RAISING YOUR EMPLOYEE REFERRAL PROGRAM RESULTS TO 50% OF ALL HIRES

50% is the new ERP target

ERE.Net, May 8, 2013

Dr John Sullivan
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www.drjohnsullivan.com

My goals for today

1. To demonstrate the business impacts of referrals 2. To expose you to dozens of proven action steps that can increase your ERP results to 50%

Part I

What are the business reasons

for focusing on referral programs?

Referrals produce the highest volume

Referrals are #1 in volume

Source popularity
Volume

1. Referrals 2. Job boards 3. Career site

28.0% 20.1% 9.8%

4. Recruiter initiated
5. College 6. Rehires 7. Social media 8. 3rd party 9. Print 10. Temp to hire

9.1%
6.6% 4.3% 3.5% 2.8% 2.2% 2.1%

11. Career fairs

12. Walk-ins
Source: CareerXroads 2012

1.9%
0.8%

Referrals are a high volume source

Reached 90% of its hires from employee referrals

Ernst & Young and Deloittes ERPs both reached approximately 50% of all hires last year

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Referrals produce high quality applicants

#1 in quality of applicants

In a survey of 73 major employers 88% said

that referrals are the # 1 best source for above average applicants

Source: 2006 DirectEmployers Association/BoozAllen Recruiting Trends Survey

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High quality applicants Although only 7% of job applicants came from

employee referrals
A whopping 40% of ERP candidates get hired

Source: 2013 JobVite Survey

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High quality applicants Referrals have the highest interview to hire ratio

Data analysis by SilkRoad reveals that 17% of referral applicants are interviewed
And 25% of those interviewed are hired (#1)

Source: Silk Road 2013

http://blog.silkroad.com/?utm_source=TLNT&utm_campaign=ec74d7751a-tlnt-daily-most-of-your-job-applicants-really&utm_medium=email

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Referrals produce quality hires

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Referrals are #1 in quality hires

Source effectiveness /quality of hire

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
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Referral produce more profit

Referral hires produce more profit

Hires from referrals produce a nearly 25% higher profit than hires from other sources

Source: The Value of Hiring through Referrals (source: UC Berkeley by Burksy, Cowgillz, Holman and Housman http://faculty.haas.berkeley.edu/bo_cowgill/papers/Referrals.pdf)

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Referral hires have high retention rates

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Retention results
Referral hires have higher retention rates Referred workers are between 10% and 30% less likely to quit than workers hired from other sources

Source: The Value of Hiring through Referrals (source: UC Berkeley by Burksy, Cowgillz, Holman and Housman http://faculty.haas.berkeley.edu/bo_cowgill/papers/Referrals.pdf)

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Part II

Benchmark firms that you can

learn from

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Benchmark firms that you can learn from

AmTrust Bank Deloitte Edward Jones Accenture Ernst & Young DaVita Aricent Childrens Hospital Owens Corning Accolo CACI International Acumen Solutions

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Part III

Lets start off with 4 high impact

strategic action steps

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Strategic action #1

Prioritize and focus your ERP effort

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Strategic action #1 Focus ERP efforts on high priority jobs including: Mission critical jobs and business units Revenue generating jobs Jobs with a high previous referral success rate

Hard to fill jobs

Sudden key vacancies Tip begin with a shortlist of targeted jobs and then add positions

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Prioritize the employee with the closest relationship Accolo uses a referral community For every open job, it selects a few employees based on the likelihood that they will know the right person As a result, Accolo has averaged 8 referrals for every job (#1)

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Be careful Homer will refer people also

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Prioritize your employees

Focus on referrals from top performing employees Why? Because referral hires from top performers produce nearly 3 times more profit compared to a referral hire from a below average performer Seek out and prioritize referrals from top performers But also warn, restrict or ban employees that routinely make weak referrals

Source: The Value of Hiring through Referrals (source: UC Berkeley by Burksy, Cowgillz, Holman and Housman http://faculty.haas.berkeley.edu/bo_cowgill/papers/Referrals.pdf)

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Strategic action #2

Do not overemphasize monetary rewards

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Strategic action #2 Use help the team" motivation (not $) The most effective referral motivation approach emphasizes the opportunity to work alongside great people because the team wins more frequently when it has the best players

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Strategic action #2 You can build a help the team mentality by emphasizing these benefits to employees Higher quality hires will improve business results and thus raise employee stock value and bonuses Its part of the responsibility of being a team player You will be recognized for helping the team You will learn more from higher-quality new hires You wont have to work alongside slackers Note: A feedback loop is required to tell employees whether they made a junk or a star referral Also show them the correlation between improved business results and a higher % of ERP hires 31

2 examples referrals dont require $ bonuses

Reached and maintained a +70% referral rate with no $ rewards Edward Jones reached 55% with no bonus

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Strategic action #3

Be proactive in seeking out referrals

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Strategic action #3 Why you need to be proactive? Great people know great people, however most employees are extremely busy so to maximize your referrals you will need to proactively approach your top referring employees

Here are 3 proactive ERP tools to consider

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Proactive referral tools A) Give me 5 Proactively approach top employees

Ask them to identify and then contact the Best manager they ever had Best team leader Best idea person or innovator Best person that "runs 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 external replacement for you when youre promoted35

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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Proactive tools C) Most wanted list for relationship building Executives identify a list of gamechangers and potential magnet hires at the beginning of the year

Employees are asked to seek out these highly desirable individuals and to build a relationship with them over social media (Relationship recruiting)
When they eventually agreed to consider becoming a referral speed hiring is required 37

Strategic action #4

Broaden the program and expand its eligibility

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Strategic action #4
Broaden the program 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 Focus on boomerangs encourage your employees to target your best corporate alumni (also allow them to make referrals) 39

Strategic action #4
Broaden the program

Add internal movement referrals - have a referral program that is designed to encourage internal movement. The best practice firm Booz Allen has a Career mobility team (Also MS, Cisco)

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Expand program eligibility

Expand eligibility 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) Note: you can help minimize conflicts of interest by offering the option of contributing any ERP reward to charity. It can also be a significant motivator for those that are not driven by bonuses (Accenture, DaVita) 41

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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Next: A long list of

tactical action steps that can

dramatically improve results

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Action steps

Tips for improving referral volume

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Best practices for increasing referral volume Hold referral events hold physical referral events and virtual meetups in order to garner attention, to educate, and to get "spot" referrals (Monster.com) 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) Competition friendly internal contests between teams can dramatically improve results (Deloitte)

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Best practices for increasing referral volume Harness social networks closely integrate referrals with your firms social media effort 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

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Increase volume by requiring less upfront Accept profiles at least initially, allow LinkedIn profiles in lieu of resumes Accept just names instead of requiring the full resume, accept names only (Childrens hospital in Dallas pay $100 just for name in key jobs even if they are not hired and 25% of the names result in a hire)

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Action steps

Educate your employees

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Education and help

Provide them with hands on help Provide virtual referral coaches Offer sample social media profiles and provide templates that can guide employees on how to develop contacts and relationships online Offer to critique their profile or their blog Provide them with stories develop "story inventories" that employees can access and then use to "sell" the firm to potential referees
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Google has a story inventory A story Inventory for recruiters and employees

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Source: Whirlpool

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Action steps

Set referral expectations in order to minimize junk referrals

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Setting clear expectations can limit junk referrals Expectations before an employee refers (guidelines) 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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We need the following information Provide the following 6 pieces of information 1. The job title or req # you are referring them for 2. How you know or 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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Action steps

Referral cards can have a high impact

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Referral cards can be powerful

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. 56 This could be the start of something great.

Electronic versions of referral cards Electronic referral cards

An alternative is to provide employees with electronic referral cards to send to their social media contacts (the cards can have a tracking code to ensure that the employee gets credit for the referral)

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Action steps

Utilize high-impact but low-cost rewards

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Rewards
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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Rewards
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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An example rewarding frequent referrers Expedias frequent hire club $1000 plus a travel coupon for each additional hire

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Action steps

Technology features to consider

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Referral technology features Impactful technology features 1. Referrals are tagged and prioritized in the ATS 2. The referring employee gets an e-mail thank you within 24 hours 3. The referred candidate gets a thank you phone call within 24 hours 4. The employee is notified via e-mail when a referral is scheduled for an interview 5. Interviews can be scheduled by the candidate on a web site (Alaska Airlines) 6. Relevant job openings are pushed to the right employees (With their permission) 63

Technology features Technology features (continued) 6. Employee referrals can be made directly from their mobile phone 7. Referring employees have a referral scorecard 8. Employees and candidates can track progress during the process (Accenture & Aricent) 9. A+ and A rejects are told what they must do to improve their chances 10.An e-newsletter is sent quarterly to A+ and A rated referrals that were not hired in order to build a relationship 64

Action steps

Administrative actions for improving program results

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Administrative actions to consider Improve responsiveness responsive is the #1 critical success factor so prioritize the handling of referrals and develop service level timelines Dedicated recruiters a dedicated ERP recruiter can improve candidate relationship management (CRM) and much more effectively sort and expedite top referrals (CACI) Expedited interviewing make a commitment to interview all A+ and A quality referral candidates for key jobs within a certain number of days (Owens Corning) 66

Administrative actions to consider

Measure quality of hire measure the on-the-job performance and the retention rates of new hires from referrals and then use the information to improve the ERP 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) Develop a referral program SLA increase the responsiveness of both line managers and HR by instituting service-level agreements that spell out 67 expectations. (Aricent)

Action steps

Avoid these 4 high impact ERP program killers

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The 4 most impactful program killers Do not allow executives to win the argument that you dont need a formal ERP program and marketing effort because its part of their job Do not withhold rewards during the new hires probationary period Avoid referral spam where a high volume of messaging causes your targeted employees to eventually ignore all referral messages Avoid sending employee referrals to apply on the standard corporate careers website (not tagged)
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Did I succeed giving you a handful of useful ideas?

Any questions ?

JohnS@sfsu.edu

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