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Recruiters can get more recommendations for candidates by making employee referral programs easy to use, keeping employees in the loop and providing them with the rewards they really want, experts say.
Research shows that referral programs are many times more effective than relying on job boards to find and hire applicants. Employee referral programs have proved to lower overall recruiting costs and improve the recruiting function's return on investment because referred individuals typically get up to speed faster, need less onboarding, are more satisfied in their roles and stay longer at the company. Referrals have also proved to be a cost-effective way to tap into a large, qualified labor pool of passive job seekers. But studies also show that while many employers know the value of employee referral programs, they don't always run the programs well.
"Our research shows that about 71 percent of companies have a referral program, but of those that have programs, 75 percent say they are not meeting referral program goals," said Kara Yarnot, an executive consultant and strategy practice leader at HireClix, a recruitment advertising and consulting firm based in the Boston area.
"The No. 1 reason people don't use a company's referral program is that employees get frustrated with the lack of communication and engagement from the company," she added. Employees also don't make referrals because they don't know how, the process is difficult to navigate and time-consuming, and they aren't recognized for their efforts.
[SHRM members-only toolkit: Managing Employee Referral Programs]
Keep Employees, Candidates Informed
Don't let referrals fall into the black hole of your hiring process. The likelihood of an employee making another referral if an initial suggestion just disappears into the ether is very low, Yarnot said.
She recommended investing in an automated referral platform to ensure that every referral and referrer is contacted and given updates throughout the process. "Just setting their expectations up front can make a big difference," she said.
Smaller employers can flag each referral for a personalized message, but for mega-companies, engaging in any way other than through automated messages is not possible. Dell, one of the largest technology firms in the world, receives 40,000-50,000 referrals each year. The company utilizes automated messaging but does offer a "white-glove service" for certain referrals, such as those from executives, said Jennifer Newbill, Dell's director of global employment brand.
Shooting updates to employees and referrals at key stages of the process is what companies should aim for. Anything more, like allowing employees access to track their referrals through the hiring process, can present a privacy challenge, Newbill said. "We take privacy very seriously," she continued. "The referral needs to be able to opt in and say, 'Yes, my friend can see this information,' and then there needs to be caution about what information is shared. The worst scenario is that the employee finds out before their buddy that he or she didn't get the job. Would you want your friend to know this information about you—that you've been rejected and the reasons why?"
Empower Your Employees with Know-How
Another fundamental reason behind the lack of referral program use is that employees may not even know about it, how to use it or what positions are open.
"Companies do a good job with sharing positions externally but have a really hard time sharing jobs internally," Newbill said. "You've got to talk about the referral program and remind people about it constantly. People don't come to work every day thinking, 'How many jobs can I refer my friends to today?' "
Critical, hard-to-fill positions are featured weekly on the social media feed at Geisinger, a health care system serving 3 million residents in northeastern and central Pennsylvania, said Julene Campion, SHRM-SCP, Geisinger's vice president of HR for talent.
Newbill uses Dell's internal social media site to remind people that certain jobs are open for referrals and provides links for the job descriptions. The information is also included in company newsletters.
Yarnot recommended inviting recruiters to division staff meetings when there are openings in the division to talk about who they are looking for and to encourage referrals.
"Another low-tech option is to invite people interested in making referrals to lunch-and-learn sessions and show them how to search through their contacts on LinkedIn to generate a list of relevant referrals," she said. "High-tech options include using upgraded talent acquisition systems like Jobvite and iCIMS, which have referral functionalities that make the process easy, and implementing third-party referral platforms." These tools auto-post jobs to employees' social networks, match open positions to individuals within those networks based on skills and experience, and recommend those leads.
Simplify Your Referral Process
Make sure your referral process is mobile-friendly. Requiring employees to upload a candidate's resume when making a referral will discourage them from doing so, as will requiring endorsements.
"Asking for information that isn't used, like a cover letter outlining how great the referral is, is just wasting everybody's time," Newbill said. "The reality is that recruiters will not read a manifesto about your friend. They barely have enough time to go through the thousands of resumes they receive every week."
Geisinger recently revised its referral process to make it less cumbersome and remove some of the program's eligibility rules. "Previously, we required each referring physician to be engaged in the recruitment process, meaning they actually had to be involved in the interview process," Campion said. "This created an unrealistic expectation and caused some frustration, so we removed it."
The process confirming who should receive credit for the referral has also been simplified, Campion explained. "We now simply verify from the referral who the employee was who referred them, and that's it. In other words, we will trust those involved in the process."
Keep any process under three clicks, if possible, Yarnot said. "Only requiring candidate contact information such as name, e-mail and a phone number to get the process started makes it as simple as possible for the employee and puts the onus on the candidate to provide their resume."
Offer Rewards People Want
Yarnot explained that about 60 percent of organizations with referral programs pay out bonuses for making referrals, but employees often don't feel appreciated for submitting referrals, whether they get a bonus or not. "You can have a successful referral program, even without paying bonuses, by increasing public recognition for those who refer new hires," she said. "Recognition from the CEO or team leaders in public goes a long way."
Employers can run contests for most referrals submitted, the most that make it to interviews and the most hired, across locations and business units. "Using a leaderboard incentivizes competition," Yarnot said. "Make a party out of it."
Items branded with the company's logo and other noncash rewards can be provided for referral hires. It's most important to understand what works best for your workforce. "Each employer needs to figure out how much is enough to make it attractive for all parties," said Jay Meschke, president of CBIZ Talent and Compensation Solutions, an executive recruiting and consulting firm based in Kansas City, Mo.
"Where companies screw up is when they pay out cash bonuses and then decide they're not going to do that anymore as a cost-cutting measure," Newbill said. "That will go over very badly."
Many companies pay part of the referral bonus on the referral's hire date and the remainder after a probationary period, often three or six months. "We call it 'seasoning,' " Meschke said. "If you pay it all up front and it doesn't work out three months later, you've got bad will directed across all ways."
Splitting bonuses or delaying payouts in any way is a pet peeve for Yarnot, who implores companies "to stop making workers wait for bonuses. It's hard on HR and payroll. The amount of effort that goes into this is ridiculous. And delaying the payment is basically saying, 'We don't trust you.' "
Outside of industries with high turnover jobs, paying the bonus in the first paycheck after a referral starts work sends the right message that your employees' efforts are valued, she said.
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