Build an ‘Executive Referral Program’ to Supplement Your Executive Recruiting

Most corporate recruiting functions inexplicably restrict the effectiveness of their employee referral program by limiting senior management participation.

Instead, recruiting directors should design a unique “executive referral program” that encourages executives to make referrals for your high-level openings.

You might think a separate program is unnecessary because high-quality referrals should flow naturally from your executives as part of their job, but such an assumption would be a mistake. Instead, make every executive an “executive talent scout” by developing a specifically targeted executive referral program that periodically mines recruiting leads from your senior leaders. Such a program can produce amazing sourcing results without the need to pay either a referral or an executive search fee.

An Alternative to Executive Search

The explosion of social networking sites like LinkedIn and Facebook make it incredibly easy for almost anyone to identify and build relationships with talent for executive positions. As a result, now’s a great time to bring executive recruiting in-house.

Unfortunately, many executives are not well-versed in leveraging such tools to optimize their networking efforts, nor are they well-practiced at periodically scanning their networks for talent that may be a great fit for the organization outside their own downstream.

Encouraging your executives to provide referrals by crafting a program that improves upon their networking skills and proactively pulls recruiting leads from said networks for open executive positions is a cheap and effective way to augment or replace the use of third-party executives.

Focus on Referrals From Top-Performing Employees

While any well-designed employee referral program should excel at producing quality hires, programs that specifically target proactive referrals from top performers consistently produce the highest level of results. Unfortunately, many organizations prohibit their top performers (who happen to be managers or executives) from participation in referral programs. If your firm truly promotes based on ability, it only makes sense that your senior managers and executives are “top performers.”

It’s imperative that your corporate referral effort include two specific subprograms: proactively approaching your top performers working in key jobs, known as a “give me 5” program; and getting referrals from senior managers and executives through a high-touch “executive referral program.”

Why Executives Are a Powerful Referral Source

Successfully filling executive positions has the highest impact on the organization of any recruiting activity. Well-connected executives are likely to know, and thus be able to refer, more “outside” executives for these critical positions than anyone except a few superstar executive recruiters.

Executives are excellent referral sources because they generally have the most extensive networks of any employee group, save for your salesforce. Executives tend to travel more frequently, participate in benchmark studies, attend industry events, and assume leadership roles in professional associations and community boards.

Not only do your executives build extensive contacts through such efforts, they also build trust relationships (that are essential in recruiting). In addition, because of their work within professional organizations and their mentoring activities, executives are also likely to have extensive knowledge of “upcoming” talent in the industry.

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Elements of a Benchmark “Executive Referral Program”

There is no standard format for executive referral programs, but some of the key components include:

  • Proactive approach –- a critical design element of any top performer referral program is that you must proactively ask individuals for “names.” They might know the best people but never find the time to refer them. Although traditional referral programs rely on employees to take the initiative, executives are different in that they are severely time-challenged. Start by filling the calendar with regular times to approach them throughout the year. Then have your designated executive recruiter contact them during slack times of the day (usually early morning or late evening). Also try to convince them to look through their PDA, mobile phone, and email contact lists for names that fit your criteria. Encourage HR generalists and other senior HR managers to pump them for names during regular interactions and especially after they attend major industry conferences and events.
  • Immediate response –- the No. 1 success factor for long-term success in any type of referral program is responsiveness. The same holds true when it comes to executives referrals. If they make a submission and you don’t respond immediately, the odds are that they will not make another. When an executive gets disenchanted, they will spread the word quickly among their peers, and participation rates will drop. Because a high volume of referrals automatically kills responsiveness, it’s critical that you proactively limit the number of referrals to a few high-quality names per cycle per executive. In the same light, if an executive makes a referral and the person doesn’t get selected, contact them and let them know precisely why.

Define Your Referral Targets Clearly

  • Define your target jobs -– executive referral programs focus on getting your executives to refer highly qualified individuals for other executive jobs. Make sure that there is another process to handle “I have a friend” referrals for regular job openings.
  • Educate them about “who” to look for -– Accepting or rejecting referrals is a highly political action, so the key is to start out with clear guidelines and targets. In particular, educate them about the firms to target, those that produce executives, and senior managers considered to be desirable skill-wise and compatible with your corporate culture. Have them seek out executives with skills and experience in the areas of innovation, technology, and international business. Encourage them to bring back the names of top individuals from conferences and benchmarking sessions. Also encourage them to provide you with information on how this referral’s skills and experience fit your firm’s needs. Whenever an excellent executive referral is hired, provide a summary of their qualifications to all executives so that they can better understand the level and the type of candidate that you’re seeking.
  • Educate them about who to exclude –– Make it clear that you want executives to proactively seek out talent and not to automatically make referrals of individuals who approach you looking for a job. In addition, the program needs to have guidelines that discourage the referral of individuals they have not had the opportunity to directly observe in a work-related setting. In the rare case where a friend or family member might have superior qualifications, require your executives to provide clear evidence of their experience working with them and how their qualifications are truly superior. If an individual submits questionable individuals, give them immediate feedback, and if it is repeated, exclude them from the program for a period of time.

Improve Participation Rates

  • CEO support –- get the CEO to publicly announce support of the program in front of every executive and establish his/her expectations for participation. In addition, CEOs also need to actively provide names. To drive ongoing support, periodically make other executives aware that the CEO has found time to make executive referrals.
  • Other executive support -– get the entire executive team to agree to respond rapidly to any referral in their functional area; the initial response should be within 48 hours.
  • Set a quota or target –– sometimes you can increase participation rates by increasing expectations. Consider setting a “target” referral goal for each executive. If you can’t get the CEO’s approval for formal targets, consider setting “expectations” by providing but not requiring a suggested target number of referrals each quarter.
  • Recognize them -– executives are well-paid individuals, so standard referral bonuses might not have a large impact. However, you might find that recognizing their success and sharing it with other executives and the CEO might significantly spur their participation.
  • Reward them –- most executives do not require a bonus to make a referral. However, if rewards are offered for making executive referrals, provide an option for the executive to “opt out” of the bonus and instead donate the money to a charity of their choice or the standard corporate charity. You can also make providing successful referrals part of an executive’s bonus formula, succession plan participation, or criteria for promotion.
  • Add to job descriptions –– add to the job descriptions for all new executive positions the fact that they are expected to both encourage referrals from their employees and to make executive referrals themselves.
  • Track and report referral rates -– executives are almost always highly competitive individuals. As a result, tracking and broadly reporting the forced-ranked performance of all executives will spur any slackers to increase their participation.

Implement Critical Program Features

  • Assign a recruiter -– designate an individual recruiter to focus on executive referrals, answer questions, and seek out opportunities to talk with executives in order to gather names.
  • Encourage a social media presence –- a good percentage of all referrals at least partially originate from social media sites. Executives, because of their title alone, can easily attract many followers on social network and social media sites. Encourage them to open profiles but also provide them with templates, coaching, and samples so that they can get up to speed quickly. Periodically assess their profiles and online activities and coach them on how to improve.
  • Candidate experience –– any executive referral must be provided with an excellent candidate experience both during the initial referral and during the hiring process. Like or not, executives almost always feel that they are special, so you need to treat them exactly that way if you expect to land them now or in the future. Referrals need to be surveyed and metrics need to be kept to ensure that every aspect of the candidate experience process is positive and responsive.
  • Fast-track assessment –– part of responsiveness includes assessing potential hires differently than most candidates. That means that you must contact them quickly and arrange for a candidate-friendly assessment process.
  • Candidate feedback -– if an executive recommends someone, assume they are high-powered individuals with significant egos. As a result, you can’t just reject them out of hand as you might a standard candidate. Instead, provide feedback and guidance as to why they were not selected. If you frustrate the candidates they refer, your own executives will stop participating in the program.
  • Define who can make referrals — In order to increase responsiveness, limit who can participate in this special program. In most organizations, the number of qualifying executives and senior managers should be less than 25.

Miscellaneous Actions

  • Make it a database -– in addition to focusing on filling immediate executive openings, set as a secondary goal to build and continually add to a “who’s-who” database of all desirable executives. This means that top candidates not immediately hired remain in the database so executives and recruiters can build a relationship with them over time. There also needs to be a relationship-building process using CRM methodology to keep in touch with individuals who don’t fit a current need but you might want to hire in the future. This database can also be used for benchmarking, product evaluation, and learning, as well as recruiting.
  • Names-only option -– many executives know the names of other high-potential executives but they don’t automatically have copies of their resume and often they’re too busy to find the time to acquire it. Where possible, develop a process where they can merely provide names, and a recruiter will do the follow-up work necessary to capture the updated resume.
  • Conflict-of-interest issues -– avoid the common assumption that allowing executives to make referrals will result in a conflict of interest (meaning that they will refer and hire individuals just for the reward). In my experience, the exact opposite is true and most executives will go out of their way to avoid this perception. Educate them in the program literature about the few cases when it’s inappropriate to make referrals and always offer the option to refuse the reward or to donate it to charity.
  • Use metrics -– implement tracking metrics to identify the effectiveness of executive referrals. Especially focus on metrics in the areas of candidate quality, candidate diversity, new-hire on-the-job performance, new hire retention rates, and executive referral program ROI.

Final Thoughts

Despite their extensive track record of success, employer referrals have been limited in scope. It’s a missed opportunity not to use them in expanded areas, including university recruiting, recruiting contractors, and for executive search.

Like it or not, the expansive growth of the Internet has changed the world of sourcing and candidate relationship building forever. Where executive sourcing used to be the exclusive realm of a few highly trained external executive recruiters, it is now possible for others to supplement their work.

Now is the time to expand the scope and effectiveness of your employer referrals program (note: if you’re interested, I have a book on improving referral program effectiveness). Act now before your recruiting workload increases and you won’t have the time.

Dr. John Sullivan, professor, author, corporate speaker, and advisor, is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high-business-impact talent management solutions.

He’s a prolific author with over 900 articles and 10 books covering all areas of talent management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops, and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations/ organizations in 30 countries on all six continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR, and the Financial Times. In addition, he writes for the WSJ Experts column. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring," Staffing.org called him “the father of HR metrics,” and SHRM called him “One of the industry's most respected strategists." He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked No. 8 among the top 25 online influencers in talent management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees, and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on staging.ere.net. He lives in Pacifica, California.

 

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5 Comments on “Build an ‘Executive Referral Program’ to Supplement Your Executive Recruiting

  1. I would agree that talent Identification is now easier, but you are still left with a gap in the screening and closing of the candidate that is hard to develop internally. A 3rd party role in these areas would still be helpful.

    MARK

  2. All great points! I agree that it’s a missed opportunity to not use employee referrals in expanded areas like university, executive and contractor recruiting. As you mentioned, executives are a valuable resource for referrals as they have built up strong relationships with both experienced and upcoming talent. I especially like your recommendation: “Whenever an excellent executive referral is hired, provide a summary of their qualifications to all executives so that they can better understand the level and the type of candidate that you’re seeking.”

    We consider all of the key elements you’ve detailed with the employee referral programs we develop for our clients. Including Referral Max (http://www.ckrinteractive.com/referralmax) in the mix enables us to provide a customized, targeted ERP based on the client’s needs and goals, as well as provide reporting on the success of the program.

  3. I agree with Mark in that this seems like one more way to render a third party recruiter obsolete. And since I’d rather not be obsolete, and know that I can provide a valuable service I am going to comment on this article. There is an important role for a third party recruiter here and that is to objectively screen, vet, manage interview schedules, a lot of other things that in-house HR and other executives simply don’t have the time to do. The reality is that a 20-30% fee means nothing to a company that values human capital. If a company is looking to do it “cheaply”, as the Author suggests, and to burden top executives with one more project, I’m not sure their intentions are in the right place. Also, HR might feel obligated to hire a candidate that is the COO’s buddy or cousin just because it’s the COO’s buddy. Wouldn’t it be harder to reject a candidate because it’s “not the right match” (e.g. personality)if it’s an Executive’s referral. I think if a referral comes organically from executives, meaning without solicitation, it’s a beautiful thing and I fully support that method.

    Lastly, I want to mention there is software out there to help manage referral programs called myrefernet.com. It might be worth checking out if corporate HR does indeed want to begin such a program.

  4. The executive ranks of any organization absolutely should be encouraged, and pro-actively worked by recruiting (not HR), to provide appropriate referrals for appropriate positions. However, the executives’ intentions for providing referrals should be unquestionably for the good of the overall organization, not because they might receive some sort of tangible reward.

    I do think the suggestion of having a reward be in the form of a contribution (in the executive’s name) to a charity is interesting. But even that opens up a huge can of worms in regards to how to properly delineate what kind of charities would be acceptable for the company to be making contributions to. The local homeless shelter or volunteer fire department might be one thing…but the PC police would have a field day with drawing lines around entities that are political, religious, etc…talk about opportunities for a PR nightmare!

    Referrals from executives are like anything else…they can be extremely good but have to be managed. Attempting to solicit referrals from the executive ranks specifically by providing rewards is misguided and much more headache than it’s worth. Bottom line: A reward program for executive referrals is a bad idea.

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