fit. Hires stemming from employee referrals also have higher retention levels than staff hired via traditional channels with 46 percent staying for longer than three years compared to just 14 percent from job boards.

It’s no surprise that many of you may be clambering on the employer referrals bandwagon, but you may then be surprised to find that even though you have set up your employee referrals scheme, it simply isn’t working. How can this be the case? Well, below, I have detailed four of the most likely reasons that your employee referral scheme may not be working:

1. Your employees are disengaged

Have you checked your employee engagement levels lately? A survey by Gallup suggests that 71 percent of American Works are “not engaged” or are “actively disengaged” – and the problem with disengaged workers is that they generally don’t say good things about their employer, are not willing to put in any discretionary effort, and are not willing to actively promote your business. This all adds up to a distinct lack of motivation to refer employees, which means an employee referral scheme has little chance of success in a disengaged environment. So, check out your own engagement levels and if they are low, this may be the source of your employee referral apathy and a problem that needs to be addressed before word-of-mouth hiring will work for you.

2. Bad employer reputation – negative word of mouth

Have you checked your employer reputation? Just like any area of recruitment, word-of-mouth hiring will be impacted by your employer brand. Candidates will be less likely to apply to organizations with a weak employer brand and employees may be less inclined to refer if they find they have to constantly defend the reputation of the business. You should not underestimate the dampening effects that a bad reputation can have on word-of-mouth hiring as a TARP survey showed that while people who have a good experience with a company share this with just a few friends, those who have a bad experience share this with approximately 85 friends. There is likely to be a strong correlation between negative word of mouth and reduced referrals. So, what’s your employer brand image like? If it’s bad it could be hindering your employee referrals scheme.

3. Employee referral scheme motivators are defective

It could simply be that your employee referral scheme is broken in some mechanistic way, meaning that the scheme’s behavior drivers are failing to motivate staff to put in effort or to refer. It could be that the incentives are too low, the scheme is unclear and has not been communicated, there is no reward for effort (just success), etc. There are many potential mechanistic scheme issues that could be mean your referral scheme is a turnoff to even engaged staff; so, make trial changes to the mechanics of the scheme and observe what drives referrals activity and what detracts from it.

4. Staff members are poor networkers

You may need to entertain the prospect that your staff members are poor networkers. Sure if you have a large sales and marketing contingent and/or a high proportion of extroverted outgoing staff members who have large networks (and regularly network with industry peers) your employees will be presented with plenty of potential referral situations.

However, less outgoing staff with smaller networks and who don’t network will have fewer opportunities to actually refer staff – and this could be another reason for low levels of employee referrals in a department or your company. If you find that your employees are not great networkers you may need to provide much more coaching on networking and provide them with plenty of technical and marketing based props and aids to make it very easy for them to network and refer.

By Kazim Ladimeji