How the Right Referral Program Can Get Candidates to ‘Yes’
For recruiters, one of the many frustrations of the tight job market has been the high number of candidates who turn down offers. John Vlastelica, CEO of the Recruiting Toolbox, early this year said he’s seen job acceptance rates at some organizations plunge from 90% to 40%.
Enter employee referral programs.
Research shows that having your employees act as your matchmakers offers multiple benefits, yielding higher-quality candidates while reducing recruitment costs. And effective employee referral programs can also help you do a better job closing the deal: Candidates who are referred to a company are 2.6% to 6.6% more likely to accept a job offer, according to one study.
Not all employee referral programs are created equal, though. Here’s how to increase your success rate:
Make submissions straightforward and seamless
When designing your referral program, it’s important to make it as easy as possible for your employees. That means limiting restrictions on who can submit referrals, accepting submissions regardless of whether there’s an open position, and simplifying the forms and steps required along the way.
And make sure to communicate clearly and consistently about the program, particularly its incentives. Most companies offer referral bonuses contingent upon a hire or upon the referral staying with the company for a specific amount of time. And while the topic might come up in casual conversation between colleagues, don’t assume your referral program is common knowledge.
It also helps to remind employees regularly about the program to keep it top of mind.
Design to drive diversity
Historically, employee referral programs have often reinforced the status quo. But when done right, they can actually increase diversity.
Research shows that traditionally referrals benefit white men more than women or people of color — white men are at least 12% more likely than any other group to be hired and receive larger salary boosts. A report from PayScale also found that a woman of color is 35% less likely than a white man to receive a referral.
Companies such as Accenture and Intel have tried to address this issue by increasing employee bonuses for diverse candidates.
“There is a monetary bonus tied to a diverse referral that gets paid out to employees once their referral joins full time,” says Melissa Davis, Accenture’s strategy campus inclusion and diversity lead. “It’s a great way to find great talent and provide an incentive for current employees to think about who they know in their network.”
When Intel doubled its bonus for diversity referrals, the company saw hires from underrepresented groups jump from 32% to 41%.
Think outside the box
Your existing employees are a great way to widen the aperture in terms of sourcing new talent, attracting candidates who might be “screened out” by traditional hiring methods as well as passive candidates who aren’t actively seeking employment.
But this only works if your employees are engaged in the hiring process, so think about different ways to incentivize participation. In addition to monetary bonuses, some companies offer perks and discounts, charity donations, recognition, or additional paid time off.
Experts at McKinsey suggest getting creative when it comes to referral programs. Some companies, for example, have implemented a “phone a friend” campaign, asking their employees to “cold call” someone from their network to discuss opportunities. Salesforce held events, called recruitment happy hours, where employees invited friends whom they wanted to refer over to the office for beers.
You can also boost referrals by encouraging employees to cast a wide net in terms of experience and geography.
Track your progress
You can’t manage what you don’t measure. You will need consistent, reliable data to tell you how the program is helping your offer acceptance rate and which types of relationships are most likely to result in a hire.
Metrics to measure a program’s effectiveness — beyond overall referral hires — could include the program’s workforce participation rate and the retention rate of new hires from referrals. At the same time, employee surveys are an important tool when it comes to tracking satisfaction with the program.
With the right metrics, you can tweak your program to improve outcomes and to respond to changing circumstances.
Final thoughts
Employees who reach out to their network can help you grow your talent pool. But it’s the quality connections that will yield the best results. Research from the Harvard Business Review found that “online only connections” — where referrers and candidates are only connected through social media — weren’t any more likely to “result in a good hire than people who weren’t referred at all.”
It’s worth remembering that your employees are essentially acting like matchmakers between the company and the candidate. With the right approach, referrals can help any company increase the odds of finding “the one” for the job — and getting them to say yes.
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