Receive daily articles & headlines each day in your inbox with your free ERE Daily Subscription.

Not logged in. [log in or register]

Why “Name-only” Employee Referrals Produce Dramatic Results

by Oct 29, 2012, 5:42 am ET

Employee referrals provide the highest quality and the highest volume of hires, but you won’t receive as high a level of results if you don’t minimize roadblocks to referrals. Requiring a current resume for employee referrals is a major “under-the-radar” detriment to reaching the goal of having referrals exceed 50% of all hires. Requiring a resume to start a referral process might not seem like a big deal (because the resume is “the currency” of recruiting) but it can be. Although “active candidates” all have current resumes, employed people who are not actively looking (some people call them passives) don’t have an updated resume available and they may have little interest in creating one.

Requiring an updated resume in order to move forward slows down and occasionally stops employee referral efforts. Consider an alternative approach, which is offering an option to employees, so that all they must submit is a prospect’s name and contact information in order to begin the referral process. This approach is known as a “name-only” referral.

Why Requiring a Resume Creates a Roadblock

The primary goal of the “name-only” referral process is to increase the volume of high-quality referrals from employed prospects who are not active job seekers. That goal is achieved by minimizing any roadblocks that inhibit referrals. It specifically eliminates a major delaying factor, which is the need to have a resume to start the formal referral process. Some of the reasons why requiring a resume causes delays, reduces referral volume, and referral quality include:

  • The delay while a referral prospect updates their resume — after an employee has had a successful face-to-face or online conversation with a prospect, they will of course ask for a copy of the prospect’s current resume. Unfortunately, many employed individuals who have not been in the job market simply don’t have an updated resume. This creates a delay because it may take weeks for an employed person to find the time to complete their resume update. It may also become a roadblock because the process of having to update a resume is unpleasant to most, so a significant percentage of the prospects may never start or eventually complete the work on their resume.
  • A delay after “the conversation” while waiting for their resume — many referrals result from an employee’s face-to-face conversation with a top prospect at a conference or an event. Even though an employee may have successfully assessed and convinced an individual to consider your firm, under most process rules, the employee can’t make a formal referral without attaching a resume. But because non-active job seekers don’t carry around copies of their resume, that means that the referral application must wait until the prospect later retrieves a copy. This delay “after the conversation” provides the prospect with an opportunity to change their mind about becoming a referral. And even if they don’t change their mind, it may take days for them to get around to sending their resume off.
  • There is no direct contact, so a resume can’t be obtained – some referrals come without any direct conversations between the prospect and the employee. This occurs when an employee identifies a referral prospect by assessing their work, their ideas, or their solutions on the Internet or in social media. In other cases, the employee will learn the name directly from another trusted professional in their field. In either case, without a direct contact and a relationship, the employee cannot easily approach and request a copy of a prospect’s resume. And a referral will not likely occur unless the employee happens to have the time to search the Internet in the hopes of finding the prospect’s resume.
  • Delaying the feeling of disloyalty when you send in a resume — many currently employed individuals don’t mind being approached and discussing a possible new opportunity. But they may consider it an act of disloyalty to their current team when they are required to actually send off a copy of their resume to another firm. This feeling of disloyalty and its related hesitation can be “postponed” or delayed if their verbal approval is all that’s required to become a referral. In fact, they won’t ever have to take any positive action that they might consider disloyal unless and until they are chosen for an interview. The firm can use a LinkedIn profile for their initial assessment, in lieu of a resume.

Why Resumes Are not Critical for Great Referrals

If you are looking for a new member for your golf team, merely being provided with the name “Tiger Woods” and the fact that he was interested in your team would be enough for any recruiter to “take it from there.” Before you assume that a resume is required, remember that the three key elements of an effective employee referral application are completed by the employee, and most are done without access to a resume. These three assessments include:

  1. They are qualified – the employee attests to the fact that they know the work of the individual. And that they have assessed the skill, knowledge, and experience level of the individual and they have determined that they are equal to or higher than that of your firm’s average employee.
  2. They are interested – the employee sold the prospect, so that recruiters and managers know that the individual is interested in the job/firm and they are willing to come in for an interview.
  3. They are a fit for the organization – the employee has assessed whether the individual would be a cultural fit for the organization (and perhaps for an individual job).

Fortunately, each of the three key assessments can be and often are done by the employee without them ever seeing a formal resume. If the firm is willing to accept these three key initial assessments and a copy of the prospect’s LinkedIn profile, in the short term, there is no need for a formal resume.

After the organization formally accepts the “name only” referral, in some cases there will be a need for additional information to determine if a telephone interview is warranted. Fortunately with the growth of the Internet and social media, even a junior recruiter can easily supplement the employee’s initial assessment and the information provided in their LinkedIn profile. They can gather any necessary additional information without contacting the prospect through Google searches on their name, Internet searches for their resume or bio, by using vendor reference checking services, and also through a search of the individual’s personal website and social media sites. So at least in the case of exceptional “name-only” referrals, a formal resume may not need to be requested until the end of their initial screening interview.

The Solution — Develop a Process to Accept “Name-only” Referrals

If you want to make it easy for employees to make referrals and for prospects to become formal referrals, you should consider developing a process for accepting “name only” referrals. The concept is certainly not new; however, recent experience at the Children’s Medical Center in Dallas has reinforced its potential positive impacts, where nearly 25% of “name-only” referrals are hired.

Incidentally, it includes a unique program feature that pays the employee $100 per name, even if the individual is not hired.

Key elements that you should consider including in your “name-only” employee referral process include:

  • Minimum information needed — only require their name, contact information, and their public LinkedIn profile for the initial application.
  • Require employee assessment – require the employee to assess each “name-only” prospect for 1) their skill level, 2) their fit for the organization, and 3) that they are interested and they will come in for an interview, if it is offered. For referral programs that demand that a referral to be linked to an open job requisition number, require the employee to determine that the individual is currently working in the field of the referral opening.
  • Offer a reward – offer the same level of referral reward for a hire under the “name-only” process as under the normal referral program. Also consider offering a small reward simply for providing the names of exceptional prospects, whether they are hired right away or not (i.e. a $25 coffee card). Although this is unusual, it will dramatically increase the number of referrals while building your talent pool.
  • If you can’t offer a reward – if you can’t or don’t want to offer a reward for new hire referrals, realize that accepting “name-only” referrals is an excellent approach because it dramatically reduces the amount of work required on the part of the employee in order to make a referral contribution. Employees are less likely to resent not being rewarded if the referral process is much easier on them. Emphasize that employees should make only exceptional referrals in order to “build the team,” to increase business results, and to ensure that they will only work alongside the very best.
  • Limit the number of referrals and raise your expectations – because “name-only” referrals require some extra work on the part of recruiters, limit the number of “name-only” referrals from an individual employee to no more than three a month. And even then, make it clear to employees that you expect that each “name-only” referral to be a top 10% “exceptional” prospect.
  • Limit which employees can make “name-only” referrals – you should also consider limiting “name only” referrals to employees who are above-average performers or who have a proven record of successful referrals.
  • Allow executives to make “name-only” referrals – consider accepting “name-only” referrals from senior managers and board members because they have extensive contacts but they normally don’t have the time to make traditional referrals. Where there are potential conflicts of interest, allow the referral bonus to be donated to a charity.
  • Provide direct feedback – if you find that individual employees are abusing the “name-only” referral process, they should be given direct and honest feedback. Individuals who make extraordinary “name-only” referrals should also be contacted to learn about their techniques and to recognize them.
  • Metrics are required – you should label each “name only” referral in your ATS  and track them over time to document that they produce quality hires.

Final Thoughts

In my experience, most people who run employee referral programs are extremely conservative and resistant to innovations. As a result, the idea of accepting “names only” is usually not met with a lot of enthusiasm. That is unfortunate because making referrals relatively easy will dramatically increase employee participation rates, the number of referrals, and the number of referrals coming from the highly important segment of currently employed individuals who are not in the job market.

If you’re still cynical, remember the children’s hospital example where 25% of all name only referrals were hired. With these dramatic results as an example, you can get extremely high-quality referrals under the “name-only” process if it is designed correctly.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • http://www.shakercg.com Joseph Murphy

    John, Great invitation to let go of poor data. Big data selection science documents time and time again that resume information does not support good decision making.

    To make referrals more informed, consider asking the refering associate to present the reasons they value the company-job-fit of the individual on a competency based, behaviorally anchored rating scale. It will make the process more objective, provide insight regarding strenghts and development opportunites, and better prepare the recruiter for the first conversation.

  • http://www.linkedin.com/in/jacobsmadsen Jacob Madsen

    As proven so many times before, referral hiring offer an near unlimited range of opportunities, and for those that can and will utilise this there are vast opportunities.
    With the ‘simplification’ of name only, this possible to be boosted even more, – thank you for sharing and keeping this topic where it belong, – at the very top of the agenda.

  • http://www.zao.com Ziv Eliraz

    John, excellent post – we agree 100%.

    Zao’s data shows that separating the referral into a two step process works extremely well. Getting the name of a candidate first, allows more employees to engage in the referral the process. When social media like LinkedIn and Facebook are involved into the platform, sometimes all you have is a name and profile, without a resume. That can then be supplemented with additional data solicited at a later point from the referrer, as Joseph mentions above.

    These names can then both be designated in the platform as leads for HR, and serve as an invitation for the candidate to apply.

    We also agree with providing rewards (even non monetary, like points) are a great way to incentivize referrals.

  • http://www.rekrutr.com Amy McDonald

    I am in 100% support of your views here, Dr. Sullivan. Processes are only as good as the results they obtain. I think often times, the fear of change in our established processes results in longer fill time, more expensive fill rate, and an overall bad experience for the candidate who is not actively trying to look for a position in the first place. I will be sharing this!

    Amy McDonald
    REKRUTR.com

  • Keith Halperin

    Thanks, Dr. Sullivan. IMHO, a company that isn’t prepared to pay a substantial (four-figure) referral bonus is broke, isn’t serious about hiring and/or doesn’t value its employees, while a company that isn’t prepared to pay a substantial (four-figure) referral bonus while willing to pay substantial (20% or more) agency fees holds its employees in contempt. If management feels that it’s an employees duty to provide referrals for minimal or no compensation, they should extend that to the sales force and see if salespeople will refer/develop substantial amounts of business out of duty…How about it is every employee’s (director level or below) duty to refer at least 1 hired person/year, for which they are substantially rewarded? It would be considered part of their bonus compensation. Furthermore, an employee referral would be considered to be as a good as a sourced candidate as far as Recruiting is concerned- part of the problem with increased usage of ERs is that quite often ERs are treated like agency hires- the recruiter doesn’t get credit ….

    Cheers,

    Keith “Spread Around the Good Money” Halperin

  • http://www.rolepoint.com Kes Thygesen

    Great post, John. Unfortunately, many organizations don’t realize the importance of employee referrals. And if they do, they don’t quite get it yet. Another idea if you can’t offer a reward — offer work-oriented prizes, donations to charity, or only offer a prize if the referral is hired. The last tip will ensure the quality of your hires are top notch. If an employer is feeling particularly lost in the employee referral world, there is software available to get started, which include metrics and measurement, tracking everything you need to know.

  • http://www.work4labs.com/ Etienne Le Scaon

    Very good post! It’s amazing to see all these great innovations and thoughts in the recruiting field lately, especially around employee referrals.

    Work4 Labs is also convinced that the reach of social networks, combined with smart referral mechanisms and highly innovative matching technology is the solution to effective employee referral programs.

  • Pingback: Update your ERP; accept name-only referrals – Zao's Rewarding Hires Blog

  • http://www.hollaroo.com Hugh Fordham

    Great article and exactly right about removing the “friction” on referrals by recognising that your referrer’s knowledge is a much more valuable source of information than the data on a resume. The only thing I’d add is that if you can also decouple the referral from a specific vacancy you will make it even easier to refer because the “timing” becomes less important.

  • Pingback: 5 Best Recruitment Marketing Articles of the Week: Halloween Edition « SmashFly Recruitment Marketing Technology Blog

  • Pingback: Motivating Employees to Make Referrals — Determining the Most Effective Rewards - ERE.net

  • Pingback: interest calculator Savings