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

6www.drjohnsullivan.com

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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%

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What are the business reasons

for focusing on referral programs?

Part I

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Referrals produce the highest volume

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Referrals are #1 in volume

Source popularity Volume

1. Referrals 28.0%

2. Job boards 20.1%

3. Career site 9.8%

4. Recruiter initiated 9.1%

5. College 6.6%

6. Rehires 4.3%

7. Social media 3.5%

8. 3rd party 2.8%

9. Print 2.2%

10. Temp to hire 2.1%

11. Career fairs 1.9%

12. Walk-ins 0.8%

Source: CareerXroads 2012

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Referrals are a high volume source

Reached 90% of it’s hires from employee referrals

Ernst & Young and Deloitte’s ERP’s both reached approximately 50% of all hires last year

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Referrals produce high quality applicants

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#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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Benchmark firms that you can

learn from

Part II

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Benchmark firms that you can learn from

AmTrust BankDeloitteEdward Jones AccentureErnst & YoungDaVitaAricentChildren’s HospitalOwens CorningAccoloCACI InternationalAcumen Solutions

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Let’s start off with 4 high impact

strategic action steps

Part III

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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 jobsJobs with a high previous referral success rateHard to fill jobs“Sudden” key vacancies

Tip – begin with a shortlist of targeted jobs and then add positions

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 employeesHigher quality hires will improve business results

and thus raise employee stock value and bonusesIt’s part of the responsibility of being a team playerYou will be recognized for “helping the team”You will learn more from higher-quality new hiresYou won’t have to work alongside slackersNote: A feedback loop is required to tell employees whether they made a “junk” or a “star” referralAlso show them the correlation between improved business results and a higher % of ERP hires

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2 examples… referrals don’t 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 you’re promoted

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“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

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Strategic action #4

Broaden the program and expand it’s 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 ERP’s also cover openings for executive positions

Focus on boomerangs – encourage your employees to target your best corporate alumni… (also allow them to make referrals)

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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 eligibilityExecutives 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)

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Expand eligibility

Expand eligibility to non-employees

Open up referrals to non-employees including FamilyContingent workersConsultants and vendorsCustomers 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 firm’s 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 (Children’s 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 firm’s 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 you’re exactly the kind of person we’d like to talk to. If you’re happy where you are, I’d never ask you to leave. But if you’re thinking about a change, give me a call.This could be the start of something great.

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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 $1,500…amounts above $1,500 have proven to have little impact

The best ERP’s 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 WOW’s 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

Expedia’s 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 features1. Referrals are tagged and prioritized in the ATS2. The referring employee gets an e-mail “thank

you” within 24 hours3. The referred candidate gets a “thank you”

phone call within 24 hours4. 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)

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Technology features

Technology features (continued)6. Employee referrals can be made directly from

their mobile phone7. Referring employees have a referral scorecard8. 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

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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)

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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 expectations. (Aricent)

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Action steps

Avoid these 4 high impactERP program killers

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The 4 most impactful program killers

Do not allow executives to win the argument that… you don’t need a formal ERP program and marketing effort… because “it’s 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)

Any questions ?

JohnS@sfsu.edu 70

Did I succeed giving you a handful of useful ideas?