By Dr. John Sullivan & Master Burnett
Employee referral programs are a lot like bottles of wine. Most companies have at least one, the vast majority of which are average or less than average, and only a few ever truly become exceptional. But the similarities don’t stop there.
When the blend of features is perfect, everyone talks about their experience with friends and family, and the producer ends up making a small fortune on a modest investment. Just as great wines go bad if not handled correctly, so do great referral programs.
In studying the design of referral programs that produce phenomenal results, it became clear that the top-producing programs clearly do things differently and execute nearly everything at a level of quality most in HR could barely even fathom.
One of the design elements that distinguishes programs producing more than 50% of an organization’s hires from programs producing 20% is a program marketing strategy that hyper-segments the employee population and communicates with each segment in a much more effective way.
Understanding Your Actual Referral Activity
In organizations with informally managed programs, research shows that more than 60% of referrals were not initiated by the employee, but rather by individuals outside the organization approaching the employee and asking to be referred. Presumably, these candidates were hoping to avoid the “black hole” of applicant death known as the career site.
Given this high concentration of applicant-initiated activity, it is a logical conclusion that in programs where this is occurring, the percentage of referrals actually qualified would be only marginally better than the career site itself, which we know is often 1:1000.
On the flip side, programs with formal, dedicated management often find that 1:5 referral is qualified, a significantly higher percentage by any measure.
The plain truth of the matter is that lacking formal leadership, most programs take on a path much like that of a leaf in a windstorm; the external forces control the destiny of the leaf.
The concept behind employee referrals is simple. Talented employees who desire to work alongside other talented people would seek out such talent, build a relationship with such talent, and eventually ask such talent to consider working with them. It’s a concept that works really well in organizations that demonstrate both trust in and respect for employees that follow through on the concept, but few companies actually trust and respect their employees!
The primary mechanism by which top-performing programs prove they trust and respect employees is by delivering a world-class program experience. One element that program participants in top-performing programs indicated was of value and that they would like more of was program communications.
Communicating to Build Program Participation
Assuming your organization is committed to demonstrating trust and respect for employees by servicing employee referrals in a world-class way, the next step is to drive program participation. This is a science that top-performing programs use to influence the flow of inbound referrals.
For example, if five hires are needed in a specific job family in June, and the average cycle time to produce a hire is 30 days, and it takes five referral candidates to produce a single hire, then in many formally managed programs, a messaging campaign is initiated with the goal of producing 25 referrals in late April or early May. Not only are the communications tied to forecasted demand, they are designed in such a way to influence qualified referrals while discouraging generic referrals.
The program marketing secrets we uncovered that lead to greater program participation include:
- Targeted messaging to hyper-segmented employee populations.
- Delivery of messages using a minimum of three different channels.
- Design of messages to provide immediate value to recipients beyond application to the referral program.
- Scheduling of messaging campaigns based on workforce planning forecasts.
Each of these marketing program design characteristics is discussed below.
While an average program may draft employee referral program messages once a quarter, the message is usually generic in nature and broadcast to the entire organization. Top-performing programs, on the other hand, may generate thousands of campaigns a year, some of which may be targeted at only a small handful of employees.
Segment messaging may include:
- Employee location
- Job family
- Job performance rating
- Labor type (employee, contractor, consultant, etc.)
- Previous employer
- Past referral success/failure
- Diversity characteristics
- Affinity group membership
- Management level
- Preferred method of communication
- Educational background (degree, institutions attended, etc.)
While some messages are relevant to the entire employee population, the vast majority are not.
The secret is to avoid “dumbing down” messages to make them relevant to everyone and instead deliver extremely relevant messages to much smaller populations. It may seem like a lot of work, but the payoff makes it well worth it.
Three-Pronged Message Delivery
Another key learning from the research is that not all employees pay attention to the same channels of communication. Some people read posters, while others ignore them. Some people read every email, while others employ filters to sort out only the most important. Some people prefer face-to-face, while others require written materials.
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What the research shows is that you need to leverage at least three channels if you want your message to reach a majority of the employee population. What happens if you don’t use at least three? The research shows 72% of employees were unable to recall basic program features when prompted, compared to 43% in companies using three or more.
The key we found was the number, not necessarily the use of specific channels. While email was common among nearly all top-performing programs, there were a significant number of top-performing programs that do not leverage email at all, like construction companies.
The most common sources of communication used include:
- Signs in public places (have you considered bathroom stall doors?)
- Intra-office mail
- Voicemail broadcasts
- Team/Departmental/Functional meetings
- Mail sent to employees homes
- Payroll notices/Stubs
Design Messages to Provide Immediate Value
More often than not, even the best marketing efforts found among average programs involved messages that were informative but not of value. Top-performing programs, on the other hand, refined the ability to develop messages that had value outside their immediate application to the employee referral program.
For instance, emails alerting employees in a specific location about mission-critical or hard-to-fill jobs may also contain guidance on how to use an online directory to find old friends or former colleagues. Because the process of how to find someone has relevance outside the act of making referrals, there is a much better chance the message will gain traction and lead to employees trying the activity suggested.
Other messages might introduce funny facts about the organization or tips on using an employee benefit in an innovative way that prime employees with interesting stories they can tell others when talking about their employer.
Some of the elements that can be designed into messaging campaigns to provide value include:
- A summary of key business performance indicators in a language the average employee could understand.
- Tips/guidance on tools and techniques employees can use to identify suitable talent.
- Wow stories that provide “interesting” conversation material for employees to chat about with people outside the organization.
- Updates on what urgent needs exist and priming questions that might help employees figure out who they know. If I were to ask you a very specific question, say for instance, do you know any financial analysts that used to work for Bear Stearns, it would be much easier for you to answer quickly than if I were to ask you a very broad question.
Messaging Campaigns Tied to Workforce Plans
The final element that differentiated marketing of the employee referral program between top and average programs was the existence of a strategy to coordinate the delivery of messages with needed workforce activity.
Several of the firms that best 70% of hires via their ERP year-over-year have proven that you can reverse-engineer what messaging is needed and when it must be sent to produce a targeted flow of referrals as needed.
By using yield model calculations, program managers can determine how many referrals are needed to make a hire, how many referrals are generated in response to specific campaign types, what factors increase referral activity, etc. Combining this data with traditional staffing analytics enables the program coordinator to proactively manage the referral program, versus allowing the winds of the organization to control its destiny.
Managing a world-class employee referral program isn’t something you do in your spare time. It requires a relentless focus on quality and execution, just like producing a fine wine.
California wine producers proved years ago that wine-making is a science, not an art, and managing an employee referral program is no different. When it comes to program management elements that make a difference, program marketing is right up there with managing the participant experience.
Marketing a program in a world-class way entails driving program participation to meet specific program goals and objectives. If you have a world-class experience but are not achieving significant referral volume, program marketing might be your issue.
However, if you don’t have a system for delivering a world-class participant experience, you shouldn’t even be thinking about program marketing yet. The cardinal rule? You can’t start with a crappy program and slowly make it better if you need mass participation to drive significant hiring volume.