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Best Practices in Employee Referral Programs
I have long argued that employee referral programs should be the foundation of all external recruiting efforts, and across the board most award nominees demonstrate why. A well-designed program does much more than distribute sourcing responsibility across an organization’s workforce; it enables organizations to hire better quality talent, faster, and cheaper than other recruiting sources. Practices that differentiate the best programs from average programs include extreme responsiveness, proactively seeking out referrals, frequent program updates, use of robust metrics, and a focus on prioritization of key jobs.
Award Winner — Aricent
Aricent, an 8,000-employee, privately held Silicon Valley-based communications product and service provider operates in 19 countries worldwide. It has developed a world-class employee referral program to fuel growth and drive organizational capability. Outstanding practices include:
- Responsiveness — Its dedicated team of five guarantees action on all referrals submitted within 72 hours of submission (it actually targets providing personalized feedback to referrers within the same time frame). Its referral help-desk also contributes to responsiveness by promising a response to all inquires within eight hours. The helpdesk is so well regarded that it achieved an astonishing 97.9% satisfaction rate among surveyed employees. This is truly a first-class approach. The No. 1 success factor in any referral program is its ability to maintain a high level of responsiveness. Almost all employee referral programs start out like gangbusters but quickly wane as employees realize that their referrals are not getting quick and responsive treatment.
- Service level agreement — Aricent developed a service level agreement that clearly spells out what referrers and hiring managers can expect from the ERP program staff and vice versa. Its SLA has produced the highest satisfaction rating of any program I have ever come across.
- Proactive referrals — Aricent used a proactive referral approach that took program representatives to employee workstations, meetings, social gatherings, etc., to educate about program specifics and to solicit on-the-spot referrals. It also publishes and distribute a referral program calendar in advance so that employees are aware of projected needs and events. In addition, at some of these referral events it provides on-the-spot rewards to solicit referral activity. This proactive approach might seem time-consuming, but it is one of the most effective ways to get referrals from ultra-busy professionals when you need them versus when other voluntarily opt to submit them. Traditional referral programs rely almost entirely on the employee making the initiative to refer in response to posters, e-mails, etc., which does little to ensure that the program produces needed results.
- Prioritization of jobs — The iRefer program is targeted to produce hires in hard-to-fill roles that require niche skills (50% of such roles were filled by ERP hires in 2009). By establishing hiring percentage targets for critical groups, Aricent made participation in the program by managers a priority as well, driving the program to produce 44% of all external hires, an increase of 9% over 2008. Anyone who gathers data on referral program effectiveness finds out pretty quickly that referrals work better on certain jobs than on others. And because there are always limited resources, prioritize jobs and business units in advance so that the program focuses on mission-critical, revenue generating jobs, and “hard-to-fill” positions.
- Referrals are pre-assessed — Tackling the subject of “junk referrals,” Aricent implemented a referral screening methodology that requires the referring employee to submit an assessment of the applicant being referred. By requiring employees to assess the technical skill and culture fit of the referral, the program forces the employee “to be accountable” for the quality of their referral, improving candidate quality and saving both manager and recruiter time.
- Goals for all managers — Aricent required all managers to refer at least one corporate alumni per year who they had convinced to return. It also involved hiring managers as iRefer ambassadors, which encourage their teams to refer profiles and to maximize their contribution during exclusive hiring events. Establishing referral targets or goals for each manager is a powerful method to drive participation.
- Boomerangs — It specifically targets former employees in order to get them to return later in their career. Sixty-six percent of all on alumni rehires came through the referral program in 2009. (Having a corporate alumni program and targeting former employees in order to get them to “boomerang” is especially important for organizations that may have been forced to lay off a large number of employees during the most recent downturn.)
- Use technology — Aricent developed a microsite on the firm’s intranet which it uses to publish a list of employees who have successfully referred. It uses management software to generate a daily status report on every ongoing referral, and it tags each and every profile against one or more domains or skills, so that whenever a new position opens up, it can more quickly and accurately identify potential candidates in the referral database. To ensure easy access to the micro-site, it places iRefer kiosks at events and “short list” individuals on the spot.
- A dedicated referral team — Perhaps its most important accomplishment is the leadership of the talent acquisition team’s ability to make a convincing business case to senior executives to fund a dedicated team of five to manage the employee referral channel.
- Bonuses — The Aricent program varies the bonus with the targeted position and offers “top-ups” as motivational bonuses on each of its unique campaigns.
- Robust ERP analytics — Aricent gathers and reports metrics in all of the important areas, including new-hire job performance, new hire retention, boomerang rehires, offer acceptance ratio, and referrals as a percentage of all hires. Analytics are the key to continuous improvement and for achieving a competitive advantage in any talent management program.
- Significant results were produced — Great features mean little if they don’t produce results, and the Aricent program has no trouble demonstrating impact. Some highlights include: ERP hires have measurably better on-the-job performance than hires from other sources, and referral hires have measurably better retention rates after one year. These are the two most important metrics in any referral program because they demonstrate to skeptical senior managers that the program is producing higher-quality hires. Also: resume-to-hire ratio of 3:1 compared to 5:1 of other sources; it increased the employee participation rate from 35%in 2008 to 66% in 2009; iRefer reached 45% of total hiring; ERP candidates accept offers at a significantly higher rate; and ERP hires cost approximately 20% less than hires produced via other sources.
Finalist — Accenture (Past ERE Award Winner)
This global consulting firm is well-known for excellent management practices, and its referral program is no exception. The current program began life as a pilot program in the Netherlands and received top honors in last year’s award program. Features that caught the judges’ attention last year (written up in the May 2009 Journal of Corporate Recruiting Leadership) were senior executive involvement throughout the program, electronic referral cards, a charity component that motivates employees by providing a small donation to charity, and a reward for referrals that successfully make it to the interview stage. This year the program went global and was refined to better meet the changing economic and recruiting climate. Major program improvements include:
- Prioritized positions — Accenture focused its program design changes on features that would improve the quality of hire, including moving away from open referrals to position-based referrals, where only high-priority positions are targeted. In an economic downturn, a firm’s leadership should clearly explain why it’s critical to continue providing referrals for some jobs, while the rest of your organization is in slow-growth mode.
- Authentic communications — Accenture realized that the wording and phrasing used in requisitions and position descriptions is much more formal than the language used in normal day-to-day conversation. As a result, it changed expectations to be more consistent with how friends/colleagues would discuss the role/organization. They then used senior leaders in their communication campaigns to be referral “champions” and to explain the importance to the business of the positions being recruited for.
- Increasing employee feedback — Accenture provides referring employees with more status information by allowing them to sign up to online feedback channels that let them monitor the status of referrals via emails, RSS feeds, and text messages. It also provided referring employees with access to their referral history, detailing status of past referrals, rewards earned, a targeted listing of key positions in their group that are soliciting referrals, and current ERP campaign messages.
- Tailoring the website experience — It learned by listening to feedback that past referrers do not need as much program information and support as “first-time” referrers. Using that learning, Accenture retooled the referral website to tailor the visitors’ experience based on the visitors’ past referral activity. Past referrers can jump straight to submitting a referral, while new referees are still provided with a high level of guidance and information.
- Results produced — Accenture started the year with a great performing program, but program retooling has made it even better. Key performance gains include: reducing the resume to hire ratio from 5:1 to 4:1; increasing the percentage of hires attributed to ERP to 34%; and estimated recruiting cost savings of over $700,000.
Both Aricent and Accenture have demonstrated an ongoing commitment to servicing employees submitting referrals and are reaping the rewards of paying attention. Got questions for either of them, comments, concerns? Share them here and elevate the conversation!
Stay tuned: in part 2 of this series, I will cover the employer branding program and corporate career website award categories.