UPDATING YOUR EMPLOYEE REFERRAL PROGRAM

Practical Tips That Can Dramatically Improve Your Programs Performance

ERE.Net WebinarNovember 13, 2008

© Dr. John Sullivan

www.drjohnsullivan.com

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Dr. John Sullivan’s summary bio

Former Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees

Has advised over 250 major organizations in 30 different countries. His appeal is so broad, that work has been translated into 23 languages

Monthly column in Workforce Management Magazine Columnist for the Electronic Recruiting Daily Author of eight books and more than 750 articles. SHRM called him “One of the industries most respected strategists” & the Best

Practice Institute honored him as one of the Top 10 Leading Thinkers in HR Staffing.org noted that he was “the father of HR Metrics” and Fast Company

magazine called him the “Michael Jordan of hiring” He has been quoted by the Wall Street Journal, Fortune, the NY Times, the

Financial Times, CFO Magazine and have been interviewed by CNN and the CBS and ABC nightly news

Currently he is a Professor of Management at San Francisco State University and the chief consultant of the management advisory firm DJS

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Dr. Sullivan’s current books

ComingSoon!

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Topics

1. Benchmark firms and performance targets

2. Referrals programs in a down economy

3. Things to add to increase program performance

4. Common errors to avoid

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Benchmark Firms

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What is your referral rate? (% of all hires)

AmTrust (78%)Intel (71%)SG Construction (70%)Quicken Loans (68%) Rackspace Hosting 66%Covenant Health (64%)Cisco Systems (62%) FirstMerit Bank (56%)Edward Jones (55%) (with no bonus)The Turner Construction Corporation (56%)Booz Allen (52%) Northrop Grumman Space Technologies (52%)Symantec (51%) 7

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You must change your ERP

to fit with a down economy

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Action areas during a down economy

1. You must prove your ROI / business case

2. Use OPT to shift the work (Other People’s Time)

3. Shift the motivators

4. Prioritize jobs

5. Increase quality by using proactive referrals

6. Reduce the volume of low quality referrals

Changing your ERP during a down economy

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During a down economy…

What is the business case justification

for referrals?

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“Employee referral programs are #1 (at leading

practice firms) in delivering the greatest volume of

hires, an improved quality of hire, and improved

retention at all levels.”Conclusion of DJS research

For external hiring

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# 1 in ROI

1. Employee referrals 82%*2. Organization's Web site 71%3. Campus recruiting 60%4. Niche job boards 58%5. General job boards 51%6. Search firms 42%7. Networking technology 36%8. Commercial résumé databases 33%9. Career fairs 30%10.Newspapers 15% * Satisfaction with the ROI of the source -January 2006 survey of 73 large employers with a mean of 139,000 applicants Source: Direct Employers/Booz Allen Hamilton

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The business case for referrals

An example of the business results an ERP can

produce

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Business impacts of shifting hiring sources

Source: 2003, Major US Healthcare chain, source comparison study

Program results Referrals Source A

Cost $2,796 $1,877 - $919

Offer Acceptance Rate 95.4% 81.2% + 14.5%

Voluntary Turn < 1 yr 9.3% 22.1% + 2.3X

Voluntary Turn > 1 yr 3.2% 12.5% + 3.9X

Termination rate < 1 yr 1.2% 4.4% + 3.6X

Performance results 14.36% Baseline

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The net gain from the performance increase alone

A +14.36% improvement in the average revenue

per employee is $70,800 per each new hire. For

60 hires, the added revenue is $4.3 million

Because the better performing new hires will stay

longer, the savings would continue over multiple

years

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During a down economy…

Shift some of the recruiting work to employees and

managers

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Shift the work to others

“Do more with less” using “OPT”Target 50% referrals, so employees do some of the sourcing and sellingGet employees to build up their social network profiles to attract candidates

PDA / name dump parties for names

Blogs by employees to attract

Events (Bring back 3 names) >

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Shift the work to others

“Do more with less” using “OPT”Encourage employee generated videos (Deloitte)

CEO calls to candidates

Shift the work to others

Create a “Friends program” Where employees in the same job can answer questions, provide stories and better examples than any recruiter can

Ask for volunteers

Pre-screen out all but the best

Provide them with the referral credit

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During a down economy…

Shift the motivators away from dollar rewards

Don’t “make it about the money”

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Motivate by focusing on “helping the team”

Convince employees it’s in their best interest to make referrals by…Using the “Help the team" approach that emphasizes the employee’s benefit from working alongside great peopleShowing them “who” suffers with a long vacancy or a bad hire (Remind them what it is like to work alongside “Homer”)Correlating high referral rates with business goal attainment and high individual bonus rates

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Change the rewards

Emphasize drawings or raffles

Make the prize something that is “talked about”

- Trip around the world

- Trip to the South Pole

- College tuition

- Reserved parking spot next to the CEO

- One on one lunch with the CEO

- First choice of vacation or shift schedules

A parking lot full of BMW’s will impress

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Change the rewards

Provide a cheap gift for those that don’t win

A $25 gift card or a Starbucks card as a thank

you

Give a coffee card only for first-time

participants

A handful of free movie tickets for the whole

family

A small reward for finding “names” or

“leads,” even if it is not an immediate referral

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Change the rewards

Pins and plaques Recognize them with a plaque, award pin, T-

shirt, cubical item etc.

You can also place their name on a plaque or a picture in the lobby

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Change the rewards

Hold a once or twice a year dinner with the

CEO to celebrate all those that have made

successful referrals

Let them appear in company advertising - Work with the advertising department to allow individuals that successfully refer an opportunity to appear in regular company product advertising

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Change the rewards

Don’t forget the personal touch

A handwritten note – a personalized note or call

from a senior executive thanking the referrer that

made a high impact referral (Amazon)

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The Army gives a “referral promotion” to PFC before boot camp

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Promotion for a single referral before your

start!

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Change the rewards

If you do decide to use cash

The average bonus amount generally varies between $1,100 and $1,500

Several research efforts have shown that bonus

amounts above $1,500 have little impact on

increasing referral rates or referral quality in

companies that practice the "help build the team"

philosophy

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During a down economy…

Prioritize jobs

Because you can’t do it all well

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Prioritize positions

Do not make all job openings eligible

Because volume kills quality

And some jobs fill better using other sources

(CFO)

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Prioritize positions

Focus on high priority positions

Mission critical jobs

Hard to fill jobs

Jobs with a high previous referral success rate

“Sudden” vacancies in key positions

High volume jobs (more EE participation/ PR)

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Prioritize business units

Focus on key business units

Focus on high performing and high-growth

SBU’s

Focus on SBU’s with high referral success rates

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Be careful

Some referrals stink

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Proactive referrals are where, rather than “advertising” to all employees for referrals, you instead…

Proactively seek out targeted employees and ask them directly for referrals

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Proactively approaching targeted employees

Proactive means to approach…Top performers - approach employees that are

in the top tier of forced ranking or performance appraisal scores

Award winners - capture the names of internal and external award winners

The well-connected – approach employees that are well connected in their profession / industry >

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Proactively target these employees

Proactively approach Employees with a successful referral history

Approach employees that in the past, have made successful referrals

Employees formerly from “target firms” –

Push referral “needs” to employees that came from “target firms” (ActiveNet)

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Proactive follow-up meetings

Consider a “follow up” meeting

After a great referral, it’s smart to schedule a follow up meeting with the person…

- To thank them (And their manager)

- To learn about the approach that they used

- To ask them for more top names (Amazon)

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Examples of 3 proactive referral tools

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3 Effective “proactive” referral tools

1. Reference referrals

Identify top performing hires from last year

Call the references that said accurate things

Thank them

Ask them “do you anyone else as good?”

Ask them to be a future reference source

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3 Effective “proactive” tools

2. Give me 5 – Proactively approach top people Best manager you ever had Best team leader Best idea person or innovator Best out of the box thinker Best person that "ran into" burning buildings Best problem solver Best sales person that beats you Best student in college that was so smart Best mentor Best technical skilled person Best international talent Best customer service person Best replacement for "you" when you’re promoted

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3 Effective “proactive” tools

3. Blue light special for critical openings

When you have a sudden critical need

Put a “blue light” sandwich board in the lobby

Also, send a “I need your help” flash e-mail to

people in the same job family

Ask the relevant manager to mention it as part of

their regularly scheduled meeting agenda

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During a down economy…

How you can reduce the volume of referrals that

occur as a result of the high unemployment rate

(and low quality)

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Set these expectations… to reduce volume

5 Expectations of referring employees (not rules)1.We are looking for referrals that will make our

firm significantly better2.Participation is a privilege… so we expect you

to put the firm and your team first and to act as a mature adult throughout the referral process

3.Normally… we expect no more than 3 a month (Because we want the very best)

4.We expect you to know their work from personal experience

5.Normally, we do not want family or social friends (Unless they are clearly superior)

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Require this information… to reduce volume

Five bits of information that we need from you

1. Tell us the job # you are referring them for

2. Assess & then tell us about their skills/ knowledge and where they are needed

3. You must assess them and then report their cultural fit… so we do not dilute our culture

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Require this information… to reduce volume

Five bits of information that we need from you4. Did you seek this top individual out? (We expect

you to seek individuals out)

We are not interested in “they ask you” referrals, when someone approaches you & specifically asks to be referred.

5. Now rate the referral on a A+, A, B+ or B scale

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Program elements to add to your referral program

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List of “things to add” to improve performance

1. Be responsive2. Develop a story inventory3. Employment branding4. Employee education on how to improve referrals5. Expand eligibility6. Getting manager’s attention7. Referral cards8. Diversity 9. College grad referrals

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Add responsiveness

Respond to every referral (make it appear personalized)

Thank both within 24 hours (72 hr rule)

Tell them what they should expect next (timing

and steps)

Make an interview decision within 5 days

Notify both when there is a rejection

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Add a story inventory

Catalog powerful stories to aid EE referrals1. Do a Google search2. Check press clippings & press releases3. Check best place & functional award applications4. Check HR benefits brochures5. Ask employees “why they stay”6. Ask new hires “why they said yes” 8. Use “We do that lists” culled from best place

articles9. Ask “superknowers”10.Create stories (B of A, MGM)

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Consider a story book

Zappos publishes a book full of 300+ employee written stories about what it’s like to work there (Available on Amazon)

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Add educating your employees

Educate them on how to find great referrals

How to find them on-line (forums & networks)

At conferences (Take a smart person to lunch)

Capture names during interviews

Offer training on how to convince them

What we have to offer side-by-side comparison

Teach them “the right day” to ask >

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Educate employees on the “right day” to ask

Day of merger

Boss/ mentor/ best friend / CEO left

Lost a promotion

After their yearly bonus

After their performance appraisal

When their project is ending

Last kid graduates

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Add expanded eligibility

Expand who can refer

Allow managers and HR to participate BUT provide an “opt out” or charity option

Former employees, alumni & retirees

Customers (Retail, Hollister)

Spouses (Addie and $2,000)

Consultants, suppliers, vendors

Strategic partners

Stock holders and the BOD

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Add getting a managers attention

Reward managers for referrals and great talent management

Set targets - Sometimes just raising the goals and expectations… can cause an increase in referrals

Post charts or “thermometers” much like how

"United Way" programs publicize their progress

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Add referral cards

Use “attention getting” referral cards Limit referral cards – only give cards to employees that can accurately spot talent. And even then, limit them to 10 cards a monthInclude phrases that excite and make them want to take action A memorable shape/ design – make it unlike a bus card… so they will know it’s something elseGive them a unique contact point – don’t direct them in a web site with all other applicants

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A WOW referral card – An illustration

Apple loves innovators…

and you WOW’ed me!

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As you unfold it… you see

I don’t impress easily…

but we might just have a black turtleneck

that fits you! Call me tomorrow!

408.738.1922 Steve

Would you

like to be part

of the team that

invented the ipod

and iphone

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And on the back you see

Because there are so few really talented people

in the world…

I just wanted you to know

Someday… you will work at Apple

If you got one… do you think you would call?Would you tell anyone else?

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A referral card – An illustration

That was

Super Service!

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A referral card – An illustration

You would be a

At StarbucksCall 403 334 9832

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Add a focus on diversity referrals

Tips for improving diversity referrals

1.Make diversity a primary goal

2.Use “affinity groups” to spread the word

3.Talk to current and former diverse employees to

identify what your firm has to offer

4.Consider a higher reward for diversity referrals

5. Use business events where diversity can be “seen”

6.Put together a diversity recruiting advisory board

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Add referrals for college grads

Endeca gives a flat screen TV as a referral bonus

for college students referring a friend that gets

hired

Intuit offered a $50 award to students who

referred someone that was hired, they hired over

half of those who were referred

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Add employment branding

A great employer brand increases referral successAwards for “best place to work”Functional awards (Virtual close)Being quotedWriting and giving speechesBenchmark studiesAcademic case studiesWOW web pageInternal branding for consistency (Libby Sartain)

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Other things to add

A global component

An internal redeployment component

Utilize your employees social network contacts

Identify “why” there are low referral rates with

some managers and business units

PDA party/ name dump

Boomerang referrals

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Program elements to avoid in your ERP

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Avoid these program “errors”

1. Delaying the reward/bonus payment 2. Referral spamming by employees3. Failing to continuously re-energize the ERP 4. No ATS marking of ERP apps for metrics5. Equal rewards for all jobs6. No feedback on weak or bad referrals7. Individual recruiters can "ignore" referrals 8. Not tracking referral rates by manager9. Giving big dollar bonuses 10. Too many rules

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Avoid these program “errors”

11.Not weighting EE referrals based on the referrer’s track record

12.ERP applications are not given priority treatment in the recruiting process

13.ERP program manager turnover and poor documentation

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An illustration of how far referrals have come

An animated viral video released on YouTube & Google Video is from Yellojobs.com

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Did I make you think?

Any questions?

www.drjohnsullivan.com70