ZALP presents Employee Referrals Your Go-To Strategy for 2014

Presenter: Dr. John Sullivan

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Why the increased emphasis on referrals?

Referrals will continue to become even more

prominent in 2014 because of:

More data proving their business impact

More firms are shifting to a data driven approach

which makes their ERP’s much more effective

The growth of social media and the Internet

make it easy for your employees to find top talent

The visibility of prospects work on the Internet

New technologies are available

New vendors appear every day

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The business and recruiting

impacts of referrals

Part I

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The 1ST step is building a compelling business case

Here is a list of the business impacts from referrals

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Business impact #1 – High quality hires

ERP’s produce the highest quality of hire

Hires from referrals perform better on the job

than hires from any other source

Let’s look at 2 charts revealing source quality >

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Referrals are the #1 source for new hire quality

Source effectiveness

1. Employee referrals

2. Large job boards

3. Niche job boards

4. Temp to perm

5. Recruiters

6. Trade media

7. Staffing services

8. College recruiting

9. Career fairs

10. Co-op education

11. Mass media

12. Military

Source: staffing.org 2011

Source effectiveness (out of 5)

1. Employee referrals 3.44

2. Social networking sites 2.98

3. Corporate career pages 2.75

4. Internal job boards 2.52

Source: Aberdeen Group 2013

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Business impact #2 – High productivity

ERP’s produce improved new hire productivity

Referred hires from average workers produce

25% more output /profit… than non-referred

employees

Referrals from top performing employees

produce 135% more output / profit

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Business impact #3 – A high ROI

Calculating the $ value and ROI of each ERP hire

Start with your average revenue per employee

Multiplying that dollar amount by the % of higher output produced by referral hires (25% up to

135%)…reveals each ERP hire’s $ impact on revenue

At a struggling firm like Sears using the minimum increase in output of 25%, ($138,200 rpe X 25% improvement) this means that each ERP new hire is worth nearly $35,000

At a productive firm like Facebook, using the maximum 135% increase in output, each ERP hire could be worth up to $1.6 million

Compared to a probable cost per hire of less than $10,000

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Business impact #4 – High retention

ERP’s hires have a better retention rate

Referred workers have a higher retention rate

and are up to 30% less likely to quit their jobs

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Let’s shift to recruiting impacts

The superior recruiting impacts from referrals

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Recruiting impact #1 – A high volume of hires

The highest volume of hires - of all sources of

corporate recruits, employee referrals are #1 in

volume at between 24.5% and 44% of all hires

An even higher volume occurs at top firms – at

firms with excellent referral programs… 50% of all

hires come from referrals and the top firms have

reached nearly 80%

Up to 8 referrals per opening – by assigning

prospects to the right employees… you can get

up to an average of eight referrals per position Let’s look at a chart revealing source volume >

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Referrals are the #1 source for new hire volume

Source popularity Volume

1. Referrals 24.5%

2. Career site 23.8%

3. Job boards 18.1%

4. Recruiter direct source 6.8%

5. College 5.5%

6. Rehires 3.3%

7. 3rd party 3.1%

8. Social media 2.9%

9. Print 2.3%

10. Temp to hire 1.5%

11. Career fairs 1.2%

12. Walk-ins 0.3%

Source: CareerXroads 2013

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Recruiting impact #2 – High quality applicants

Higher quality applicants

A survey of 73 major employers… 88% said

that… “referrals are the # 1 best source for

above average applicants”

HR executives rated referral candidates #1,

earning a 8.6 on scale of 10

Referrals also have the highest interview to hire

ratio (17% of referrals are interviewed)

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Recruiting impact #3 – A better hire ratio

A much better hire ratio

Although only 7% of applicants come from

referrals, they produce 40% of all hires

Between 14% to 25% of referrals are hired…

Versus 1% from among all sources combined

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Recruiting impact #4 – Time to fill

Faster hiring speed / time to fill

A referral program with a quick response time

can have the fastest “time to fill” of all sources

“Blue light alert” referrals are the fastest of all

referrals

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Recruiting impact #5 – Low-cost

Lower-cost hire

A well-managed referral program that doesn’t

focus on the reward as a motivator produces

hires at a lower cost than the average cost per hire

at a firm

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Not all referrals are equal

Top-performing employees submit the highest

quality referrals

Referrals from top performing employees

provide significantly higher quality referrals

than the average worker

The worst referrals come from “people that you

don’t know that approach you”

Relative strangers that ask you to “please make

me a referral” produce the worst quality…

because you don’t know their work or skills

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What are the key elements that

are present in top-performing

referral programs?

Part II

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What elements differentiate the top performing programs from the average ones?

Key differentiator elements…

ERP elements for increasing referral quality

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# 1 - Prioritize jobs to focus on quality

Focus ERP efforts on high priority jobs (40% max)

Mission critical jobs

Revenue generating jobs

Key jobs in high profit and high-growth SBU’s

Jobs with a high previous referral success rate

Hard to fill or high-volume jobs

“Sudden” key vacancies

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#2 – Motivate using a “help the team approach”

$ rewards can reduce the focus on quality & impact

Use a “help the team" approach that emphasizes:

It’s part of your responsibility as a team player

An opportunity to work alongside great people and… you won’t have to work alongside slackers

You will learn more from higher-quality new hires

You will be recognized for “helping the team”

Your team will “win” more frequently

Providing this competitive advantage… will improve bus. results, stock value and bonuses

Show employees the correlation between better business results… and a higher % of ERP hires

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#3 – Use proactive approaches, not spamming

Proactive means seeking out the best referrers

It is true that “Great people know great people”, however… most employees are extremely

busy… so in order to get quality referrals… you must proactively approach them

Proactively approach the teams that have the

hardest openings to fill… as well as your top

referring employees

Here are 2 proactive ERP tools to consider >

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“Proactive” referral tools

A) The “give me 5” approach (Google)

Proactively approach top performers and ask them

To identify the top five people that they know in

their field… in these categories

The best performer you ever worked with

The most innovative

The best team player

The best manager

The best under pressure

Then ask your employee to contact these 5

individuals and try to convince them to apply

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“Proactive” tools

B) Reach out to job references for referrals

Identify top performing hires from last year

Call their references that said accurate things

Thank them

Ask them “Do you know anyone else as good?”

Ask them to be a future reference source

#4 - “Assigned referral” tools

4 Assigned referral approaches to consider

A) Use a referral community - for each of its jobs,

Accolo selects a few employees based on the

likelihood that they will know the right person for

a job opening… they average 8 referrals for every

job

B) Assign an individual with a strong connection –

Zynga executives identify an important recruiting

target and then select the employee that has the

strongest social media relationship with them. That

individual is then coached to make the referral 25

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Another assigned referral tool

C) Assigned boomerang referrals

Utilize your corporate alumni group to… identify top-performing alumni that work in high need areas and assign an employee to them (DaVita 16%)

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Another assigned referral tool

D) “Most wanted list” of assigned referrals

Executives identify… a list of gamechangers

and potential “magnet hires” at the beginning of

the year

Key employees are asked to seek out these highly

desirable individuals and to build a relationship

with them over social media

When they eventually agreed to consider becoming

a referral… speed hiring is required

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#5 - Require this information to ensure quality

You must require these 6 pieces of information

1. The job title or req # you are referring them for

2. How / when you have assessed their work

3. Assess and then tell us about their skills and

knowledge… and how they are superior

4. Assess and then tell us about their cultural fit…

so we do not dilute our culture

5. Assure us that you have sold them to the point

where they will accept an interview, if asked

6. Honestly rate them with a A+, A, or B+

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#6 - Clear expectations can limit junk referrals

Set expectations before an employee refers

1.We are exclusively seeking superior individuals

that will make our firm significantly better

2.Because we only want the very best… we expect

no more than 3 referrals per employee a month

3.Throughout the referral process… we expect you

to put the firm’s best interests first

4.Except in extraordinary cases, we do not want

referrals from relatives or individuals that

approached you and asked to be referred

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#7 – Great referrals require education & coaching

Source: Whirlpool

#8 – A story inventory is critical

A story inventory for recruiters and employees

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An example - How to generate stories

Microsoft “Spreadthelove” internal website

Their “Spreadthelove” website allows Microsoft employees to "write up" their own individual story about their career with Microsoft (their story might include pictures, testimonials and video)

Employees can then share the web link and "spread the love" with targeted friends, family and potential referrals

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Now let’s shift to actions that increase volume

Actions for increasing referral volume and participation rates

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#1 for volume – Responsiveness is essential

Responsiveness is the key to continued success

The #1 volume reducing factor is a slow response

Dedicated recruiters – can improve candidate

relationships and much more effectively sort and

expedite top referrals (CACI)

Develop service level timelines like:

Responding to all referrals within 24 hours

Offering at least phone interviews to A+ and A

candidates within 5 days (Owens Corning)

#2 for volume – Everyone is a “Talent Scout” (Tata)

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#3 for volume

Focus on attracting “passive” prospects

Here are 4 passive approaches to consider >

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A) Referral cards can attract passives

Your customer service just now was exceptional. I work for the Apple store and you’re exactly the

kind of person we’d like to talk to. If you’re happy where you are, I’d never ask you to leave. But if you’re thinking about a change, give me a call. This could be the start of something great.

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Focus on passives

B) Names alone can start the referral

Pay $100… just for a name in key jobs… even

if they are not hired (Must provide contact

information, they must be someone working in the field

and be interested in a new job at Children’s hospital in

Dallas)

25% of the names result in a hire

www.ere.net/2011/08/03/paying-for-names-not-just-referred-hires/#more-20189

http://www.genomeweb.com/blog/interesting-referral-incentive

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Focus on passives

C) Accept profiles – at least initially, allow

LinkedIn profiles in lieu of the “slow to

acquire” updated resume

D) Look for great work online – encourage

employees to seek out examples of excellent

work on the Internet and convince those

prospects to become a referral

www.ere.net/2011/08/03/paying-for-names-not-just-referred-hires/#more-20189

http://www.genomeweb.com/blog/interesting-referral-incentive

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#4 for volume – Expand program eligibility

Expand eligibility to execs, managers and HR

Executives are encouraged to refer - a “white

glove treatment” recruiter can be assigned to

encourage executives to make referrals (Deloitte)

Managers and HR are made eligible – managers

and those in HR are also well connected, so they

should be eligible to make referrals (Accenture)

Give it to charity – you can motivate those not

driven by money and minimize conflicts of

interest by offering the option of donating their

reward to charity (Accenture, DaVita)

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Expand eligibility

Expand eligibility to non-employees

Open up referrals to non-employees including

Family

Contingent workers

Consultants and vendors

Customers

Board members

Corporate alumni (Internosis, Clearlink, CACI, Verinon)

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#5 for volume – Broaden ERP coverage

Broaden referral coverage

Add on-boarding referrals – proactively ask new hires for referrals during on-boarding (Eli Lily)

Add college referrals – the college population is well connected through social networks, so add a referral sub-program for college hires and interns (Endeca, Intuit)

Add referrals for executive positions – advanced ERP’s also cover openings for executive positions

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8 additional practices for increasing volume

1. Alerts – send targeted “I need your help today

alerts” to the most relevant employees with a

successful referral track record (CACI International

and Quicken Loans)

2. Competitions – friendly internal contests between

teams can dramatically improve results (Deloitte)

3. Hold referral events – hold physical referral

events and “virtual hangouts” or “meet ups” in

order to garner attention, to educate, and to get

"spot" referrals (Monster.com)

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8 practices for increasing referral volume

4. Harness social networks – closely integrate referrals with your firm’s social media effort

5. Develop professional learning communities and have your employees make referrals from the best participants (Microsoft)

6. Recognize managers – set targets, make it a promotion criteria and then… track, report, recognize and reward individual managers for high referral rates within their team

7. Ninja searches – periodically approach top employees and ask them to search their phone, social media and computer databases (Facebook)

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8 practices for increasing referral volume

8. Conduct a follow up interview – after a successful referral, send a recruiter to interview the employee in order to identify best practices and to ask for additional referrals (Amazon)

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If you’re going to include rewards…

utilize high-impact but low-cost rewards

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Reward best practices

Action steps for improving rewards

Realize that the average bonus amount generally

falls between $500 and $1,500…amounts above

$1,500 have proven to have little impact

The best ERP’s never pay "equal" bonuses and

most vary it by job, location and competitor $

"Grossing up" bonuses (so that they are in effect

tax-free) really WOW’s employees

Pay off quickly and consider a “prize patrol”

approach to add excitement (Quicken)

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Reward best practices

Inexpensive rewards to consider

A referral dinner/luncheon held once/ twice a

year with the CEO to celebrate referrers

A $25 gift / Starbucks card for your 1st referral

A handful of free movie tickets for the family

First choice at vacation, schedule or other

desirable work items

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4 Final strategic program elements

1. Realize that a focus on diversity referrals will

actually increase your diversity hires

2. Track referrals to identify the high and low

referring teams

3. Notify employees when they make a particularly

weak referral

4. Use referrals for internal openings

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What elements drag down the

performance of average

corporate referral programs?

Part III

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Be careful

Homer will refer

people also

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The 4 most impactful referral program killers

1.Do not allow executives to win the argument that…

you don’t need a formal ERP program and a

marketing effort… because “it’s part of their job”

2.Do not withhold rewards until the probationary

period is over (consider an added bonus if they stay)

3.Avoid “referral spam” where a high volume of

the same message causes your targeted employees

to eventually ignore all referral messages

4.Avoid sending employee referrals to apply on

your standard corporate careers website (not tagged)

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And finally… Benchmark firms that you can learn from

AmTrust Bank

Deloitte

Ernst & Young

Edward Jones

Accenture

DaVita

Aricent

Children’s Hospital

Owens Corning

Accolo

CACI International

Acumen Solutions

With these simple steps you are sure to see improved results in your referral

program. And if you need a tool that will help you seamlessly achieve all of

this,

ZALP is just a click away

You may also opt for a free consultation on improving your referral program results. Our employee referral specialists would be glad to help.

For more information, visit www.zalp.com To book a free demo, drop a mail to

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