Managing Executive Referrals During an Economic Meltdown

Several excellent articles have appeared here recently that have offered useful advice on how to deal with challenging economic times; certainly, many of us find ourselves helping our friends update their resumes, deciding where to trim out budgets this year, and coaching our organizations through headcount restrictions and freezes. ERE continues to be a great source of useful, timely information no matter what the business climate happens to be.

Right now, the business climate happens to be a little frightening. Since it looks like things will be like this for a while, I’d like to offer some thoughts on something that you’re certain to encounter in the next few months: a notable increase in executive referrals.

Anyone who spends time here knows that employee referrals are a simply fabulous way of bringing talent into your organization. The benefits are legion: employee referral hires are cheaper, pre-screened, more likely to be successful, increase employee morale, etc. A well-run program that delivers a consistent experience to both the candidate being submitted, and the person doing the submitting, will pay for itself many times over.

Executive referrals are a little different . . .

They come in three general categories. First, are the referrals that are simply sent to, say, the CEO’s office by strangers hoping for a leg up on the hiring process. I find that they usually arrive at my desk in batches, the time and date they were received stamped on the top, and sent along whenever the executive assistant felt like it was time to get them off their desk.

Second are those from an executive who has been brought in to lend some firepower to a referral. These often arrive in e-mail from a senior-level executive, and if you start at the bottom of the e-mail chain, you see that the first note is a “Hey Charlie, remember me?” note to the executive, in which the sender forwards a resume, and asks for help in “getting it to the right person” for consideration. Typically, Charlie does not know the person being referred.

The third scenario is quite different. In this case, the executive is referring someone that they know personally, or have at least met. Sometimes there is an expectation that someone will “reach out to them” for a conversation, or (in some companies) that they will be brought in for an “exploratory” interview. Depending upon your company culture, there can be tremendous pressure to hire these referrals. I once worked for a company where the second-in-command was trying to get a job for the boy who mowed his lawn. He insisted upon accompanying the young man to any interview that he had. Imagine scheduling an interview with a 19-year-old kid for some summer help, and having one of the most powerful people in the company walk into the room along with him!

The reason for this article is that you are about to see Scenario 3 a lot! One and two are easy to manage — I typically draft a polite note to the person being referred, personalize it with their name and the executive involved, and invite the candidate to visit the careers webpage and build a profile. I then forward a copy of that e-mail to the executive involved so he or she knows that follow-up occurred.

Under normal circumstances, Scenario 3 is rare. However, the current tough economic times will make it much more common — if more people are looking for work, and there are fewer jobs, they’re more likely to use an executive connection they might have in order to give them a competitive advantage. These interactions are very tricky.

Years ago I worked in a large recruiting organization that was led by a remarkable leader. After some months, this person appeared to take an interest in my career, and I was chosen for some great developmental assignments. One day, this person approached me, and handed me a resume. It was a resume from her best friend’s son. He was finishing school, and she wanted me to “keep his resume in mind” for future openings.

While this young man was bright, his experience was in an area slightly different than what we typically hired new college grads for. To make a long story short, I eventually did find a job for him in the company. While that might sound like a success, it took time, and things were never quite the same between me and the departmental leader after that. She believed I was a promising recruiter. If that was the case, then why was it so difficult for me to find this young man a job? Clearly, her best friend’s son was a star (in her mind), so the problem must have been with me.

If that was the outcome from actually finding an executive referral a job, imagine what happens if you don’t find them a job! Managing an executive referral is time-consuming, politically risky, and rarely leaves everyone satisfied. One or two per year is a manageable volume (you probably have a resume like that on your desk right now!), but you’re certain to see many more in the coming year. The time to start planning how you’re going to handle these referrals is now.

Here are some tips to help you come away looking like a business partner, instead of the goof who can’t find the CEO’s best friend a job!

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Decide Now How You Want the Process to Work and Have Conversations

Your executives may have no idea how often you receive resumes from their colleagues. Schedule time to talk about this, and let them know you’re committed to bringing great talent into the organization. Ask what they’re expectations are regarding the referral of a friend. If you have the opportunity, try to have the conversation with as many executives as possible. Make sure you know what they expect to happen.

On a related note, be sure your HR leadership is included in these conversations. For one thing, they’re an important business partner, and it’s critical that you are both on the same page. Often, the resume in question will go to an HR VP, and then to you. Make sure these referrals don’t become a game of “telephone,” with you sending a polite note while the HR VP promised that an exploratory interview would take place!

Offer Options and Recommendations

After listening to your customers, offer some possible alternatives. Do they really want exploratory interviews? Who will be on the interview schedules? What sort of expectations does that create? In other words, will it make things worse in the long run to have someone in if it turns out that simply by examining the resume it’s evident that there is probably not a place for this person? What if you agree to reach out to the person each month for a status update? What about a process for maintaining a slate of executive referrals, and reviewing their credentials against open jobs at their level? My experience has been that it’s easy for an executive to send over a resume — after all, you’re in charge of Staffing. Why can’t you just hire this person? Helping your customers understand what’s involved in finding a match, managing tight headcounts, and understanding the minutia of work authorization, competencies, and salary expectations is a worthwhile exercise.

Insist Upon Shared Accountability

How often have you received a call or a note from someone in your organization who knows a “great executive recruiter you should really be working with”? Rather often would be my guess. I suspect you’ve been asked to meet with people from executive recruiting firms to “explore ways of working together” and “discuss opportunities for them to help you with your executive hiring.” While I genuinely appreciate the chance to meet new vendor-partners I’ve not met before, often there is an expectation on both the part of the recruiter (“Susan said you’re the one who makes the decisions about executive searches”), and the person who introduced them to you (“George is a great recruiter — after all, he found me!”). Suddenly, you’ve become the person who is “not willing” to give them one of your searches!

In the same way, executive referrals can paint you as the villain. Insist upon some measure of mutual accountability from the person sending the referral. Would they be willing to hire the person into their own department? Would they be willing to network within the company at their level to locate potential opportunities for the person they are referring? Making the placement a shared effort can go a long way in building your credibility as a consultative business partner instead of someone who “finds a place to put people” for senior leaders.

Communicate What You’ve Done

Once you establish a process that everyone agrees upon, make sure you keep the executive who referred the candidate informed. As I look back to my earlier example of my department head’s best friend’s son, I don’t think anyone had any idea how many calls I made, or how many meetings I had with various hiring managers to discuss this young man’s qualifications. It might very well have looked like I didn’t do anything at all to find a job for that candidate. Once you agree to a plan, communicate your activities regularly so the executive knows what actions are being taken.

Report Back Results

Executive referrals are extraordinarily complicated. They require many hours of your time, and take some pretty sophisticated maneuvering within the organization to ensure all parties walk away satisfied. For every hour that you’re shopping a resume around the company, or meeting face-to-face with candidates, that’s an hour you’re not focusing on getting your company through these tough economic times. It’s important for your leadership (and your HR partners) to know how much time this activity requires. It’s also important for them to appreciate the return on investment it generates. If you end up spending 20% of your time on this activity, and it ultimately results in no hires, it’s critical that your customers know this. Often this leads to a mutual appreciation for the resources the activity consumes, and can lead to some new approaches for handling these referrals.

Your executives are well-networked, and can give you access to fabulous talent that you might otherwise miss out on. Executive referrals are an important mechanism for getting this great talent in the door.

This activity is time-consuming, though, and politically charged. It’s also certain to take more and more of our time in 2009. Invest some time into working with your leadership to create a plan that meets everyone’s needs, and you’ll find that this activity can actually become one of the most enjoyable parts of your day.

He started his career as a research chemist in the laboratory. Now, Michael Kannisto has tried to apply a similarly disciplined and science-based approach to the fields of recruiting and talent management. His long-term interests include employment branding, multiple generations in the workforce, and using Six-Sigma methodology to improve recruitment outcomes.

His current passion is the development and use of mathematical models to predict future staffing and development needs (a remarkably more accurate form of “workforce planning” than what is traditionally employed). Call it predictive modeling, call it “big data” ... but the information sitting in your HRMS right now has the potential to change the way you think about talent forever.

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