Higher-quality candidates, quicker hiring time, a lower cost-per-hire, and an improved employer brand. These are four good reasons for employee referral programs. Companies filled about 20 percent of openings via employee referral in 2013, according to the 2014 CareerXroads “Source of Hire Report 2014,” based on a survey of 50 companies. By conservative estimates, the report adds, a referred job seeker is three to four times more likely be get the job than applicants without a referral.
“Referrals tend to stick longer with the company,” says Jeff Brockman of New Jersey-based Career Transition Resources. In his two decades of recruiting experience, he has come to love getting these quality leads and says “most decent-sized companies” have a pretty good referral program.
In fact, some Fortune 500 companies have whole teams of recruiters dedicated to managing referrals, says Kara Yarnot, founder and president of Virginia-based Meritage Talent Solutions, which surveyed 100 recruiting organizations for a 2014 report on employee referral trends.
The post-recession competition for top talent has in part driven these programs, which give companies a “warm” introduction to an individual who might not otherwise respond to a company recruiter, Yarnot says.
But some employee referral programs run cold, while others flourish. Here are nine ideas to ensure yours is a success.
1 – Pay up.
Meritage research found the average paid to be less than $1,000, while Brockman has seen companies pay up to $5,000. For “spotlight jobs,” he says, companies will sometimes pay more. But it’s all a drop in the bucket compared to an agency fee.
2 – Consider non-cash rewards.
Are they actually desired? Yarnot’s research has uncovered many companies that saw a big impact on employee behavior by offering small non-cash incentives. “One financial services firm started offering Starbucks gift cards to employees who referred qualified candidates to open positions,” she says. “Within about three months, the percentage of referred candidates who were actually qualified for the open positions increased significantly.” Besides gift cards, companies have offered prize drawings, company logo items and extra vacation days.
3 – Automate program management.
Employee referral program tools can automatically notify employees of jobs and track referred candidates. These platforms can even be used to pay out earned rewards automatically. (Learn more about the systems here.)
4 – Keep employees in the loop.
It’s important to keep employees informed on the status of a referral; they’ll be more likely to refer again. Program management systems integrate with a company’s applicant tracking system to automatically update an employee on what stage of the hiring process a contact is in. A quick-response-time policy helps both current and potential future employee to have a positive impression.
5 – Get social.
Referral management systems can also tap into employee contacts by integrating with LinkedIn, Facebook or other social media platforms. With some systems, a customized email can even be sent to recommend specific contacts as good fits for a referral. But that need not be automated. Brockman has asked employees to open up their LinkedIn contacts lists so they can go through them together in search of ideal job candidates.
6 – Go mobile.
A common feature in third-party tools, mobile accessibility allows employees to act on recommending a friend while on-the-go. Consider adding an app for that, or at least a mobile-optimized website.
7 – Insert fun.
Programs may use a leaderboard for the referrals game, with credits applied for forwarding a lead internally, bringing in an applicant or simply sharing a job opening socially. Badges and rankings mix in some healthy competition.
8 – Widen the circle.
Former employees, clients, vendors, social media followers and other groups with a connection to the company are welcome to participate in some referral programs. “Companies need more avenues to identify qualified candidates, especially those with in-demand skills,” says Yarnot. “They feel that non-employees understand their business and hiring needs.”
9 – Remember new hires.
Brockman suggests leveraging the excitement of new employees through outreach encouraging them to bring others on board. “Welcome to the company,” the conversation might go. “Who do you know who would also be good here?”
Keep the hiring momentum going: Find out how CareerCo can boost your recruitment efforts.