Making Your Employee Referral Program Work Smarter

MAKING YOUR EMPLOYEE REFERRAL PROGRAM WORK SMARTER -- Tips for Updating “Stale” ERP Programs

ere.net Webinar June 16, 2010

Dr. John Sullivan Professor, Author, and Advisor to Management [email protected] | drjohnsullivan.com | @drjohnsullivan LinkedIn.com/in/drjohnsullivan | facebook.com/drjohnsullivan

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Topics for today

1 Results you can expect

2 Simple steps to refresh a stale program

3 Linking up with your social media effort

4 Improving hire quality

5 Increasing candidate volume

6 Advanced approaches to consider

7 Benchmark firms

ERE Recruiting Department of the Year Nomination

#1 - The highest volume source of hire

Source: CareerXroads 9th Annual Sources of Hire Study, February 2010

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#1 in quality of applicants

88% of 73 major employers say…

Referrals are the # 1 best source of above average applicants

Source: 2006 DirectEmployers Association Recruiting Trends Survey

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#1 in quality of hire

Source: Aricent Corporation

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#1 in 1st year retention

Source: Aricent 2010 ERE Recruiting Excellence Award Nomination

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#1 in retention – Another example

Turnover of new hires post 180-days is 32% lower than the norm.

Source: DaVita Corporation

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#1 in satisfaction with the ROI of sources

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%

Source: 2006 DirectEmployers Association Recruiting Trends Survey

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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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Significant cost savings

Cost savings  Accenture increased the percentage of hires

attributed to ERP up to 34%

 They later estimated the recruiting cost savings of doing so to be greater than $700,000

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ERP metrics

Primary metrics 1. Program ROI 2. Quality of hire (Compared to other sources)

3. Retention of new hires (Compared to other sources)

4. Diversity rates (Compared to other sources)

5. % of all hires that came from referrals (Target 50%)

Other metrics  Satisfaction of managers, employees and referees  Time to fill (Target 21 days)

 % of top performing employees referring (Target 50%)

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Reinvigorating a “stale” program

Nine quick actions to reinvigorate your program 1. Focus on key jobs – focus on mission-critical

jobs, revenue generating jobs, hard to fill jobs and rapid growth business units

2. Reinforce the employee's role in building the team – develop and then pretest the business case for employees and managers to assume the role of “24/7 talent scouts.” Demonstrate benefits in productivity, job security and working alongside the very best

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Nine actions to reinvigorate your program 3.  Improve referral quality – educate employees on

the need for quality. Make them certify superior skills, interest in the firm and cultural fit

4.  Improve responsiveness – it is the #1 factor. Prioritize the handling of referrals. Develop service level timelines

5.  Set targets – increase expectations by setting referral targets for SBU’s, managers & employees

6.  Boomerangs – focus on top performers in key jobs that quit or were reluctantly laid off

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Nine actions to reinvigorate your program 7.  Harness social networks – allow LinkedIn/

Facebook profiles in lieu of resumes. Provide best practices and education to key employees

8.  Emphasize recognition – decrease the focus on cash bonuses and increase internal recognition for referrers and managers. Hold referral celebration events with executives. Emphasize prizes, drawings and internal privileges

9.  Shift resources – shift resources away from job boards and agency fees

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Leverage social networks

Action steps for linking with a social media effort  Realize the interdependency – you cannot

produce spectacular results without a direct connection and a smooth handoff

 Leverage your employees – recruiters will never have enough time and employees better understand their profession

  Simplify the administration – make it easy to turn a social network relationship into a referral

 Recognize & reward – reward ee’s for activities that are likely to lead to referrals

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Educate them on:  Which social media sites best support their

professional community  Best practices on building online relationships

with industry peers that are not actively in the job market (Actives will usually find them)

 Who in the organization is highly visible and respected on social media sites

18 Source: Whirlpool

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Provide them with social media help   Provide coaching  Offer to critique their profile or their blog  Offer sample profiles   Provide templates that can guide them on how to

develop an effective online profile   Provide them with stories – develop "story

inventories" that employees can access and then use to "sell" the firm to potential referees

 Develop a process for spreading best practices

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Improving referral hire quality

Steps to improve candidate and hire quality   Speed – emphasize speed, because the very best

are gone quickly   Proactively approach top performers –

proactively seek out top performers and ask them to give you names (Give Me 5)

 Require a professional relationship – require knowledge of their work/advanced skills and discourage referring relatives and friends

  Identify weak referrers – track, provide feedback and when necessary disqualify them

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Improving referral hire quality

Steps to improve candidate and hire quality   Focus on boomerangs – you know their quality  On-boarding referrals – proactively ask new

hires for referrals during on-boarding (Eli Lily)  Alerts – send targeted alerts to the most relevant

employees with a successful referral track record in order to make them aware of your current need. (CACI International and Quicken Loans)

  Follow up interview – after a successful referral, send a recruiter to interview for best practices and to ask for additional referrals (Amazon)

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Increasing the volume of referrals

Tips for increasing volume  Referral cards – provide both paper and electronic

referral cards to highly visible employees and set a maximum quota (Accenture and Southwest Air)

 Referral events – hold referral events and hiring parties for referrals in order to garner attention, to educate, and to get “spot” referrals (Monster.com)

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Tips for increasing volume  A reward for a quality candidate – increase

candidate slates by offering a small reward for any referral that interviewed (Accenture)

 Charitable donations – providing donations to charity can be a significant motivator to those that are not driven by bonuses (Accenture and DaVita)

 Avoid program killers – avoid common program killing features like delayed or partial bonuses, failing to update marketing materials, spamming referral openings and too many program rules

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Change “who” is eligible to make referrals  Managers are eligible – because managers and HR

professionals are also well connected, they should be eligible to make referrals (Accenture)

 Non-employee referrals – open up referrals to non-employees including consultants, customers, references and corporate alumni (Internosis)

 Supplement your program with external vendors

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Advanced approaches to consider

Improving program responsiveness  Rapid feedback – the best programs set a target of

getting feedback and a thank you to the referrer and the referred individual within 48 - 72 hours of submission (Aricent and AmTrust Bank)

 Fast track processing – all referrals are given a priority for processing or are fast tracked in order to ensure that the employee “special” (Accenture)

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Improving program responsiveness  Expedited interviewing – make a promise to

interview all employee referral candidates within a certain number of days (Owens Corning)

 An “on the spot” assessment process – resumes are collected at referral desks or at referral events that also provide on the spot screening followed by preliminary evaluation & instant feedback (Tata)

 24/7 help desk – the best open 24x7 referral help desks to provide information and to answer questions (Tata and Aricent)

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Improving program responsiveness  Online tools – programs offer online assessment

and/or self scheduling of interviews. (Alaska Airlines)

 Referral status tracking – internal site features allow employees to continually track the status of their referrals. (Accenture and Aricent)

 Develop an SLA – increase the responsiveness of line managers by instituting service-level agreements that spell out expectations. (Aricent)

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Improving program responsiveness  Referral database – develop a pool of referrers

that can be proactively approached. Select these individuals based on past referral success and the likelihood that they know someone with a particular skill set (Accolo)

 Website customization – the referral website provides detailed information to first-time referrers but experienced referrers can jump straight to submitting a referral (Accenture)

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Expand your coverage  College referrals – the college population is well

connected through social networks. An advanced program must include referrals for college hires and interns (Endeca)

 Executive referrals – advanced programs cover executive openings and they also encourage executives to make referrals across the board

 Global referrals – the very best programs not only solicit referrals worldwide but also allow for regional customization (Tata)

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Benchmark firms with innovative components

 AmTrust Bank  Edward Jones  Accenture  Amazon  Booz Allen  Quicken Loans  Owens Corning  Accolo  CACI International  Microsoft  Acumen Solutions

Questions?

Did I make you think?

Any questions?

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Dr. John Sullivan Professor, Author, and Advisor to Management [email protected] | drjohnsullivan.com | @drjohnsullivan LinkedIn.com/in/drjohnsullivan | facebook.com/drjohnsullivan