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Dr John Sullivan


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%


Part I

What are the business reasons for focusing on referral programs?


Referrals produce the highest volume

Referrals are #1 in volume Source popularity

1. Referrals 2. Job boards 3. Career site 4. Recruiter initiated 5. College 6. Rehires 7. Social media 8. 3rd party 9. Print 10. Temp to hire 11. Career fairs 12. Walk-ins Source: CareerXroads 2012

Volum e 28.0% 20.1% 9.8% 9.1% 6.6% 4.3% 3.5% 2.8% 2.2% 2.1% 1.9% 0.8% 10

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


Referrals produce high quality applicants

#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

High quality applicants ďƒ˜ Although only 7% of job applicants came from employee referrals ďƒ˜ A whopping 40% of ERP candidates get hired

Source: 2013 JobVite Survey

High quality applicants Referrals have the highest interview to hire ratio ďƒ˜ Data analysis by SilkRoad reveals that 17% of referral applicants are interviewed ďƒ˜ And 25% of those interviewed are hired (#1)

Source: Silk Road 2013

Referrals produce quality hires

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: 2011


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

Referral hires have high retention rates

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

Part II

Benchmark firms that you can learn from


Benchmark firms that you can learn from AmTrust Bank Deloitte Edward Jones Accenture Ernst & Young DaVita Aricent Children’s Hospital Owens Corning Accolo CACI International Acumen Solutions

Part III

Let’s start off with 4 high impact strategic action steps


Strategic action #1

Prioritize and focus your ERP effort

Strategic action #1 Focus ERP efforts on high priority jobs including:  Mission critical jobs and business units  Revenue generating jobs  Jobs with a high previous referral success rate  Hard 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 ďƒ˜ For every open job, it selects a few employees based on the likelihood that they will know the right person ďƒ˜ As a result, Accolo has averaged 8 referrals for every job (#1)

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

Strategic action #2

Do not overemphasize monetary rewards

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

Strategic action #2 You can build a “help the team” mentality… by emphasizing these benefits to employees  Higher quality hires will improve business results and thus raise employee stock value and bonuses  It’s part of the responsibility of being a team player  You will be recognized for “helping the team”  You will learn more from higher-quality new hires  You won’t have to work alongside slackers Note: A feedback loop is required to tell employees whether they made a “junk” or a “star” referral Also show them the correlation between improved business results and a higher % of ERP hires

2 examples… referrals don’t require $ bonuses

 Reached and maintained a +70% referral rate with no $ rewards  Edward Jones reached 55% with no bonus


Strategic action #3

Be proactive in seeking out referrals

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

“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

“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

“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

Strategic action #4

Broaden the program and expand it’s eligibility

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 subprogram 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)

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)

Expand program eligibility Expand eligibility  Executives 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)

Expand eligibility Expand eligibility to non-employees Open up referrals to non-employees including  Family  Contingent workers  Consultants and vendors  Customers  Board members  Corporate alumni (Internosis, Clearlink, CACI, Verinon)

Next: A long list of tactical action steps that can dramatically improve results


Action steps

Tips for improving referral volume

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 (  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)

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

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)

Action steps

Educate your employees

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

Google has a story inventory A story Inventory for recruiters and employees


Source: Whirlpool

Action steps

Set referral expectations in order to minimize “junk referrals�

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

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+

Action steps

Referral cards can have a high impact

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.

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)

Action steps

Utilize high-impact but low-cost rewards

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)

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

An example‌ rewarding frequent referrers Expedia’s frequent hire club $1000 plus a travel coupon for each additional hire


Action steps

Technology features to consider

Referral technology features Impactful technology features 1. Referrals are tagged and prioritized in the ATS 2. The referring employee gets an e-mail “thank you” within 24 hours 3. The referred candidate gets a “thank you” phone call within 24 hours 4. 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)

Technology features Technology features (continued) 6. Employee referrals can be made directly from their mobile phone 7. Referring employees have a referral scorecard 8. 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

Action steps

Administrative actions for improving program results

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)

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)

Action steps

Avoid these 4 high impact ERP program killers

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)

Did I succeed giving you a handful of useful ideas?

Any questions ?


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Zalp Webinar - Raising your employee referral program results to 50 of all hires  

Zalp combines the effective reach of social media with the valuable potential of employee referrals to source the best quality candidates.