Updating Your Employee Referral Program — ERE Community Q&A Part 2 of 5

Employee referral programs play an immense role in the modern staffing function.

To drive better understanding of world-class employee referral program practices and support continuous improvement of a sourcing channel that has become the dominant source of quality hires for many organizations, we’ve assembled 38 questions raised during a recent webinar on this important topic.

This article is the second in a five-part series on updating your employee referral program. The first five questions were featured in Monday’s article, and today we continue with eight more critical topics. Look for the rest of the questions Wednesday, Thursday, and Friday.

How do you ensure that you are getting quality referrals and aren’t just talking with people who aren’t the top talent and may never be a fit for the company? Almost all “first generation” referral programs suffer from low-quality referrals, primarily because they are not designed to produce anything but. “Next generation” ERPs contain elements that discourage both high-volume and low-quality referrals. The four key points highlighted in response to question #5 accomplish a lot with regard to altering the system to produce a higher-quality output. Program coordinators and recruiting leaders need to understand that all sourcing initiatives are systems, and that if the systems are not producing the desired outputs, chances are it is not the concept, but rather the execution that is flawed.
I am a recruiter for a call center. We receive tons of referrals for friends of friends, co-worker of a sister, etc., and there is very limited detail given on the referrals, since they are complete strangers to the associate. Any advice here? This happens all the time in programs that are not formally managed with dedicated resources and where little has been done to define/articulate the employment brand inside the organization. It also used to happen a great deal in Asia and Eastern Europe where employees feel a great deal of commitment to helping out others in their community. Unfortunately, such referrals are highly undesirable and often chew up resources that could otherwise be engaged to improve the experience of high quality referrals. In addition to the methods mentioned in response to previous questions to dissuade poor referrals, you should consider implementing a formal employment branding program that develops a true employment value proposition and leverages internal communications to articulate the brand. Helping employees realize that they are part of a special group, and marketing attributes around that group, will go a long way toward empowering employees with a sense of ownership and pride in the organization that they will start to protect.
Does the referrer (employee) have to notify the company who they referred? Can’t they just provide their info to candidates, and leave it to the candidates to apply on the website and indicate the referrer’s name? We tried really hard to not become frustrated with this question, but we couldn’t help it. Pushing applicants to apply via the website is an action driven entirely by a motivation to reduce the administrative workload of recruiters, not one to execute a business process that produces a markedly higher quality of hire with strategic intent. It signifies a desire to treat all applicants the same — i.e., poorly. One of the worst things recruiting technology providers have done to hurt the recruiting profession is support an employee-referral model that pushes referrals to apply just as a perfect stranger walking in off the street would do. A well designed referral program leverages personal relationships to entice and woo top talent who possibly wouldn’t apply otherwise. For that reason, the role of employees in the process needs to be expanded, not minimized. In addition, eliminating employees from the process could very easily result in applicants scanning online for an employee’s name, or getting a name from someone else to insert into the application form field, even though they don’t really know the employee.
What level of positions should ERPs cover? The best referral programs are targeted and don’t attempt to treat every job the same. Many top-performing programs narrowed their focus to positions that fit into one of the following groups: hard-to-fill positions; mission-critical positions; and revenue-producing positions.
Do you recommend confirming with the employee before contacting their references for referrals? I am sensitive to those relationships. One of the specific concepts presented during the webinar was one called “reference referrals.” Implementing this concept involves contacting the references of past referrals who have proved top performers and thanking the reference for vouching for someone who has proved exceptional. Then, you ask them if they know anyone else that might be interested in several specific-yet-related roles of interest at the time. With regard to asking the employee if it is OK to contact their references again prior to doing so, it really is a matter of personal preference. One way to resolve the potential conflict is to ask references directly during all reference checks if it is OK for you the recruiter to contact them directly again in the future, should you ever have a need that they may be able to help with. Again, because the concept behind employee referral programs is one of leveraging personal relationships, it might make sense to leverage the employee to reach out to the reference, using a team approach with the recruiter.
I think that putting too much responsibility on the referrer will discourage them from making referrals. Keeping it simple and letting the recruiters handle the rest makes most sense to me — no? You’re right, it will discourage referrals: the ones you don’t want! Putting the responsibility on the employee helps add to their “ownership” of recruiting. You want the referral process to be a deliberate one where employees identify the very best from among many, and then critically assess them over a period of time. When employees spend little time on referrals, you will have disastrous results. You’re always looking for a balance, but in our experience, asking for “too little” work on the part of the employee has many more drawbacks than asking for “too much” work. Failing to require the employee to know the applicants’ skills and fit could triple the number of “junk” referrals which would clog the system with applicants who realistically have no chance of getting hired. There are numerous regular sourcing channels that produce a high volume of mediocre names; the referral program shouldn’t be another one!
How do you balance confidentiality when notifying employees of a rejection? There is a lot of fear about being sued for discrimination in the recruiting profession, even though the probability of such suits is less than that of you being struck down by lightning! By becoming an employee referral, there is an inherent belief among referrals that the employee will be involved in the process and be able to get things the applicant couldn’t get on their own, like the attention of a recruiter and honest feedback! Our end-user research revealed that more than 73% of candidates were comfortable with their referrer playing a role in their assessment. The only organizations that should be concerned with educating employees and candidates why the organization isn’t moving forward with an offer are those that have systemic discrimination issues in the first place. On a related matter, we recommend that you help those few select candidates that are highly desirable to understand why they were rejected. By honestly letting them know what they can do to improve their chances next time around, you can keep them interested in your firm. Being honest will generate more questions and a few complaints, but in my experience, the positive returns far outweigh any arguments against honesty.
Small or large company, is there a sound formula to calculate a budget for ERPs? Establishing the budget for an employee referral program is more a function of anticipated hiring volume versus the size of the organization. There is an article mentioned in the introduction to this Q&A on Budgeting for a World-Class Employee Referral Program that discusses the details, so we won’t go too deep into it. A general rule of thumb for programs that employ the poor referral dissuasion techniques mentioned earlier is to budget program headcount based on a requisition load three times the size of the average recruiter. In other words, if you expect your program to produce 100 referral hires per month and the average recruiter usually deals with 32 hires per month, then you will need only one dedicated program coordinator. You will also need to allocate budget for marketing communications, program infrastructure, and rewards. It is becoming more and more popular for managers to pay the referral bonus and for the referral program overhead to be absorbed by the recruiting function budget.