While the benefits of implementing a well-designed employee referral program are practically endless, it is fairly common for even the best programs to become stale after some period of time. Best-practice firms routinely garner at least 40 percent of new hires via their employee referral programs, and they use this measure, combined with employee participation rates, as a barometer of program health. If you have never achieved such performance, or have seen this metric decline, chances are your program needs an infusion of innovation. Luckily, employee referral programs are dynamic — many things can be done to upgrade or reenergize your program. The average organization will generally begin to experience program performance declines within six months of the program’s initial launch. If not addressed, these declines can spiral into serious problems within one year.
Action Steps for Reenergizing Your Referral Program
- Reinforce the employee’s role in building the team. Great referral programs are not about money; they’re about empowering employees to play an active role in building an all-star team for them to work with. Exceptional employees understand that working with the very best people helps them learn, reduces the time required to clean up other people’s sloppy work, and ultimately leads to a better chance at success. The major action to take is to change the perception of who benefits from the referral program. All promotional materials and communications must be redesigned to emphasize this program is “all about them.” The subliminal message is that if they don’t help by becoming 24/7 talent scouts, they might just end up working alongside a lot of pretty average people!
- Shuffle the advertising and marketing materials. All advertising, whether it be product or employee referral program related, begins to lose its impact over time. Professional marketers understand that there is this magic window between when a campaign establishes a foothold and when it becomes old and easy to ignore. Remember the Budweiser Frogs or the “whassup” campaigns? They came and went fairly quickly, each establishing a strong foothold. Work with your product advertising department to identify new and exciting ways to get your message across. Change the advertising copy often and rotate the placement or channels used to push your message. If you haven’t tried these, consider placing marketing materials on cafeteria tables, using an A-frame in the lobby, paycheck stuffers, placing referral messages on employee scratch pads, and alerts over the phone and the computer to remind employees to refer top people that they just finished talking to via phone or e-mail.
- Use proactive referral tools. Even new or reenergized referral programs produce less-than-optimal results when they rely on advertising and word of mouth alone to produce referrals. Instead of the standard “wait for referrals” approach, recruiters need to proactively seek out top performers in targeted jobs and ask them directly for names. It turns out that top performers are often too focused like lasers (and they seldom need the extra money) to find time to make referrals. What is needed is a program to directly approach them face-to-face during breaks in management meetings and after their return from a trip to an event and then to ask them specifically for the names of the people that really impressed them.
- Make the business case to line managers. Even if you’ve got the budget for the referral program, you will need to reenergize hiring managers if you want to reenergize your program. Rather than bombarding them with memos and promotional materials, get their attention by reminding them of the dollar impact that referrals can have on their departments. Start by showing them the superior performance and retention rates of referees. Then go one step further and quantify that performance in dollar terms — something they clearly understand. If their department is low in referrals, show them the exact dollar costs as a result of having low departmental referral rates.
- Gather metrics for continuous improvement. Surveys reveal that well over 75 percent of referral programs do not use metrics to monitor the performance and health of their programs. An even greater percentage of organizations do not evaluate the on-the-job performance of new hires by source. Without this crucial metric, you cannot calculate the added value of referrals. Other metrics need to be kept on voluntary turnover, offer acceptance rates, and termination rates. Employee participation rate by reporting group can be a particularly telling metric.
- Distribute ranked referral metrics to managers. It’s not enough to gather metrics about referral programs. If you really want to drive performance, distribute ranked referral results by individual manager. The report should go to each manager every month so that they can see by name where they rank against others on producing quality hires. There is no tool that will get managers attention faster than distributing ranked metrics.
- Reinvigorate “event” referrals. Getting referrals from employees who attend events is the most underused approach to referrals. Every year, literally hundreds or thousands of your employees attend seminars, association meetings, and other professional events and come home with nothing but a hangover. Referral programs must work with managers and corporate travel to identify which individuals are attending professional meetings and to encourage them to “bring back” the names of the very best people they encounter at these events.
- Educate your employees on how to talk to top talent. You might not realize it, but most employees actually don’t know how to meet and screen individuals for referrals. As a result, they have a bad tendency to refer their close friends or relatives. However, if you are willing to educate them, you’ll find that referral volume and quality will go up significantly. The key to employee education is to help them understand what questions they can ask, and what tools and approaches they can use to identify and to strike up a conversation with the best talent they meet. Teach them that it is okay to use community events, charity events, association meetings, list serves, and blogs to identify potential candidates for referral. You should also consider having individuals who consistently produce great referrals to give talks or mentor others.
- Accountability and budget allocations. It’s amazing how many organizations delegate the referral program to a junior person or intern. If you want to reenergize your program, rotate someone into the job with a background in marketing. Managing the referral program should be someone’s full-time job, and the percentage of the recruiting budget that is allocated to it should correspond with the percentage of total hires it produces. The fact that referrals seem “easy” is no reason to under-appreciate and under-fund them. Getting “top performer” referrals requires great talent, time, and money.
- Reinvigorate the rewards. Although some well-designed referral programs produce great results without any monetary rewards, most research shows that offering a monetary reward increases both the number and quality of referrals. This does not mean that you should offer a lot of money ($1,500 is the recommended maximum), but it does mean that you should vary the rewards and change them periodically to keep people excited. Many firms successfully use drawings for trips, luncheons with the CEO, a reserved parking spot or other non-cash items. The key here is to vary them and to see what works and what doesn’t. When something does work, it generally needs to be changed less often — about every six months or so.
- Hold referral parties. Hold quarterly “referral parties.” Eli Lilly is famous for holding “Rolodex parties,” but given technological advances, PDA or email dump parties might be more appropriate. You schedule time in key targeted departments, during a slow period, to meet in their conference room with snacks or even lunch to get employees to give up the names of key individuals that they met recently. These events work particularly well after a large percentage of the team has just returned from a large professional event or convention.
- Develop a slogan. Referral programs are no different than any advertising or marketing campaign designed to get people to do something you want. As such, borrow from the advertising world and develop a slogan that helps stake out mental real estate for your program. Much like the Budweiser campaigns, change your slogan periodically to keep the excitement level up. Some sample slogans include:
- “It’s all about you.”
- “You can help us ‘pick the team.'”
- “If you happen to be playing with Tiger Woods, can you get his card?”
- “Browse your Rolodex for us.”
- “We know that you know the very best people.”
- “Give it up.” (your best referrals)
- “You know somebody, don’t you?”
- “Help us build a great team, so we can all win.”
- “Simply the best…that is who we need.”
- “We can’t be champions without your help.”
- “Every employee is a talent scout.”
- “If you want to work alongside the very best, be a talent scout.”
- ‘Drop a dime’ on the best people you know.”
- Referral cards. If you don’t currently have them, there are few better ways to reinvigorate the referral program than referral cards. Referral cards are attention-getting cards (Southwest Airlines used mock boarding passes) that you give to employees to hand to people they meet in their everyday business and personal life who have a special skill. They say something very complimentary (like, “Your customer service skills are amazing!”) and suggest that they might fit well with your organization. These cards work the best when you’re looking for customer facing skills because we see those people every day when we purchase things, eat lunch, travel, or return things.
- Referral alerts. Announce in the mailroom, through email, or even over the intercom that there is a critical need for certain position. Just like blue-light specials and amber alerts, this program can excite people and spur action in a short period time.
- Manager talk. Have key managers give talks at scheduled management meetings characterizing the importance of referrals. Have them share a few success stories, pointers, and program updates. This will generally energize employees who frequently think that only HR cares about referrals. You can get the CEO to announce that she is a big supporter of referrals and has even made referrals herself.
- Diversity referrals. It’s a common misconception that referral programs have an adverse impact. If you want more diversity, it’s important to reinforce the referral program contribution to diversity hiring. Start by talking to minority employees and ask them to pull out all of the stops. Encourage all employees to seek out diversity referrals and periodically report diversity-hire ratios to alleviate any fears.
- Give referrals high priority. Nothing deflates a referral program faster than having a slow response rate to employee referrals. Prioritize referrals and develop a system to screen all of them within five days. To keep the energy level up, respond rapidly to the employee and the candidate and be honest as to the reasons why someone is not selected. Never delay payments or add restrictions on who can participate; such features are program killers must be eliminated immediately.
- Awards and recognition. Providing awards and recognition at all-hands meetings is a simple, effective way to remind people of the importance of referrals. Awards should be given to the manager who encourages their department to produce the most referrals and mention should be made of the number of top performers in the organization who got their jobs through referrals.
- Branding and winning awards. Nothing spurs employee referrals more than winning “best place to work awards” as well as functional awards for excellence in each individual business area.
- Coordinate different referral programs. If your company is one of the many that uses an external referral tool like Jobster, H3, LinkedIn, and even Jigsaw, they should be coordinated with the standard referral program in order to avoid confusion and to produce the best overall results.
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Referral programs must be updated and reenergized on a regular basis if they are to remain vibrant and effective. It’s more important to do new things and to change program elements than which tool or approach to select to reenergize the program. Track program performance on a graph so that you can see in advance when returns and quality are slipping. The ideas presented here represent a tiny fraction of the approaches that companies can and have used to reenergize their programs. If you have a referral program that is producing less than 20 percent of your hires, the time to act was yesterday.