For great recruiters, this is an historic opportunity that can’t be missed. The elite of the elite are teetering — firms that have for decades had their way with the best talent from around the globe. If you haven’t already developed a recruiting plan to poach the best individuals and yes, even intact teams, there is no time to waste.

Target Top Performer and Innovator “Survivors” Who Hate Stagnation

The obvious recruiting move would to be to target the thousands of financial professionals and MBAs who are about to lose their jobs. While that is OK, if you want to land a true “find,” my recommendation would be to instead target the “survivors.” Survivors are those top performers and innovators who are almost guaranteed to still have a job because they are so valuable. Normally these extremely high-value individuals would be untouchable by corporate recruiters outside the financial industry. However, for a brief period these top performers and innovators will be considering other opportunities because these individuals have difficulty coping with the frustration that comes with frozen budgets, cost containment, limited risk-taking, and the politics of mergers and acquisitions. These top performers and innovators are so good that they will almost certainly survive any buyout, merger, or even a bankruptcy.

This state of uncertainty and stagnation doesn’t bother most employees because they are just happy to have the security of a job, but top performers and innovators hate stagnation. They want to be “in the competitive game” constantly. They don’t want to take a break from the competition. Take Tiger Woods, as an example. If he was on your golf team but senior managers decided with little notice to play no matches for the next year, what would his reaction be? You could assure him till you were blue in the face that he would have a job and a paycheck, but it would matter little; Tiger wants to play against the best every day.

Great players and great employees want to be competing every day. They want to try new ideas and face new challenges. And that can’t happen in an organization where budgets are frozen and executives are laser-focused on trying to restore stability. Anytime an organization freezes hiring, pay, promotions, or budgets, the loyalty of top performers and innovators shrinks immediately.

Perhaps an example will help to illustrate the point. I know an exceptional top performer who had worked only at great high-tech firms from Intel to Cisco. Eventually, he moved to an emerging firm because it promised him fast decision-making and the opportunity to innovate on the “bleeding edge” of technology. He was energized and excited and he threw himself into the opportunity. But suddenly, with no warning, he abruptly quit one day. I was startled because he was so excited about the opportunities and challenges that he faced. So, I asked him: ‘Why the sudden turnaround in loyalty?’ He said, ‘I had no choice, because they froze all development budgets for the next year.’

Because I work at a university where budget decreases come on a weekly basis, I was puzzled. I asked him why the budget freeze was such a big deal; after all, it wasn’t a cut, only a freeze. He answered without hesitation, ‘I couldn’t stand the thought of not taking risks and innovating for an entire year. The stagnation would kill my spirit!’

He made a year with no budget increases sound like an eternity, but to him it was.

Corporate recruiters are always talking about becoming more strategic, but unfortunately few find the time or develop the courage to take advantage of strategic opportunities when they are presented with them. While the turmoil on Wall Street is a terrible thing, it has presented stable companies with cash in the bank a very rare opportunity. Not only is it a great time to recruit top talent away elite firms, it is also a great time to swoop up smaller- and medium-sized firms that rely on credit to fund operations because credit will be in short supply. Acquiring companies for their talent is not a rare occurrence; unfortunately, it is rarely one proposed by corporate recruiting functions. Truly strategic recruiters should understand the employer pecking order in the labor markets, the business models of talent competitors, and be able to build a short list of “labor investments” that offer great return.

Action Steps for Identifying Top Performers at Troubled Firms

Identifying who you should target to “poach” is easier than you think. Here are some tips on how to do it:

1. Remember: don’t look on layoff lists. Stars will still be employed.
2. Use social networks (Facebook, LinkedIn, Twitter, etc.) to identify individuals from these firms. Ask those who you do identify to help you out by naming others.
3. Search blogs written by employees at target firms for the names of top employees.
4. Ask your own employees and especially new hires if they know any top performers and innovators at your target firms.
5. Use “names” search firms (research firms have ways of identifying these individuals). There are numerous research firms that, for a relatively small fee, will provide you with the names and the contact information of anyone at a target firm if you know their title.
6. Identify famous or well-known individuals by running their “Google score.” Key people always have high Google scores. They can be found by searching for major technical terms or job titles, along with a firm name.
7. Search seminar, association events, and trade show brochures for speakers who come from these key firms. These survivors are likely to be authors and/or speakers.
8. Offer an increased referral bonus (bounty) for the next few months for top-performer referrals from these key firms.
9. Purposely include a representative from key competitors in your interview list for job openings. During the interview tell them that you assess top talent in part by their ability to “name other top talent.” If the same names appear across multiple interviews, you are getting close.
10. Contact former employees at these key firms and ask them for names.
11. Ask suppliers, customers, and consultants who work with your firm for names.
12. Use sites like Jigsaw (which collects business cards) to identify individuals with key job titles at these firms.
13. Use executive search firms that specialize in these industries.

Selling Them on Your Firm

Once you identify the individual, obviously you still have to convince them to make the switch from an unstable firm to a stable one. Some tips that might help you include:

• Put together a portfolio of arguments demonstrating that your firm has the resources and the executive support to invest in innovation and new ideas.
• Put together an interview team of executives and innovators who excel at exciting and “selling” others on the vision of your organization. Use this team to convince your target to make the move.
• Expand your offer letter process to include information on the type of resources, budget, and opportunities that the new hire will have if they accept your offer. Make whatever promises you need in order to convince them that a switch to your firm offers challenge and financial support.
• Directly ask your candidates what they would need to be successful at your firm, and what it would take to convince them to make the shift. Obviously, you need to use that information to better “sell” the candidate.

Final Thoughts

In a competitive business environment, recruiters must learn to be proactive and seek out opportunities to hire truly exceptional individuals. The turmoil that is resulting from the current financial crisis will affect not just the well-known firms that are going through bankruptcy and mergers, but also many tangential firms that will freeze their budgets and limit innovation as a result of the crisis.

If you have the courage and the ability to act quickly, now’s the time to cherry pick a handful of the survivors and bring them into your firm. Incidentally, if you’re successful, it is highly likely that each one will also bring along a handful of top talent with them, making the ROI of your initial recruiting initiative even higher.

In part 2, I will highlight some of the action steps you can take to implement a successful college referral program including advanced approaches, tools, and some added tips.

If you want to generate a significant portion of your college hires as a result of your referral program, here are a variety of approaches to consider. Select those that fit your level of aggressiveness and corporate culture.

Things to Do

• Offer rewards. Surprisingly, many people associated with a university are willing to make referrals with no promise of a reward. Why? Because they really believe in the abilities of the students they know and work with. You don’t need to give away a flat-screen TV in order to be successful. Students will readily refer with simple rewards like gas cards, iPods, software, movie tickets, a pizza party for their friends, professional sports tickets, or a chance to win a spring-break vacation. Offer students a choice from a list of rewards. It’s best to start small and then increase the rewards if you find those under $100 are ineffective. Since every campus is different, directly asking students or trial and error are the best ways to determine what works. You can also offer campus clubs and student professional organizations larger rewards for successful hires as a result of their referrals. The key is to offer an exciting reward but not one with an economic value so high that it might cause someone embarrassment.
• Referral cards. Referral cards are under-used in both traditional employee programs and in college referral programs. Think of the excitement an individual gets when they’re handed a card that says “WOW, you really impressed me. You’re just the kind of person that would be perfect at XYZ firm!” Referral cards can be electronic (like an e-greeting card) or on paper. It’s important to limit the number you deliver (to make sure the people who get them feel “special”). It is also extremely important that individuals responding to such invitations to apply are not treated identically to applicants walking in off the street.
• Utilize your databases. Use the information you gain from other sources, including scholarships, participation in community events, and working with alumni groups. Data mine the information in order to identify potential referrers.
• Use blogs. Have recent grads and interns (and even college recruiters) write blogs that discuss what it is like to work at your firm. Blogs are an effective way both to attract and “sell” students on your firm. Ask your most successful bloggers to evaluate those that make great comments or ask good questions on their blog and to make referrals if they identify someone special.
• Social networks. Encourage your recent grads, interns, and employees who work in functions that target college grads to be active on social networks like Facebook, MySpace, and Twitter. Ask them to build relationships with individuals who show promise.
• Ads, posters, and campus radio. Although they can produce some good referrals, your screening program has to be able to handle a larger volume than when more targeted marketing approaches are utilized.

• Global referrals. If your college recruiters are Internet-savvy and well traveled, you will find that it’s possible to set up basic referral programs at universities around the globe, without ever visiting them. The office of international programs at international universities might even be aware of and be willing to make referrals from among their crop of U.S. students who are currently studying as part of an exchange program. This allows you to get students with foreign experience and no visa issues that other U.S. firms are likely to miss.
• Referrals at student conferences. It’s wise to send a recruiter to student conferences in order to make contacts and get referrals.
• Ask for referrals from other schools. Don’t restrict referrals to students from the same school. Instead ask them for the names of students they know who are good at other name universities.
• Collaborate with other college recruiters. Where appropriate, consider making informal agreements with other recruiters who visit your campuses to “trade” non-competing referrals from majors that “their” firm isn’t targeting but yours is. For example, in the case where one firm is recruiting only engineers and your firm is recruiting writers, both firms agree to make a referral should they run across a great student in the other firm’s recruiting target area. Obviously, no cash bonus should be offered in this case where both firms benefit.

Approach These People for Referrals

• Approach grad assistants. The most successful college intern referral effort that I’ve ever encountered in my research received a phenomenal 100% success rate by asking the grad assistants of a few top professors to make referrals from the undergraduate students they had worked with. Grad assistants are easy to find, well-connected, and willing to make referrals, often without a reward. In addition, a simple call to the department office can identify them. In addition, one firm I know successfully recruited them remotely, without ever meeting them face-to-face.
• Approach officers of student organizations. Other than grad assistants, no one is likely to know the very best students better than the student president of an honor society or an elite professionally oriented student club. Student organizations are easy to find without visiting campus because they are affiliated with student government. In addition, most have webpages that list their officers and contact numbers.
• Approach honor societies. Referrals from officers and members are likely to be of higher quality than other student groups. Also ask award winners to refer other students.
• Ask your recent college hires. Obviously, recent graduates will still know and be in contact with some current students. Ask them on the first day of onboarding to provide you with referral names and to help you in convincing the targeted student to apply.
• Approach interns as referral sources. Make it a standard part of your internship program to ask students to make three to five referrals during their internship. Also consider making them “ambassadors” for the firm when they return to campus. While on campus, ask them to make one or two referrals each month. Even using former interns (who chose not to return) as referral sources can yield a few top referrals.
• Ask references to make referrals. You might be surprised to find that the references of exceptional students, when asked, also turn out to know one to three additional students who are also likely to be exceptional. To take advantage of this phenomenon, make a list of those who referred the very best and make them a permanent part of your college referral process.
• During conversations with exceptional students. Whenever you find a really exceptional student, find a way to make it part of the conversation, email exchange, or interview to ask them to identify and refer a handful of other exceptional students. Because they compete against each other in labs and classes, they will know the best of the best.
• During conversations with diverse students. Diverse and international students can feel somewhat isolated from the rest of the university community. As a result they tend to stick together and share the same networks. Take advantage of this closeness, while simultaneously improving your diversity recruiting results by utilizing referrals. The key is to educate a few leaders in each community about the inclusiveness of your firm and the success that diverse and international student hires have had there. Use your current diverse and international employees as mentors and relationship builders. Once the relationships are strong, show your contacts how they can help themselves and their community by becoming a permanent part of your referral process.
• Use current employees. Your employees with kids at top schools are likely to meet some of their children’s friends during visits and school breaks. Take advantage of these contacts and encourage your employees to make a few “exceptional” referrals. Consider allowing your employees to make one referral from among their own children if they are currently enrolled in a targeted major at a targeted school. If you know of any of your employees who teach or volunteer at targeted universities, make them part of your referral effort.
• Ask high school counselors. Some firms start identifying talent early in their academic life. If you go this route, ask counselors at top high schools to give you names of their top students. Then build relationships with them as they move through college.
• Ask community college faculty and counselors. Build relationships with these students as they go on to other schools. Often community college faculty are less reluctant to make referrals because an immediate job is really being offered.
• Employees using educational reimbursement. Ask employees who are taking advantage of your educational reimbursement at targeted schools to make a few outstanding referrals.
• Night and virtual students. At some schools, a significant portion of the student body is not on campus during most Career Center hours. However, in my experience, both night and virtual students form academic and social networks at least as tight as those formed by traditional students.
• Approach faculty. Part-time lecturers and adjunct faculty generally have full-time “regular” jobs, and as a result, they are less likely to be fully aware of the services offered by the Career Center. In my experience, they are more likely to be willing to refer individual students directly to a firm than traditional tenured faculty. If you can build a relationship with them, ask if they would consider referring one or two students a year. Some tenured faculty will not make direct referrals, but some will (I do). Ask them to identify super students who might not appear on the “radar screen” of the traditional Career Center hiring process. Especially focus on faculty who already have some relationship with your firm. Some faculty are not comfortable making formal referrals, but if you ask them directly to “name your best student,” they will give you the name without hesitation.
• Alumni groups. Recent grads who are part of the Alumni association can be asked to refer current students they know.
• Administrative staff. Outside of “top 10″ schools and in low-demand majors, where the competition is not so intense, you will find that many staff employees are eager to help the students they know get an internship or job placement opportunity. If you find a university where that is the case, work with internship coordinators, tutoring coordinators, or the director of the computer or science labs.

Final Thoughts

If you are not fiercely competitive, you might initially resist the concept of student referrals just because you, or no one in HR, had ever heard of them before. But don’t let that stop you.

If you have concerns about the propriety of referrals, remember that students are not university employees and they are free to make referrals and even to accept gifts (like free pizza at your information sessions). If you use a referral program, you are not precluded from interviewing referred students through the traditional Career Center process.

Any concern about doing something new and bold will fade rapidly when you find, like other firms have, that college hire referral programs work almost immediately and they produce amazing results.

Yet for some unexplained reason, most corporate college-hire programs don’t have a referral component.

A few firms have pioneered in the college referral area. For example, the always leading-edge talent team at Intuit has produced amazing results with micro-cash bonuses (over 50% of their hires from one university came from their student referral program).

And Endeca found that Harvard and MIT students were willing to make amazing referrals with the promise of a flat-screen TV as a reward. Bold, but effective!

Not having a referral program as a key element of your college recruiting effort is a missed opportunity because no group of potential candidates are more connected with their peers than college students.

And the stronger the connections, the better referral programs work. Students connect through social networking sites, text messaging, online forums, face-to-face in classrooms, at social events, and in student organizations. If you understand their social connections, it’s relatively easy to develop a formal “college hire referral program” that can supplement your career-center efforts and produce a majority of your intern and college graduate hires.

Think about it, you can have others do more than “half of the work” in college recruiting (by making referrals), which frees up time and resources to focus on the other half.

The Referral Concept

The basic premise of all employee referral programs is that “the very best” know other top individuals. They get to know them because top performers learn from and compare themselves to other top performers. Professionals are constantly talking to each other on the phone, through text messaging, and Internet forums.

Shifting the focus to students, it’s clear that the best students know other top students because they identify them and compete against them in classes. They also meet each other in social situations, in student groups and clubs, in honor societies, and of course, online.

All referral programs work by getting others to share with your recruiters the names of the top individuals that they know. By merely asking or by offering a small incentive, they will likely share these names.

In the case of most employee referral programs, the identification is made by your employees. In the college recruiting variation, you contact a broader array of individuals (students, faculty, and alumni) in order to compile a list of the very best. Because college students are relatively poor, it takes a much smaller incentive to get them to refer other top students.

The Advantages

Placing a significant portion of your college hiring effort into a referral program has some key benefits and advantages over relying 100% on the traditional Career Center approach. Some of these benefits include:

• Quality. Referral programs routinely produce the highest-quality candidates and new-hires. Top-quality college students are relatively easy to identify by those in the campus community because college life is performance-based. Students are constantly graded and ranked in professional programs. There are numerous awards and honors programs to recognize these individuals. And you can easily find them in the most advanced classes with the most difficult professors. As a result, if you design your college referral program correctly, it will target and accept referrals only from students and individuals who are likely to know top performers.
• Costs. Having someone else do your name identification and recruiting saves on expensive recruiter time. And because students typically expect little in return for referring their peers, effective referral bonuses can be as little as $50 or a free iPod (make sure to provide a choice of rewards to choose from to meet different student needs). If you have a strong employment brand on campus, getting student referrals is even easier.
• Remote capabilities. Most Career Center recruiting requires a campus visit. In direct contrast, most of the student referral process can be carried out electronically. This means you can identify top students at a lower cost.
• Assessment. In addition to generating names, college referrals add an additional level of assessment. This assessment may include the students’ fit with the corporation, their ability to work in teams, their leadership potential, their interest level, and their willingness to relocate. By having other students do some pre-assessment, you can end up with a candidate pool that is closer to your needs.
• Selling. Students who already know of and think highly of your firm will help your recruiting efforts by helping to convince or sell the targeted individual that your firm is a top opportunity. Peer encouragement increases the chances that top individuals will come to information sessions, apply for positions, and come to your interviews and plant visits.

Be Responsive

The key to any successful referral program is responsiveness, so treat your best referrals like they are gold.

If for any reason you fail to respond rapidly and to communicate often, you will forever “kill” referrals from your frustrated referrers.

The best way to ensure that you have the necessary time and resources for responding rapidly is to limit the volume of “average” referrals. You don’t want to clog your referral program with a high volume of students you could have found using other sources and who have little chance of ever getting hired.

To generate a small number of high-quality referrals:

• Restrict the number of referrals. Restrict the number of referrals you accept from any one individual to a handful each semester; after all, you are targeting the “cream of the crop” and need to limit referrals to truly exceptional individuals.
• Make the skill sets clear. Use detailed position summaries so that everyone who is considering making a potential referral knows precisely what you’re looking for and more important, what you are not seeking.
• Target your referrers. Rather than spamming the campus and asking everyone to refer, target your campaign toward individuals who have a higher likelihood of making quality referrals. If you have the capability, send “targeted invitations to refer” only to those individuals on a campus who you know by name or title. These students are likely to know the right candidates. This group of “targeted referrers” might include faculty, teaching assistants, heads of student groups, key administrators, and senior and honors students. Finally, when you use posters or websites that notify a large population that you are seeking referrals, be sure that these referrals are “coded” (Attn: Mary Sue or a separate webpage). This is so that your recruiters will know that these referrals are likely to be of a mixed quality.
• Avoid “they approached you” referrals. In traditional employee referral programs, it’s not unusual for a majority of the referrals to come from individuals who were “approached” by a relative stranger and asked if you would make this person a referral. I call these types of referrals “they approached you” or “stranger” referrals. The same “stranger referral” problem can occur in student referral programs when the student that “approached you” is not well-known by the potential referrer. These unwanted referrals can be minimized by telling your potential referrers up front that you don’t want them to make these types of referrals. Ask the person making the referral to answer how long they have known them; whether they have known them in a professional context; and what they know about the person’s specific skills and experience.
• Assess previous referrals. After final hiring decisions are made, identify which referrals turned out to be the best. In the future, you can weigh referrals from the best individuals and in contrast, limit or downgrade the referrals from individuals or groups with a bad track-record.

Next week in part 2, look for advanced approaches and tips for generating great college referrals.

“We didn’t add any staff because responding to candidates didn’t add more work — we just changed our process,” says Catie Cowher, candidate experience leader for Recruiting Strategy and Initiatives at Wachovia Corporation.

Wachovia posts some 600 to 800 openings per week on its website, which includes both newly created positions and vacancies, and averages 10,000 applicants. According to Cowher, rejected candidates receive an e-mail informing them about their status and the reasons behind Wachovia’s decision. Most candidates are declined early in the recruiting process, following a resume review by a recruiter. Nearly 90% of applicants responding to job postings at Wachovia are declined. Giving candidates immediate feedback about their status was a process change that served up numerous benefits.

Cowher cites anecdotal evidence that she’s received through feedback from applicant surveys that making quick decisions and informing candidates about their status has not only improved the applicants’ experiences with Wachovia’s hiring process, but more specifically their perceptions about Wachovia recruiters. The bottom line is that candidates don’t view unresponsive recruiters as overworked — they view them as incompetent. A surprise benefit is that declined candidates often refer a qualified colleague, after gaining a better understanding of the job requirements through post-declination feedback. Wachovia recruiters spend less time fielding calls from candidates requesting a status update, and have a better handle on the inventory of viable candidates.

In addition to informing declined candidates about their status, Wachovia refers them to other employers by including a link in the e-mail to the AllianceQ website.

AllianceQ pools candidates and shares them among member employers. The company has been building inventory since the end of May. For every 1,000 rejection e-mails sent by member companies providing a link to AllianceQ, 25% of applicants have clicked on the link and 89% have then completed a profile, according to the firm’s managing director Phil Haynes.

“We don’t make any judgments about candidates, and our feeling is that we don’t own them,” says Cowher. “Timing has a lot to do with whether someone is hired — or maybe they just don’t have the skill set we’re looking for.”

Although there’s no formal referral system in place, major Seattle employers Starbucks, Washington Mutual, Weyerhaeuser, and Microsoft sometimes refer candidates to each other, according to Rhonda Stickley, director for recruiting and staffing at Weyerhaeuser, especially when candidates align with positions offered at the other firms. Stickley adds that there has been some internal discussion at Weyerhaeuser about sharing retiree pools among several area employers, which has started a discussion within her team about managing excess human capital inventory more effectively.

In some companies, qualified candidates are referred to other managers when they aren’t a fit for one position, and some recruiters stay in touch with surplus hirable candidates through newsletters, phone calls, and touch campaigns. The key is that all resumes are reviewed when submitted and candidates are sorted into categories. Then the candidates are quickly informed about their status so databases remain pure, searches result in a slate of viable contenders, and relationships are built and maintained through the recruiting process.

“Dealing with surplus candidates or even inventory management is a challenge in our industry, and the bottom line is that we’re not doing it very well,” says Denny Clark, director of the Thought Leadership Institute. “The good news is that we’re going to see much better technology coming down the pike which will help with the problem. Another solution that I believe we’ll see more of, is a restructuring of the recruiting function so that more people initially screen candidates and stay in touch with passive candidates, so their status remains current in the database.”

One simple, but powerful referral sourcing technique is closing each recruitment cold call with the question: “Can you do me a favor?”

As we all know, much has been much written about overcoming the objection “I am not interested…” or “I am happy; thanks, but no thanks…”

But in reality, you will not be able to turn a “no” into a “yes” in many (if not most) of these situations.

Yes, they might listen to your message (or pitch) but in the majority of cases, they won’t be interested or, they won’t be qualified.

Of course, when this happens, it is your job to network with this person to get referrals. Your ability to extract referrals and/or leads to help you with your search depends on many factors; including (among others):

• How you opened your call.
• If you were able to build rapport in the first 30 seconds of the call.
• The thought-provoking questions you ask during the call.

At some point, you will exhaust your ability to harvest referrals and will end the call.

This is where the “Can you do me a favor?” line can link you to your next hire!

A good habit to get into (if you are not doing it already) is to close each one of these calls with the line: “Can you do me a favor?”

Of course, expecting the worst, the prospect might come back with a line like: (shaky, nervous voice . . .) “Yeah, what is it?”

“I was wondering if I could shoot you an email outlining the specifics of this opportunity and my contact information (attach your Outlook v-card)? If you think of anyone who could benefit from the info and/or could help me with my search, I would appreciate if you would pass this info along.”

And 99.9% of the time, they will say “sure,” if for no other reason than to close the call and get on with their day.

While this may not seem like a big deal (some of you use this technique already), the benefits of this simple “habit” are huge:

• If you do not have their personal email address, this is the time you can harvest it to send the email.
• The written word is more powerful than the verbal word. Most people comprehend information better when reading it. Often, you will send a well-crafted “Attention Grabber” and . . . they will shoot back an email saying they are interested!
• It will sit in their inbox. When something negative occurs at their workplace, they will look you up.
• They end up passing this email to their peers. We know the whole power of being LinkedIn!

The record in our office is a sixth-generation hire. An email was forwarded six times, ending up in the hands of the person who we actually hired.

We achieved all this by implementing a simple routine at the end of a sourcing call.

Through speaking, I not only help companies understand the latest recruiting trends, but I also learn from hundreds of professionals about what they see as hot topics, emerging trends, and how they are approaching them. I wanted to take this opportunity to share my thoughts on what recruiting trends will top the agendas of Global 500 recruiting managers in the next 12 to 18 months based on my interaction with more than 300 organizations around the globe this year.

The Latest Trends in Corporate Recruiting

Based on conversations with recruiting leaders, questions asked during seminars, advisory requests, and best-practice research, expect to see an increased emphasis in:

• Upgrading employment branding. Nothing is hotter around the globe in recruiting than employment branding. Firms throughout Asia, in particular, are increasingly adopting employment branding as a wildly important activity for 2009. The success of Google, a firm that has built the world’s strongest employment brand over an amazing five-year period, has led others to focus on this impactful long-term strategy. Key focus areas include increasing media coverage, increasing visibility online, building your “green” brand, and countering your “negative” employment brand. Firms to watch: Facebook, Google, Yum Brands, Tata, E&Y, Enterprise, U.S. Army, and Sodexo.
• Reinvigorating referral programs. Despite the growth of career-related Internet sites, the highest volume and quality candidates still come from well-designed employee referral programs. While heavy adoption was initially hampered by cultural issues around the world, today such programs are proving highly effective everywhere. Key focus areas include proactively approaching key employees for referrals (program targeting), leverage non-employee referrals, making reward systems more comprehensive, immediate, and visible, and last but not least, helping employees leverage social media to restore relationships, make new relationships, and build stronger relationships. Firms to watch: AmTrust Bank, Edward Jones, Whirlpool, and Amazon.com.
• Renewing the focus on quality of hire. As a result of strong research by organizations like staffing.org, recruiting leadership has begun to refocus its efforts on identifying factors that increase the quality or the on-the-job performance of new hires. Key focus areas include improved quality of hire metrics, calculating the performance differential between average and quality hires, and identifying sources that produce high-quality hires. Firms to watch: Aimco and Wipro.
• Reinforcing the business case for recruiting. As budgets tighten and slow economic growth continues, recruiting budgets will face constant constraints. Instead of whining, many leading talent organizations are seizing the opportunity to reposition themselves as non-transactional organizations. When the focus in recruiting is placed on non-transactional, more systemic issues, such organizations can work with the CFO and risk management to demonstrate the importance of supporting recruiting even during times of reduced hiring volume. The key focus areas include predictive modeling, dollarizing recruiting results, and showing the dollar impact of vacancies in revenue generating positions. Firms to watch: Aimco, DFS, Wipro, and Google.

• Utilizing social networks. Although using social networks as a recruiting source has been a well-discussed concept for a while, few firms have found productive ways to truly leverage social media sites. However, as new approaches are developed that more accurately align with the paradigm of social media audiences, recruiting on social networks will become more mainstream. Focus areas include encouraging your employees to be more visible online and using networks to identify innovators. Key networking sites include Facebook (global), MySpace (global), Friendster (global), LinkedIn (global), Twitter (U.S.), Multiply (Asia), Mixi (Japan), Cyworld (Korea), and Xiaonei (China). Firms to watch: E&Y, Zappos, CIA, Yum Brands, Google, and Facebook.
• Utilizing video. While it may be hard for some to fathom, 1:1 and 1:many video has become a very popular communication medium, surpassing all other forms of Internet traffic. Second only to employee referrals, the most impactful tool for effectively demonstrating the excitement and passion at a firm is online video. If a picture is worth a thousand words, then moving pictures demonstrating what it’s like to work at your firm would have to be “priceless.” Focus areas include posting on video-sharing sites such as YouTube (global), Youku.com (China), and sharing employee-generated “unscripted” videos on your corporate site. Firms to watch: Deloitte, Microsoft, and Google.
• Upgrading succession planning. A common practice becomes much more critical as global growth and large-scale retirement loom on the horizon. Focus areas include replacing retirees, improved succession planning metrics, adding external candidates to your plan, and fast-track leadership development. Firms to watch: Intuit, Eli Lilly, Deloitte, and TVA.
• Using employee blogs for recruiting. A practice that is finally beginning to enter the mainstream is employee blogging to support recruiting efforts. The very best firms use blogs not just to spread their message but also to answer questions and to make their company appear more “real” and approachable. Key focus areas include blogs by employees other than recruiters and micro-blogs. Firms to watch: Microsoft, Google, and Sun.
• Using mobile-phone recruiting. As mobile phones with amazing features spread throughout the population, recruiting managers are beginning to realize that they can be a powerful recruiting media. Key focus areas include text messaging, mobile video, and mobile-accessible corporate careers sites. Firms to watch: Google and nearly any firm in Asia!
• Revitalizing corporate jobs page. Recruiting managers are beginning to understand that pitifully dull and dated websites drive away innovators. Focus areas include providing personalized information to the visitor, Flash video integration, blogs, podcasts, and virtual Q&As. Firms to watch: Microsoft, Google, and Deloitte.
• Using a CRM model for hiring. I’ve been touting the values of the CRM (customer relationship management) model for years. More firms are beginning to understand the value of improving the experience at each “touch point” with the candidate. Key focus areas include relationship recruiting, automated applicant profiling, automated event calendaring, and robust lifecycle metrics. Firms to watch: U.S. Army, GlaxoSmithKline, and E&Y.
• Hiring innovators. Rapid product copying and the high visibility of innovative firms like Apple and Google are forcing recruiting managers to modify recruiting processes in order to successfully recruit innovators and game changers. Key focus areas include relationship recruiting, pre-need hiring, and tolerant/inclusive screening and interviewing processes. Firms to watch: IBM and Google.
• Recruiting globally. Recruiting managers are beginning to learn how to differentiate multi-national recruiting from true global recruiting. Key focus areas include global sourcing, globalized websites, and globalized employer referral programs. Firms to watch: Infosys and IBM.

Other Trends to Observe

Although these trends aren’t red-hot, they are emerging areas where a few firms have taken the lead and have produced noticeable results. These are certainly not going to become mainstream for most firms during the next year, but if you are an innovator, keep a close watch:

• Virtual-reality recruiting on SecondLife
• Video games as recruiting tools
• Online assessment tools
• Using contests to identify internal and external prospects
• Simulations for candidate assessment
• Inclusive recruiting (replacing diversity recruiting)
• Remote interviewing
• Remote college recruiting
• A renewed focus on internal redeployment
• Boomerangs (bringing back key ex-employees)
• Recruiting at professional events
• Using credit card/sales leads to find prospects
• Using analytics and modeling to predict future workforce needs
• A new focus on the use of contingent workers in the weak economy
• “Remote” college recruiting
• A focus on contingent hiring
• Improving on-boarding to build the employment brand
• Reality TV shows as a recruiting and branding mechanism

Not-So-Hot Areas

Here are some areas that vendors and consultants talk a lot about, but in many cases, there is little innovation to report:

• Outsourcing recruiting processes. Protecting your own recruiters makes this option less attractive as budgets get tight.
• Video resumes. It’s still hard to get managers to view them.
• Competency modeling. Too time-consuming to undertake during tough times.
• Large job boards. Always mediocre, and their value is shrinking.
• Retention. In a tight economy, only the very best will consider leaving.
• Speed of hire. As unemployment rises, there is less pressure to make rapid hiring decisions.

Final Thoughts

These are just my thoughts. If you have identified any additional trends, let me know (johns@sfsu.edu) or post them on the ERE forum.

Just five years ago, less than 1:10 Fortune 200 companies had a dedicated role to manage the employment brand, yet today more than 1:4 Fortune 200 companies have dedicated headcount and budget to the practice.

Employment branding is the practice of managing your firm’s image or reputation as an excellent place to work. Because so many factors influence how an organization is perceived, employment branding is loosely defined.

Most of the individuals involved in employment branding use a “learn as you go” approach, actively trying a market basket of brand manipulation activities to see what works and what doesn’t. Quite often, initial employment branding efforts are weak and full of elements that need serious improvement.

To have an effective employment branding function, periodically conduct an assessment or audit of the three critical branding areas:

• Your branding program’s design elements.
• The information that you provide.
• The approaches used to establish each of your sub-employment brands.

Whether you want to audit your existing effort or get a new effort off on the right foot, here is a quick audit checklist you can use to judge where you are now and where you need to be.

Incidentally, if your goal is to build a powerhouse employment brand like Google’s, recognize upfront that each individual audit item is important, so don’t skip a single one.

Audit Part One: Assessing the Critical Program Design Elements

When you assess the design of your branding program, the following are critical elements that must be included if your effort is to be successful:

• Program plan. The program has a written plan with milestones, timetables and individual accountabilities.
• Program goals. The program spells out each of its specific measurable goals. These goals must be widely communicated and there must be a specific metric (with a measurable target) to assess whether each program goal is actually met.
• Focus on job acceptance criteria. It’s critical that there be a process for identifying the “job switch criteria” of the candidates you’re trying to attract. Successful programs have a process for matching your firm’s strengths with the requirements of potential applicants. The program should then focus image-building efforts on those targeted factors or brand pillars.
• Excitement. Branding is a sales and bragging effort, so identify and spread several specific WOW’s or features that will measurably excite potential candidates. Branding can’t be successful unless it excites potential candidates to take action (i.e., visit your website or apply for a job).
• Emphasis on “hot” topics. Assess whether your overall campaign sufficiently emphasizes all of the current hot topics including green/sustainability, innovation, emerging technology, global reach and job security.
• Minimize advertising. Recruitment advertising adds value but does not constitute employment branding. If you must “pay” to get your branding message out, it’s just not as credible. A focus on leveraging traditional recruitment advertising is the most common employment branding error. The best employment branding messages are spread virally.
• Clearly differentiated. If you mention programs or features in the information that you provide that everyone has, your firm cannot appear superior. As part of your audit, compare your branding programs, features, and messages with those of your talent competitors to make sure that your programs and features stand out as clearly superior in more than one way.
• Focus on stories. Great branding works because it emphasizes stories which can be easily spread by your employees and the media. Stories about what it’s like to work at your firm are the most effective tool for spreading your brand message. If your information doesn’t contain stories or if the stories are not compelling enough to be repeated, you have missed a great opportunity.
• Focus on referrals. Nothing is more credible or powerful than having your own employees tell stories and provide examples about how great it is to work at your firm. If your referral program has not been refurbished so that it results in over 40% of your hires, you have to grade your branding program as mediocre.
• Relying on collateral materials. In an electronic world, brochures and handouts send a message that you are antiquated. Because ads and collateral materials cannot contain video, blogs, or detailed information, you cannot justify their high expense or rapid obsolescence.
• Referral cards. Providing powerful referral cards (both hardcopy and electronic) to key employees is essential if you are to take advantage of their broad social and professional networks.
• Your website. Every potential applicant will visit your website as a mechanism for validating whether what they’ve heard about your company is really true. Your “careers” and “jobs” websites must provide opportunities to read detailed information, to review employee profiles, to read blogs, and to view videos.
• It is tested. Never assume that your materials and approaches are effective. Test information you provide on your target audience in order to assess the resulting image and the action that each message obtains. This involves surveys and focus groups among the targeted individuals that you are not currently able to attract. (Do not ask them whether they liked it, only whether it would lead them to make an application.)

Audit Part Two: The Information You Provide Has the Maximum Impact

The next phase of the audit is to assess whether the information that you provide effectively sends the correct message to your target candidates. Regardless of how you communicate with your target audience, your efforts should meet these criteria:

• A story. The information has at least one repeatable compelling story contained in it.
• No trite words. It doesn’t use a single trite word or phrase (i.e., teamwork, values, ethical, a challenging career, exciting opportunities). If these vague words are used, there must also be examples included so that the reader can easily differentiate what you offer from what everyone else offers.
• Quantified results. Using numbers to differentiate is one of the most powerful ways of improving program information (e.g., we offer 25 days of vacation the first year versus “we have paid vacation”).
• Degree of participation. Potential applicants often view HR programs with a degree of skepticism. Overcome some of that cynicism by showing the degree that the program or feature is utilized by your workforce (e.g., 96% of the workers participate in our flexible work schedule).
• Dollars and time spent. List the amount of money (or time) spent on it each year (e.g., employees devoted 2,005 hours of paid time to community-based programs).
• Direct comparisons. Already powerful stories with examples and numbers can be made even more powerful when they include comparison numbers. This might include comparisons like “we spent an average of $2,000, the highest in the industry, while the average in the industry was only $700.” Stating that you were the first in the industry to do something can also be a powerful brand builder.
• Compelling quotes. Almost any bit of information can be improved and made “more real” when a compelling quote from an employee or customer is added.
• Programs have names. HR and people management programs get more recognition and are more likely to be passed on if they have compelling names (e.g., periodic meetings versus “departmental CEO coffee talks”). Program names should be tested to ensure that they convey the right message.
• Involving ordinary people. Almost universally, applicants like to read information or hear stories that involve the success of “ordinary” people. Providing information and stories where the “little guy” becomes very successful within the corporation is a strong brand builder (even if your applicant isn’t an ordinary person). Assess whether these powerful programs are open to participation by hourly and even part-time workers.
• Testimonials from individuals. Where more detailed information can be provided (i.e., the corporate website) effective branding information includes testimonials from employees. These can be narrative but they’re more effective if they are available on video and in podcasts. Profiles of your employees who are compelling can also be effective.
• Real examples. Examples can highlight either program features or of a typical employee’s experience with the program. Without compelling examples, programs can appear dull and ordinary.
• It includes media coverage. Narrative information about people management programs becomes more credible when it includes quotes or an actual newspaper/magazine clipping from when the program was profiled in the media. When possible, provide access to the actual media stories for the visitor to review.
• Videos. Any successful branding effort must provide one or more compelling video clips. Nothing is more powerful than seeing and hearing what it’s like to work at your firm. Often, the most effective videos are prepared by your employees in an ad-hoc manner. These videos can be made available for viewing on your website or on popular sites like YouTube.
• Pictures. When writing articles or including information on your website, always include a compelling picture showing the involvement of an actual employee (not a “canned” diversity picture with actors).
• Imperfection. Nothing reduces the credibility or believability of information more than the fact that it appears to be perfect. When you assess the information that you provide, rate it lower if it’s overly glossy or if it provides a 100% perfect story. Instead, make a story appear “real” by including one or two things that are currently being improved.
• An opportunity to read in-depth. Link to detailed information on a particular topic (the additional information is usually provided through a link to a website or blog entry).
• Values. Nothing is drier and less compelling than listing a firm’s mission or values without providing details and examples to prove that these values are real. If you can’t differentiate your values and how you act on them from other firms, don’t list them.
• Technology. Almost every picture and “nugget” of information that you provide needs to emphasize the fact that your firm is an extensive user of technology. Don’t provide pictures or descriptions that show antiquated equipment or methods. Instead show in every bit of information that technology permeates the firm
• Trite slogans. After the use of trite words or phrases, the next most common brand killer is the use of trite slogans (e.g., “We care about our employees!” or “We focus on quality!”). If you must use these slogans, at least provide examples or illustrations to bring them to life. Avoid all slogans that can’t be demonstrated and differentiated.

Audit Part Three: Your Branding Effectively Covers Each of Your Employment Sub-Brands

Although every firm has an overall employment brand, few realize that a firm’s brand includes up to 12 employment sub-brands. Two examples of sub-brands are a firm’s image on the Internet and your firm’s image as a “green” environmentally conscious firm.

The very best employment branding programs focus on providing information that effectively builds their image in each of these areas. When conducting your audit, assess the effectiveness of your efforts on each of these sub-brands:

• Your Internet brand. This includes information on your own site and information that potential candidates can find on other sites, on blogs and in videos. Effective branding programs ensure that it’s easy to find the desired information about your firm.
• Your internal brand. Your internal brand reflects how well your employees are enabled to bring the organizations brand to life based on their experience with the organization. Internal brand strength can be measured through surveys and by assessing customer reactions to employee service levels.
• Visibility in the media. Effective branding programs proactively spread their message in highly credible business and trade publications as well as on TV and radio. Assess the amount of exposure that your firm receives in the desired outlets and to what extent that coverage is positive.
• Professional event brand. Assess whether your leaders have successfully increased your firm’s exposure and image by speaking at industry events.
• Your referral program brand. The image and the information that your employees present when they are talking to potential job referrals is your referral brand. Assess its effectiveness both by the messages and the stories that employees convey, as well as by the percentage of new hires who come from referrals.
• Your image post-orientation. How well your firm manages and improves your image during orientation/on-boarding is critical because so many individuals call new hires during their first few weeks to ask them “what is it like there.”
• Your brand among college students. How well-known and how positive is your image among the college students you’re targeting?
• Your “well-managed” brand. Many firms choose to bolster their brand image by offering excellent pay and employee benefit programs. An alternative approach that focuses on your firm’s excellent management practices (incidentally, the approach CEOs prefer) is more effective in attracting top performers, innovators, and game changers. This “well-managed brand” approach communicates that your firm has great managers and excellent management practices. Focus on surveying only top performers and innovators who care more about excellent management practices than the average worker.
• Your “negative” brand. Assess the visibility of negative messages that can be found about your firm. Counter or “bury” those negative messages so that they are difficult to find.
• Green image. A strong branding effort proactively builds the firm’s image and reputation in the important area of the environment. If most of the potential applicants to your firm view it as having a positive impact on the environment, you have done a good job. However, if they view your firm as a leader in this area, you should rate your effort as outstanding.
• Your community brand. Your image in the surrounding community as a result of your proactive efforts to “give back” to the community is your community brand. This brand can aid in recruiting and in minimizing local legal and business restrictions.
• Your geographic brand. Firms need to assess how well they have provided information that causes potential applicants to view the local area and the region in which a job is located in a positive light. Great branding identifies any potential negatives associated with your locations and provides information to counter them.
• Your industry brand. If the industry in which your firm operates has a neutral or negative image, build up the image of your industry as an exciting place to work (i.e., retail, fast food, nuclear power, oil industry). Ask applicants during interviews if they have seen or heard any of your firm’s “pro-industry” messages.

Final Thoughts

Whether you are just now designing an employment branding program or if you are auditing one that is already in operation, it’s critical that you understand which factors make a program effective.

By using this simple audit checklist, you can force your efforts to focus on the critical elements that lead to a successful employment brand. If you need additional help on branding you will find numerous articles that I have written on the subject on ERE or on my personal site at www.DrJohnSullivan.com.

By Dr. John Sullivan & Master Burnett

Employee referral programs are a lot like bottles of wine. Most companies have at least one, the vast majority of which are average or less than average, and only a few ever truly become exceptional. But the similarities don’t stop there.

When the blend of features is perfect, everyone talks about their experience with friends and family, and the producer ends up making a small fortune on a modest investment. Just as great wines go bad if not handled correctly, so do great referral programs.

In studying the design of referral programs that produce phenomenal results, it became clear that the top-producing programs clearly do things differently and execute nearly everything at a level of quality most in HR could barely even fathom.

One of the design elements that distinguishes programs producing more than 50% of an organization’s hires from programs producing 20% is a program marketing strategy that hyper-segments the employee population and communicates with each segment in a much more effective way.

Understanding Your Actual Referral Activity

In organizations with informally managed programs, research shows that more than 60% of referrals were not initiated by the employee, but rather by individuals outside the organization approaching the employee and asking to be referred. Presumably, these candidates were hoping to avoid the “black hole” of applicant death known as the career site.

Given this high concentration of applicant-initiated activity, it is a logical conclusion that in programs where this is occurring, the percentage of referrals actually qualified would be only marginally better than the career site itself, which we know is often 1:1000.

On the flip side, programs with formal, dedicated management often find that 1:5 referral is qualified, a significantly higher percentage by any measure.

The plain truth of the matter is that lacking formal leadership, most programs take on a path much like that of a leaf in a windstorm; the external forces control the destiny of the leaf.

The concept behind employee referrals is simple. Talented employees who desire to work alongside other talented people would seek out such talent, build a relationship with such talent, and eventually ask such talent to consider working with them. It’s a concept that works really well in organizations that demonstrate both trust in and respect for employees that follow through on the concept, but few companies actually trust and respect their employees!

The primary mechanism by which top-performing programs prove they trust and respect employees is by delivering a world-class program experience. One element that program participants in top-performing programs indicated was of value and that they would like more of was program communications.

Communicating to Build Program Participation

Assuming your organization is committed to demonstrating trust and respect for employees by servicing employee referrals in a world-class way, the next step is to drive program participation. This is a science that top-performing programs use to influence the flow of inbound referrals.

For example, if five hires are needed in a specific job family in June, and the average cycle time to produce a hire is 30 days, and it takes five referral candidates to produce a single hire, then in many formally managed programs, a messaging campaign is initiated with the goal of producing 25 referrals in late April or early May. Not only are the communications tied to forecasted demand, they are designed in such a way to influence qualified referrals while discouraging generic referrals.

The program marketing secrets we uncovered that lead to greater program participation include:

• Targeted messaging to hyper-segmented employee populations.
• Delivery of messages using a minimum of three different channels.
• Design of messages to provide immediate value to recipients beyond application to the referral program.
• Scheduling of messaging campaigns based on workforce planning forecasts.

Each of these marketing program design characteristics is discussed below.

Hyper-Segmented Messaging

While an average program may draft employee referral program messages once a quarter, the message is usually generic in nature and broadcast to the entire organization. Top-performing programs, on the other hand, may generate thousands of campaigns a year, some of which may be targeted at only a small handful of employees.

Segment messaging may include:

• Employee location
• Job family
• Job performance rating
• Labor type (employee, contractor, consultant, etc.)
• Tenure
• Previous employer
• Past referral success/failure
• Diversity characteristics
• Affinity group membership
• Management level
• Preferred method of communication
• Educational background (degree, institutions attended, etc.)

While some messages are relevant to the entire employee population, the vast majority are not.

The secret is to avoid “dumbing down” messages to make them relevant to everyone and instead deliver extremely relevant messages to much smaller populations. It may seem like a lot of work, but the payoff makes it well worth it.

Three-Pronged Message Delivery

Another key learning from the research is that not all employees pay attention to the same channels of communication. Some people read posters, while others ignore them. Some people read every email, while others employ filters to sort out only the most important. Some people prefer face-to-face, while others require written materials.

What the research shows is that you need to leverage at least three channels if you want your message to reach a majority of the employee population. What happens if you don’t use at least three? The research shows 72% of employees were unable to recall basic program features when prompted, compared to 43% in companies using three or more.

The key we found was the number, not necessarily the use of specific channels. While email was common among nearly all top-performing programs, there were a significant number of top-performing programs that do not leverage email at all, like construction companies.

The most common sources of communication used include:

• Signs in public places (have you considered bathroom stall doors?)
• Email
• Websites
• Intra-office mail
• Voicemail broadcasts
• Team/Departmental/Functional meetings
• Mail sent to employees homes
• Payroll notices/Stubs

Design Messages to Provide Immediate Value

More often than not, even the best marketing efforts found among average programs involved messages that were informative but not of value. Top-performing programs, on the other hand, refined the ability to develop messages that had value outside their immediate application to the employee referral program.

For instance, emails alerting employees in a specific location about mission-critical or hard-to-fill jobs may also contain guidance on how to use an online directory to find old friends or former colleagues. Because the process of how to find someone has relevance outside the act of making referrals, there is a much better chance the message will gain traction and lead to employees trying the activity suggested.

Other messages might introduce funny facts about the organization or tips on using an employee benefit in an innovative way that prime employees with interesting stories they can tell others when talking about their employer.

Some of the elements that can be designed into messaging campaigns to provide value include:

• A summary of key business performance indicators in a language the average employee could understand.
• Tips/guidance on tools and techniques employees can use to identify suitable talent.
• Wow stories that provide “interesting” conversation material for employees to chat about with people outside the organization.
• Updates on what urgent needs exist and priming questions that might help employees figure out who they know. If I were to ask you a very specific question, say for instance, do you know any financial analysts that used to work for Bear Stearns, it would be much easier for you to answer quickly than if I were to ask you a very broad question.

Messaging Campaigns Tied to Workforce Plans

The final element that differentiated marketing of the employee referral program between top and average programs was the existence of a strategy to coordinate the delivery of messages with needed workforce activity.

Several of the firms that best 70% of hires via their ERP year-over-year have proven that you can reverse-engineer what messaging is needed and when it must be sent to produce a targeted flow of referrals as needed.

By using yield model calculations, program managers can determine how many referrals are needed to make a hire, how many referrals are generated in response to specific campaign types, what factors increase referral activity, etc. Combining this data with traditional staffing analytics enables the program coordinator to proactively manage the referral program, versus allowing the winds of the organization to control its destiny.

Summing Up

Managing a world-class employee referral program isn’t something you do in your spare time. It requires a relentless focus on quality and execution, just like producing a fine wine.

California wine producers proved years ago that wine-making is a science, not an art, and managing an employee referral program is no different. When it comes to program management elements that make a difference, program marketing is right up there with managing the participant experience.

Marketing a program in a world-class way entails driving program participation to meet specific program goals and objectives. If you have a world-class experience but are not achieving significant referral volume, program marketing might be your issue.

However, if you don’t have a system for delivering a world-class participant experience, you shouldn’t even be thinking about program marketing yet. The cardinal rule? You can’t start with a crappy program and slowly make it better if you need mass participation to drive significant hiring volume.

Tom Mazzocco, for instance. He’s the VP of HR for the San Diego Convention Center. The center recruits from Jobing, Craigslist, Monster, CareerBuilder, military bases, and other sources (like when it needed a Greek-speaker and just headed over to a local Greek restaurant and talked to the manager about bringing one of his employees onboard for a while). Anyhow, the convention center brings in about 40-45% of its hires via referrals, which isn’t bad when you consider it pays nothing for a referral.

And then there’s AmTrust Bank, one of the ERE award-winners this year. The more I look at AmTrust’s three-year employee-referral increase (graphed below), the more I’m wowed. AmTrust pulled out all stops to increase referrals (something that’s explored in-depth in the May Journal, by the way), including donating money to charities for employees (such as recruiters) who provided referrals but aren’t eligible for money, as well as giving time off to the first team of people to reach 100% participation in the referral program. AmTrust pays up to $5,000 for the hardest-to-fill jobs.

In the end, it’s not money that makes a referral program work, as Mazzocco showed. But, as AmTrust’s charts below demonstrate, sometimes it can’t hurt.

Employee referral programs are the most powerful corporate recruiting tool, bar none. They can produce a high volume of quality hires who have been statistically proven to have lower rates of attrition.

When designed well, they can not only be cost-effective, but they can produce one of the highest ROIs in the entire HR function.

Firms with well-designed referral programs can tune them to produce over 70% of hires (AmTrust, for example, has reached 78%).

However, there can be a dark side to referrals. Because the concept seems so simple, many program managers design their programs based on intuition, guesswork, and emulation.

Unfortunately, while the concept truly is simple, executing it in a world-class way is anything but. As a result, most referral programs sadly underperform their potential by using numerous “program killers,” or common components of a majority of corporate referral programs.

If your referral program is struggling to produce a mere 30% of your organization’s hires, I guarantee that you have more than one of these 15 killer elements as part of your program design:

1. Responsiveness of the program. Nothing kills a well-designed program faster than slow or no response rates to employee referrals. If the person being referred doesn’t hear something unique to their submission within 72 hours, they will become discouraged. If the employee making a referral doesn’t get a similar rapid response, they will also begin to wonder about the program. If nothing ever happens, they will simply stop referring. This happens in a majority of referral programs. The first step in increasing responsiveness is to “mark” referral resumes and to develop a system to immediately notify individuals and to screen all referrals within five days. Respond rapidly to the employee and the candidate, and be honest as to the reasons why someone is not selected.
2. Delaying reward/bonus payment. Withholding payment of the bonus for 90 to 180 days post-hire is silly. Do sales people have to give back their sales bonuses if the customer stops buying after 90 days? Do you delay payments to staffing agencies or executive search firms? Well, of course not. So why should you treat your employees more harshly than you do your vendors? Rewards work only if they are immediate and there is no “risk” of not getting them. Nothing discourages participation more than delaying the reward based on something beyond the employee’s control. Paying half of the fee upfront is not an acceptable alternative. In addition, it’s not the employee’s responsibility to hire a candidate, only to refer them. Hiring managers do the final assessment and they determine whether the person is the right fit. If the person does quit prematurely, it’s the manager you should blame, not the employee making the referral, because they have no control over how the individual is treated.
3. Referral spamming. Designing a process that allows individuals to inundate the referral system with high-volume, low-quality resumes will cause the program to suffer or even fail. If you allow it, some employees will bring you stacks of resumes that they got from a recruiter friend or from the Internet. Although it’s tempting to accept them, never accept large volumes of resumes or referrals. The reason for this is that the person giving a large volume of referrals cannot know them all, and one of the key design features for program success is that employees only refer people they know on a professional level. Unless it’s an unusual circumstance, limit referrals to no more than three a month for many individuals.
4. Excluding senior managers and HR people. The idea behind a referral program is to get as many people as possible scanning the streets and talking up your firm. To exclude anyone, especially highly visible individuals like senior managers and HR professionals, is not advised. Excluding them makes them feel like they are second-class citizens, and they will not refer at the same rate if they are excluded specifically from the program and the reward. If you’re worried about these individuals referring people who are qualified just to get the money, then these individuals should be fired on the spot. The best programs allow hiring managers or anyone with a perceived conflict to “opt out” of the bonus or donate it to charity.
5. Allowing “I found you” referrals. The idea behind quality referrals is that you seek out individuals and assess their work and their fit with the company over a period of time. However, as many as 60% of all referrals are not actually referrals but instead are situations where an individual proactively approached one of your employees (because they knew where they worked) and asked them to put in their name as a referral. In this “I found you” situation, there is no in-depth assessment of the individual. In fact, the referral is made more as a favor because someone asked. The best programs require the employee making referrals to provide enough information about the individual to ensure they know them. Program rules should specifically prohibit “I found you” referrals.
6. Failing to continuously refurbish. Referral programs are essentially marketing programs and as a result, they lose their effectiveness over time. In fact, even the best designed programs begin to produce significantly lower results in as little as six months if the marketing materials and approach are not updated. So refurbish and re-energize your referral program at least once a year.
7. No referral cards. Give employees “referral cards” to hand to impressive individuals. The best referral cards include praise for the individual and an action statement that encourages them to apply for a position. Unfortunately, most companies have no cards or fail to replenish an individual’s supply on a regular basis.
8. No ATS marking. If all individuals being referred are required to visit the corporate website in order to apply, there is a significant chance that the source of the resume will not be “marked” as a referral. In fact, some HR technology does not allow referrals to be “marked” so that they can be given higher priority. And without prioritization, the slow response rate will quickly degrade program participation.
9. Equal rewards for all jobs. All HR programs should reward performance, and referrals are no different. Referrals for hard-to-fill jobs and mission-critical jobs should get a bigger bonus than easy-to-fill jobs. In addition, there should be a supplemental bonus if someone turns out to be a top performer after they are hired. If you fail to include reward differentials, your key jobs will be filled more slowly or not at all. In fact, the best programs allow referrals only for jobs that are high impact or are hard to fill.
10. No feedback on weak or bad referrals. Most employees have good intentions when they’re making referrals, but if you don’t notify them after they’ve made a particularly weak or bad referral, they have no way of improving future referrals. The best systems rate referrals and the individuals making them so that future referrals by this individual are given a higher priority as a result of their previous successful track record.
11. Individual recruiters are allowed to “ignore” referrals. It’s not unusual for regular recruiters to ignore or pay little attention to candidates who come from employer referrals. It’s generally an ego thing because they didn’t initially “find” the candidate. In any case, there needs to be measures and rewards that encourage recruiters to focus on employer referrals.
12. Not tracking referral rates. Employer referral rates vary dramatically among departments in almost every firm. If the program manager is to increase participation in these underperforming departments, there needs to be a process to track and report participation by managers. In the best cases, participation rates are part of the manager’s bonus formula.
13. Big-dollar bonuses. Paying too much money can actually kill a program, as large bonuses incent employees to spend more time looking for referrals than doing their jobs. This angers their managers and eventually it will cause these managers to resist the program. Research shows that anything over $1,500 will generally have little impact on referral volume of quality candidates.
14. Paying a miniscule reward. Do not embarrass yourself by paying a ridiculously small bonus. Yes, you can pay nothing or just have drawings for prizes and still have an effective program, but don’t pay $50 or $100 for something that if you had to hire an external consultant to do would cost thousands of dollars. If you’re paying significantly lower than the market standard, you will get push back from your employees who compare what your firm pays to what is paid by close competitors.
15. Employee program manager turnover. Because of weak metrics, most employee referral programs are under-appreciated by recruiting, HR, and senior management. As a result, turnover rates among ERP program managers are quite high. Because the learning curve is steep, the replacement manager almost always “damages” even the strongest referral program. In order to avoid this problem, the position needs to be given as much recognition and pay as necessary to encourage the program manager to stay in it for at least three years. If the person running the program views this position as one small step on their way to becoming an HR generalist, you have made a bad hiring decision.

Final Thoughts

Most managers in HR and recruiting view employee referral programs as simple to design and maintain. After years of research and studying over 600 companies, I have concluded that the exact opposite is true. Almost every firm has an ERP program but only a small percentage reach the full potential of well-designed employee referral programs.

It’s important to realize upfront that there are factors that lead to program success (which I’ve highlighted in previous ERP articles for ERE) but more importantly, there are factors that seem innocent on the surface, but when present, they can literally kill your program results in a very short period of time.

There were just a couple of challenges standing in his way: only 19% of the company’s hires were coming from employee referrals, and Cooke’s entire talent acquisition staff consisted of four contract recruiters.

Cooke’s solution: Increase the company’s recruiting staff by 700 people overnight, by engaging the company’s full-time workers as recruiters. Some of the key steps to his implementation plan included:

• Gain the support of senior company leadership for the concept.

• Engage the company’s employees as recruiters by educating them about the program, gaining their trust, and providing easy-to-understand incentives.

• Extend the company’s reach by soliciting the recruiting efforts of family members and friends of employees.

Cooke developed an internal marketing campaign to educate employees about the program and company executives sent letters to employees’ homes endorsing the program, but he worked hardest at the most critical element — building employee trust.

The talent acquisition team followed up on every referral within three days of submittal and provided open feedback to employees on the status of referred candidates. The idea: Transparent communication and timely follow-up creates trust and encourages employees to make more referrals. Cooke says that many referral programs start out with a big bang and then fizzle, so Cooke hired a marketer, not an additional recruiter, to create continuous marketing buzz around the program, and the company offered a referral contest award trip to Hawaii and informed the spouses of employees about the opportunity. Besides follow-up and consistency, Cooke attributes the success of his program to its simplicity. There were clear and easy directions for submitting candidates, easy-to-understand rewards and lots of recognition for the referral leaders.

Two years later, VistaPrint has hired close to 1,800 employees and Cooke has increased the company’s recruitment staff to 24. But it’s the increased hires from employee referrals that he cites as the greatest reason for the company’s growth, because the internal referral rate has increased from 19% to 46%.

by Dr. John Sullivan & Master Burnett

It’s no secret that employee referral programs are proving themselves around the world to be a highly effective and efficient channel for sourcing quality candidates. While many employers are drawn to the source based solely on attractive cost-per-hire predictions, those savvy enough to measure the impact post implementation are finding out that candidates sourced via referral are more apt to:

• Meet job requirement expectations.
• Accept offers more often.
• Meet minimum standards of productivity faster.
• Perform better long-term on the job.
• Turn-over less often.

While on average only 1:3 firms measure the economic impact of these factors, those that do can easily attest that employee referral programs produce one of the highest ROIs in the HR function and possibly even the enterprise.

Past experience with ERPs, success stories in the media, and unrelenting demand for top talent has led nearly every major company competing for talent on a global level to either initiate a new program or reinvigorate an existing program in 2008. One question that nearly everyone is asking is “How should we budget for a world-class employee referral program?” It’s a great question.

World-class programs elevate program execution to an art form with scientific precision, and carry out a number of activities that average programs often overlook or discount.

Those activities have a cost associated with them, some of it fixed, some of it variable. Our research found that the average-performing program, one that produces approximately 26% of all hires, had a cost per hire (inclusive of bonus amounts paid) of $2,306. The top-40 performing programs invested more, paying out nearly $5,855 per hire on average, and that difference had nearly nothing to do with the reward.

In 2006, it took hiring 38% of all hires via employee referral to make the top-40. By 2007, that percentage had grown to 46%. If early statistics prove indicative, by year’s end it will require hiring more than 62% of all hires via employee referral to rank among the best in 2008.

$3,549 Well Spent

Some people see the added cost-per-hire to run a world-class program and immediately think it would never work in their organization. Other, more strategic recruiting professionals, see the added cost-per-hire and start to wonder what return warrants the added investment.

In 2006, Booz Allen Hamilton surveyed 73 major employers, and 88% found that hires made via employee referral performed better on the job than candidates hired via other sources as measured by their companies’ performance appraisal systems. If those systems were valid, that performance must be worth something, right?

Based on that statement, we looked at the companies with top-40 ranked employee referral programs and asked them to complete a statistical analysis of their programs’ performance, looking in particular at the factors mentioned in the opening of this article. While not all 40 completed the analysis, those that did found some startling numbers.

The following chart presents the minimum and maximum observed data points between employee referral program hires and hires by all other sources combined with respect to each of the measures previously mentioned.

If you have ever spent time as a line recruiter, a few of these data points should have jumped out screaming at you! At the very least, applicants via the ERP were 13 times more likely to meet job requirements, and 17% more likely to accept an offer. Immediately that should register a recruiter time savings, but think of the time savings for all managers and employees involved in the assessment process!

Start tacking on the savings related to decreased turnover and increased productivity and you can easily see why companies with top-performing programs are not pinching pennies.

How Top-Performing Programs Spend the Extra Money

1. Applies dedicated resources. Every one of the companies with a program in the top-40 had a dedicated program manager in place to drive the strategy and execution of the employee referral program by the end of 2007. The smallest company in the top-40, employing just over 3,000 employees, has a dedicated team comprised of a program manager, communication specialist, and full-time recruiter. The average number of dedicated ERP staff per employee in top-performing programs is 1:1,390.
2. Has a documented strategy. Most employee referral programs are managed in an ad-hoc employee opt-in manner. Such approaches limit the strategic value of the program by failing to incorporate program drivers that create activity when needed most in the most needed areas. World-class programs coordinate program execution with the overall staffing strategy and workforce plan to drive the volume necessary into the process to create the output volume of hires needed based on traditional yield model analytics. Our research demonstrates that programs that lack the proactive management element are more apt to fill the ERP pipeline with candidates who approach employees asking to be referred versus employee sourcing and selection of top talent.
3. Has specific goals and objectives. Because most programs lack formal management, it is not uncommon for the average program to have no specific goals. The absence of such goals leave program communications, reward structure, and program evaluation baseless. World-class programs determine probable participation rates by various demographic strata; set targets for program performance; establish tracking metrics; and leverage the data to drive decision-making around participant experience.
4. Places emphasis/priority on mission-critical jobs using differentiated communications and rewards. It’s great when an employee refers a friend who they would like to work alongside, but that doesn’t mean the company has a need for that person at that time. Truly strategic referral programs attempt to drive traffic into the program by leveraging demographically targeted custom communications and differentiated rewards. While they may still leverage companywide communications from time to time, the bulk of ERP-authored communications in top-performing programs is directed at the team/department level and frequent in nature. Most top-performing programs deliver targeted messages weekly regarding hot jobs, tips for identifying talent, sharing success stories, etc.
5. Prioritizes referrals. This is based on three elements: quality of the referral source; the position being referred for; and competitive intelligence drivers. Remember: Homer Simpson knows people, too! World-class programs prioritize response to referrals based on what is needed most by the company. If Employee A has a phenomenal track record for referring candidates the org hires, then his referrals should be fast-tracked. Likewise, if Employee B has referred 100 candidates, none of which the org has ever hired, he/she should be banned from the program! However, at times the org may also want to prioritize response based on competitive intelligence needs. Candidates often give up lots of info during interviews, info which when aggregated can have significant strategic value to senior leaders.
6. Periodically adjusts communication strategy based on employer brand and positioning strategy. Most programs communicate stale, generic messaging and do it for long periods. The human mind is insanely powerful at filtering out patterns. How long after a new billboard is installed along the freeway do you continue to notice it? Communication approaches should last no longer than 90 days and be tied to the audience. A few messages can be organization-wide, but most should be department/function/location centric.
7. Uses a viral marketing engine to drive engagement and disseminate selling stories. You could pretty much take messaging from Company A and put Company B’s name on it and no one would know the difference. Messaging that originates in HR is often so generic that it is immediately ignored by the educated masses we seek to influence in recruiting. World-class ERPs coordinate their efforts with the employment branding program to develop an inventory of “Wow!” stories that are so compelling they spread virally. Such stories truly differentiate an organization in such a way most competitors cannot compete. These stories provide an arsenal of things for employees to share in social settings and to leverage when approaching a potential recruit. (If you can’t think of any such stories for your organization, you should quit!)
8. Uses a combination of push/pull techniques to manage flow of inbound referrals. Some percentage (between 12% and 23%) of employees will voluntarily refer someone at some point during their tenure with the organization even if the organization doesn’t have an ERP. The secret is to manage the process such that at least 25% of the organization is participating annually.
9. Provides extreme customer service. Employees are special people, we already know them and can evaluate their performance, yet we treat their friends and colleagues like crap, often just like we treat applicants walking in off the street. All referrals should receive a custom response within 72 hours of submittal. The referring employee and the referral should receive status communications at every step in the process, including a communication upfront to establish the process and likely timeline so as to set expectations. Our research shows that more than 72% of employees who have participated in their companies’ ERP program found the experience unpleasant. More than 68% were not likely to participate again.
10. Uses existing information to minimize assessment steps. ERPs are all about the perception of special treatment. World-class programs leverage any and every piece of existing information about a candidate to minimize the assessment steps needed, making it look like the organization is skipping steps in their otherwise tedious process.
11. Uses technology wherever possible to provide 24/7 service. While a few of the top-40 programs are purely human-powered, many are leveraging home-grown technology systems and customized ATS systems to enable customer-service 24/7. If you have turned off the module that allows employees to track referral status in your ATS, turn it back on and start populating it with real feedback. The one caveat to using technology: DO NOT UNDER ANY CIRCUMSTANCES FORCE EMPLOYEES TO USE THE REFER-A-FRIEND FUNCTIONALITY IN MOST ATS SYSTEMS THAT DOES NOTHING MORE THAN SEND A URL ASKING A REFERRAL TO TORTURE THEMSELVES BY COMPLETING THE SAME GENERIC APPLICATION AS EVERYONE ELSE! Instead, make it easy. Use a simple form asking for contact info, how the employee knows the candidate, what makes them think the candidate would be a good fit for the role/company, and whether they would be willing to vouch for the candidate as a quality hire. (Nothing will reduce the amount of chaff in the referral system more than asking that last question!)
12. Has extensive metrics to monitor/diagnose the process and program. Self explanatory!
13. Rewards all activity. Most programs send a generic, automatically generated thank-you note upon submission. Unless a hire is generated, that is often the only communication a referring employee will ever get. World-class programs seek to drive program participation and that translates into rewarding all activity in such a way that employees are not motivated to refer for reward sake, but feel valued by the process.
14. Has open participation to all stakeholders. Lots of stakeholders related to the organization can source top talent, but most organizations limit participation to existing employees. World-class programs allow former ee’s, consultants, contractors, shareholders, etc. to refer.

Putting a Final Figure Down on Paper

As consultants, we learned a long time ago that what one company can do with $100,000 would take another organization five times as much (think government). The secret to budgeting for a world-class ERP is working backwards. Ask yourself the following:

• How many hires are projected for the next budget cycle (growth + attrition)?
• What percentage of hires would we like to generate via the ERP: 35%, 46%, 70%, or more?
• To realistically be capable of delivering the experience outlined in the section about what top-performing programs do differently, what resources would be required in your organization?
• Estimate the cost for each resource identified and total them up.
• Now add about 20% to cover things you might have overlooked and you’ll have a decent budget for year one.

Final Thoughts

Most organizations really miss the mark when it comes to managing their employee referral program. The biggest mistake they make is trying to do it cheap and thinking that employees will understand when they never hear anything back.

Managed correctly, ERPs can have significant impact on an organization’s capacity and capability to achieve their strategic objectives, two things anyone who has ever spent time in operations will tell you are key. Sure, it may seem like managing the program well will make recruiters less necessary, but in reality, it proves that recruiters can work smarter and demonstrate strategic-level contributions.

By Dr. John Sullivan and Master Burnett

As the global war for talent continues to manifest itself in an ever-increasing manner of ways, a nasty practice left over from an era long ago continues to handcuff recruiting organizations around the world. The practice we speak of is the gentlemen’s agreement made between two organizations not to poach one another’s employees.

Once incredibly common among strategic partners, suppliers, resellers, and even direct competitors, such agreements can quickly isolate a large percentage of the suitable talent supply needed to fuel growth in an organization outside the direct reach of the companies’ recruiters.

Such agreements were always a nuisance but not a major obstacle impeding organizational growth when talent was in abundant supply, but that isn’t the case anymore. Today the worldwide demand for skilled labor has outpaced supply and the role of talent has changed. From the Industrial Age to the birth of the Information Age, talent was merely a resource, but as knowledge and the ability to continuously innovate have become primary differentiators for companies, the role of talent has significantly increased in importance. Today such agreements stand to do much more than constrain labor costs by preventing bidding wars for top talent? they stand to pre-determine the winners and the losers in the global battle for top talent.

Anti-poaching agreements do not ban the recruiting of employees from other organizations; they merely prohibit recruiters from directly sourcing such talent. If employees in other organizations reach out to recruiters on their own, they are fair game.

So the question arises: are there things that recruiters can do to encourage/convince targeted talent in non-approachable companies to “approach” them seeking employment opportunities? Luckily, the answer to that question is yes.

Tools for Acquiring Candidates Without Directly Recruiting Them

If you are a recruiter or recruiting manager who works for an organization handcuffed by archaic anti-poaching agreements, our first recommendation would be to quit and join a company that truly understands the value of top talent and is willing to fight hard for it.

Recruiting top talent is never easy, but strategizing, selecting tools, and initiating