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ZALP presents

Your Go-To Strategy for 2014

Employee Referrals
Presenter: Dr. John Sullivan

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 ERPs 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 2

Part I

The business and recruiting impacts of referrals

The 1ST step is building a compelling business case

Here is a list of the business impacts from referrals

Business impact #1 High quality hires

ERPs produce the highest quality of hire Hires from referrals perform better on the job than hires from any other source

Lets look at 2 charts revealing source quality >

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 Source effectiveness (out of 5) 1. Employee referrals 2. Social networking sites 3. Corporate career pages 3.44 2.98 2.75

4. Internal job boards

2.52

9. Career fairs
10. Co-op education 11. Mass media 12. Military Source: staffing.org 2011 Source: Aberdeen Group 2013
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Business impact #2 High productivity

ERPs 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

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 hires $ 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

ERPs hires have a better retention rate Referred workers have a higher retention rate and are up to 30% less likely to quit their jobs

Lets 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
Lets look at a chart revealing source volume >
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Referrals are the #1 source for new hire volume


Source popularity 1. Referrals 2. Career site 3. Job boards 4. Recruiter direct source 5. College 6. Rehires Volume 24.5% 23.8% 18.1% 6.8% 5.5% 3.3%

7. 3rd party
8. Social media 9. Print 10. Temp to hire 11. Career fairs 12. Walk-ins

3.1%
2.9% 2.3% 1.5% 1.2% 0.3%
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Source: CareerXroads 2013

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 doesnt 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 dont know that approach you Relative strangers that ask you to please make me a referral produce the worst quality 17 because you dont know their work or skills

Part II

What are the key elements that are present in top-performing referral programs?

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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 SBUs

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: Its part of your responsibility as a team player An opportunity to work alongside great people and you wont 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 21

#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 23

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
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#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
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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 27

#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 firms 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

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#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 lets 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)

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

#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 youre exactly the kind of person wed like to talk to. If youre happy where you are, Id never ask you to leave. But if youre thinking about a change, give me a call. 37 This could be the start of something great.

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 Childrens hospital in Dallas)

25% of the names result in a hire

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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

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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) 40

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 ERPs 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) 43

8 practices for increasing referral volume 4. Harness social networks closely integrate referrals with your firms 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) 44

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 youre 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 $1,500amounts above $1,500 have proven to have little impact The best ERPs 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 WOWs 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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Part III

What elements drag down the performance of average corporate referral programs?

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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 dont need a formal ERP program and a marketing effort because its 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 Childrens Hospital Owens Corning Accolo CACI International Acumen Solutions

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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
info@zalp.com
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