The Top 10 Actions for Dramatically Improving Employee Referral Program Results

As the economy improves and recruiting top talent becomes more difficult, focus on employee referrals. They routinely produce the highest volume and quality of hire. If you are getting less than 40 percent of your hires from your employee referral program, here are the top 10 actions that I have found will dramatically improve your ERP results.

The Top 10 High-impact Actions for Increasing Referral Results

  1. Prioritize your jobs — the best programs do not cover all jobs and instead prioritize and focus on high-impact and hard-to-fill jobs. Don’t waste employee time and burden your program’s administration with “junk referrals” and referrals for jobs that can be adequately filled through normal sources. Referral programs that focus their resources on attracting top talent, game changers, and innovators produce the highest ROI.
  2. Educate employees as to how/where to find prospects — most employees simply don’t know where to look for referral prospects and how to convince them to accept becoming a referral. Start by asking your most effective referring employees what works and what doesn’t work. Then educate your employees by providing them with a simple toolkit that directs them toward the best approaches and helps them to avoid learning by trial and error.
  3. Provide a story inventory — the most powerful tool for selling referral prospects are authentic compelling stories about the firm. The first step is to develop an electronic story inventory so that employees can easily access your compelling stories. You should also develop a process that allows employees to contribute new stories by creating a “spread-the-love” website or wiki. The goal is to provide employees with access to an abundant number of stories, best practices, and examples for use in selling prospects.
  4. Proactively approaching target employees — most referral programs communicate using a broad impersonal approach; a superior proactive approach involves recruiters seeking out individual employees who have a high likelihood of making a quality referral for a specific job. Employees and managers are proactively approached on a one-to-one basis (and often in person) and are asked to provide the names of a handful of individuals who fit a targeted set of criteria. Because the approach is personal and targeted, the response rate and referral quality are significantly higher. Incidentally, top-performing employees submit the highest-quality referrals. When top performers and executives are proactively approached, frequently they are willing only to provide names, with no follow up or resume. Accept these referrals and use LinkedIn to see if they qualify.
  5. “Do it for the team” should be the primary motivator — instill in your employees that the primary reason that they should refer people is because the team wins when it has the best players. It is a superior motivator over monetary rewards, because it turns referrals into an opportunity to provide their teammates and themselves with the very best coworkers. The key is to convince every employee it is part of their responsibility to the firm and their team to be a 24/7 talent scout. By emphasizing the superior capability of employees to make contacts, to build relationships, and to assess potential candidates, you can educate your employees about the critical role that only they can play in filling the team with top performers and innovators.
  6. Provide referral cards — providing your most visible employees with a paper or electronic referral card can be powerful. The card should praise the type of person receiving the card and note that you have determined that they would be an exceptional fit at your firm. Electronic referral cards can include a tracking code to ensure that the employee gets credit for the referral. Encouraging your employees to wear “ask me about xyz” buttons at major industry events can also be effective in starting conversations and for beginning referral relationships.
  7. Boomerang referrals — some of the highest-quality referrals are former employees (boomerangs). In order to capture them, you must maintain a continuous relationship with these high-quality former employees (corporate alumni) in the hopes of someday rehiring them through an employee referral. Top corporate alumni themselves can also be asked to provide referrals.
  8. Send your job openings only to a targeted pool of likely connected referrers — do not “spam” all employees with referral requests for all job openings. Instead, develop a targeted pool of referrers (a top referral database) that can be proactively searched in order to identify and approach the small number of individual employees who have a high likelihood of knowing individuals with the required skills and experience for any particular job. This group of employees should include the externally “well-connected” and “superknowers” who know about the established relationships that your employees have.
  9. Expand eligibility to include managers and non-employees — managers should also be included in the referral eligibility list. Non-employees who know your firm well are often willing to provide referrals. Consider including corporate alumni, retirees, vendors, spouses, references, strategic partners, and even customers. Work with finance to find the easiest administrative ways to reward non-employees. This approach is even more impactful at smaller firms, where the employee population simply isn’t large enough to generate enough referrals.
  10. Rapid response to a referral is critical — a lack of responsiveness to employee referrals is the No. 1 program killer. The best programs set a target of getting feedback to the referrer and the referred individual within 48-72 hours of submission. Continuous and honest feedback is also essential if you don’t want to discourage future referrals.

Also Avoid Referral Program Killers

If you expect great results, in addition to providing some of the above advanced features and best practices, you must consciously avoid the following 14 “referral program killers” that can instantly damage your results.

  1. A program that is slow to respond to referrals and questions
  2. Failing to periodically re-energize the program’s marketing every 18 months
  3. Delaying the reward/bonus payment for three to six months
  4. Referral spamming of employees with too many messages
  5. Not ATS tagging of referral applications, so that you can track program effectiveness and the quality of hire that it produces
  6. Paying equal rewards for all jobs
  7. No feedback to individual employees on their weak or bad referrals
  8. Individual recruiters are allowed to “ignore” referrals
  9. Not tracking referral rates by manager so that you know the weak spots
  10. Too many rules and restrictions that make the process of submitting a referral time-consuming
  11. Not weighting individual employee referrals based on their past success record
  12. When referral applications are not given priority treatment in the recruiting process
  13. Not preventing frequent referral program manager turnover
  14. Not tying together the referral program with employer branding and social media recruiting

Final Thoughts

I have been developing and researching employee referral programs for over 20 years and during that time I have unfortunately found that although most firms have referral programs, the majority are poorly designed and are not data-driven. As a result, I urge program leaders to stop relying on old practices and instead use data to identify the referral-program elements that have the highest impact on hiring volume and quality. Instead of guessing, you need to know the highest impact actions and the elements that kill program results.

About the Author

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Dr. John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high-business impact; strategic Talent Management solutions. He’s a prolific author with over 900 articles and 10 books covering all areas of talent management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops, and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations/ organizations in 30 countries on all six continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR, and the Financial Times. In addition, he writes for the WSJ Experts column. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring," Staffing.org called him “the father of HR metrics,” and SHRM called him “One of the industry's most respected strategists." He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked No. 8 among the top 25 online influencers in talent management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees, and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on www.ERE.Net. He lives in Pacifica, California.

  • http://www.medievalrecruiter.com/ Medieval Recruiter

    For #6 in the program killers section, what’s the justification or reasoning behind this policy? I’ve seen way more tiered referral programs, with a very, very few with a payout tied directly to the salary of the incoming position. It would seem to me, the bigger the impact of the position, the bigger the payout should be.

  • Logan Meece

    @ Medlieval Recruiter. I think you and Dr. Sullivan are making the same point. I think his suggestion is to avoid paying the same referral for all jobs…such as a flat $500 for any referral for any job…

    • http://www.medievalrecruiter.com/ Medieval Recruiter

      You’re right, my mistake. It was in the killers section…

  • Shikhar Mishra

    Motivations brought up in #5 can be especially powerful given that employees tend have better credibility (see source below) than executives/managers, which can be put to use in selling the brand to potential candidates.

    source: http://www.forbes.com/sites/ekaterinawalter/2013/10/15/want-to-find-brand-ambassadors-start-with-your-employees-2/

  • Chad Batty

    Great article. Having just hired a referral from a new hire that has yet to start I was curious if anyone had any data/opinions they’d like to share with this practice. On the positive there may be some extra motivation and time to provide referrals, on the negative they may not be as in tune with company culture to provide a good fit. Thank you.