Did you know that referrals typically make up about 40% of all hires, despite only accounting for 7% of all applicants? This is one of the many reasons why referrals are often considered the best source of hire for any company. In addition, its been found that a referred job applicant is 47% more likely to stay with a company for 3 years. Furthermore, referred applicants have been found to be able to start work almost twice as soon as applicants from job boards. They also cost much less to hire than other sources of applicant as well. All these reasons and more are why companies put so much effort in to trying to promote their employee referral programs. However, many large corporations struggle to get the required ROI out of these programmes and can only dream of a 40% hire rate from the programme. There are, however, some steps that can be taken to fix this quite easily.
Communicate all vacancies in real time
One of the main reasons that companies do not get the desired number of referred applicants in simple, most of the time their employees do not know that they are hiring. Too many large corporates need to put complex process and structure around simple items. So, what happens is that they end up building some sort of internal intranet system where employees can view all open vacancies. It’s a great idea in principle, but the truth is, unless an employee is actively looking for a move, they NEVER check the portal. Therefore, they never see the vacancies and never refer anyone.
The fix to this is quite simple, every time there is a new vacancy, send an email out to your employees to let them know there is a new vacancy, attach the job description and ask them if they know anyone that might be suitable. This simple, and yet often ignored step, dramatically increases the number of referrals immediately. Do not limit communication to just the team where the vacancy is either. Companies often do this, assuming only people doing the role will know other people who could do the role, but human relationships do not work that way. I once hired an extremely niche technology professional, who was referred by our office cleaner. Her nephew worked for a well-known tech firm and was looking for a new role. So ensure you communicate to all employees as often as possible about new roles.
Simplify the application process
Whether we are talking about candidate experience, employee experience, or customer experience, ultimately this all comes down to one principle, ensuring the process is simple and easy for the user. However, large corporates have again over complicated this process. They will use the intranet site I reference above, and then require someone to have a unique log in, password, be required to upload their friends CV to a unique job identification number that they have to search for. It’s a nightmare and most employees can not be bothered to go through the process.
Again, there is an easy solution for this. Simplify the process. As you are dealing with internal colleagues making referrals, here is a unique and crazy idea, let them be able to just email your HR team or the manager the CV. Crazy right? By making the referral process as pain free as possible for the employee, there is a significant increase in referral numbers. This is like the job board application process, when an applicant gets redirected to a corporate website and needs to create an account to submit their application, there is a 90% drop off in application. The same is true of referrals. If your HR team need to track the applicants in the system, have your HR team upload them to the system themselves, do not ask your employees to do it. Alternatively, there are numerous tools available that can automatically upload batches of CVs to an ATS without needing a human to manually do it.
Another reason for disengagement with the referral process is because employees see it as a waste of time. If one of your employees takes time out to speak with a friend or family member and then refers them to the company. How do you think they feel if they never hear back? Your employee is going to look stupid to the person they referred if that person never gets a call or email about the role. Or worse, they come in for an interview and then never hear back. Your employee is putting their personal reputation on the line every time they refer someone. If you make the employee look stupid to their friend or family member, they are not going to want to do it again.
The way to fix this is to simply have a policy that all referral applicants must be given specific feedback. Sure, sometimes your employees can refer some inexplicable people. I once had an electrical engineer referred for a qualified accountant role. But it takes 2 mins to provide feedback in this instance. Reach out to your employee and tell them that you won’t be considering the candidate as they are not qualified for the role and explain why. Likewise, also pop the candidate a quick email and thank them for their interest and let them know they are not right for this role but you will consider them for other roles in future that may be more relevant. It is not that hard.
Create a referral culture focused on quality and not money
Another challenge around referrals, is that it is simply sometimes just not the culture of the organisation. The truth is most referral interactions within an organisation are incredibly transactional. If an employee is referred, the company will provide you with a referral fee. This results in people trying to game the system and make money. I have even known firms where the manager and employee agree to split the fees, and it all gets very shady. Instead, the company should put the emphasis on quality of hire, not just getting paid for referring someone.
The easiest way to do this is to gamify the entire experience. You could have a weekly or monthly leader board that allocates points based on the quality of a referral. For example, you could provide 1 point for a referral, 5 points for a first interview, 10 points for a second interview, 20 points for a hire, 25 points for the hire passing probation, 50 points for them lasting 6 months and 100 points for them staying 1 year. This can be kept as a running total, so employees can level up throughout their time with the firm. You can then allocate specific rewards at certain scores. For example, if someone gains 1000 points during their tenure, they get an extra day annual leave, 500 points, they get a free lunch, 250 points, free coffee etc. This would take a little while to embed, but over the medium term it would completely change the culture within the firm around referrals.
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