Employee referral program – Action items to get started

Hiring/recruitment for any organization is the most important function for its success on any parameter. Take any successful leader, they have been very selective about selecting team members to achieve what they are set out for no matter if the vision is number driven (to be a billion-dollar company) or market share driven (to be #1 / market leader) in x years.

If hiring is such an important part to be successful, why would any company not implement a successful employee referral program? No really, there are many organizations who don’t have these basics in place. Here are some stats:

  • 63% organizations have a documented Employee referral program (iCims) | 37% don’t even have a formal process
  • 24% hires originate from referrals (less in smaller organizations – only 14%)

Why is employee referral such a big deal? You might be Steve Jobs of recruitment, but employee referral has some straight benefits:

  • there is an absolute financial incentive – more than 400% savings on the average cost per hire if done via referral (Achievers.com)
  • efficient hiring – hiring rate is 1:3 via referrals when compared to non-referrals which is 1:10
  • quality hires – referred employees are 25% more productive/profitable than their peers

Let’s not get into other obvious benefits like being able to find better cultural fit and brand ambassadors.

Now the question is, do you have a successful employee referral program?

There are Thought Leaders in every vertical who either don’t have an employee referral program and if some of them at all have one, they are not executed/run well. Now that hopefully we are convinced about the importance of having a robust referral program, here is how you can get started:

  • Set Objectives – clear vision of what this program should accomplish. Broad goals and specific goals in relation to broad goals, for example:
    • Broad Goals could be:
      • Improve diversity – look for a select group of employees to refer more.
      • Role-specific hiring – sales, engineering, developers
      • Specific to accounts/verticals business is serving to –  top 5 accounts/clients
    • Specific Goals could be:
      • if at all you have 5% – 10% placements done via referral in 2017, the goal for 2018 should be to make it 20%
  • Process – create an extremely user-friendly process. The less work an employee has to do to refer a candidate, the more successful the program will be. Based on K.I.S.S principle, process simply can be –
    • an employee just need to send the Contact details + LinkedIn profile/Resume of a referred candidate
    • every referred candidate must be contacted within a stipulated time (2-24 Hours TAT can be your way across the board)
    • use of technology – create/hire a platform/tool for them to be able to track the progress of their referral. Can it be done using ATS? Using ATS can be cumbersome, but having an independent platform linked with ATS can be done.
  • Train consultants/employees – covering these four aspects:
    • The practical nature of how to use the system
    • What we are looking for in referred candidates – high-quality referrals
    • What employees can expect when they refer a candidate
    • Consistent training/policy document/dedicated webpage with all the info on the corporate website etc.
  • Keeping consultants/employees abreast – once you’ve built a program and trained employees how to use it, it’s time to run consistent campaigns and keep employees aware of the open positions for which you are looking for hires.
    • Create a weekly/monthly campaigns calendar to a group of employees with specific open positions based on the set goals (Title/Role/Skills)
    • Most people have 500+ professionals in their professional networks. To add to this, most are blind to the career advances and changes others go through in their networks. To combat this, each email campaign should encourage team members to comb through their LinkedIn connections by doing a simple advanced search as a refresher and see if they know anyone who’s right for the open position.
  • Recognize / Reward – An employee who refers a candidate and gets some positive recognition is likely to refer again, and it will inspire others to follow as well
    • Referral Bonus
    • Shout out in the monthly R&R
    • A personal thank you note from the Referral Team/top management
  • Measure – against the set goals
    • %age of referred candidates who hear from the referral team – the goal has to be 100% (period).
    • %age of qualified candidates – this number needs to be higher than the total number of referrals who got an interview. If it isn’t, there is a quality issue, people are sending wrong referrals. To fix this, you would need better and consistent internal campaign to stress on quality of the candidates referred. You just wouldn’t want anybody and everybody in their network to be referred.
    • %age of applicants who got an interview and overall referral closure percentage – If this number isn’t as high as you have set the goal for, there is a need to make it even easier for employees to refer a friend or do a better campaigning reminding your workforce of the open positions.
    • Participation rate in the Program
    • Quality of Hire through referral program – measure/keep track of Tenure and Performance of the employee/consultant came through referral. Check this against those who came without the referral.

A good referral program or number of hires through referrals not only adds a great deal of $$ to the bottom line but is a sign of engaged employer/best place to work. This should surely be one of your core objectives for 2018.

Some action items:


Did the above help in any way? Let me know…


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