4 Ways To Fire Up
Your Employee Referrals
You know that employee referral programs (ERPs)
are among the most successful and
cost-effective strategies for new-hire
prospecting.
The facts speak for themselves: Referred
candidates are less expensive to recruit and
more qualified; they stay at your company
longer; they adapt to the company culture more
quickly; and they accept your offer more
readily because they already know and trust
the employment experience your company will
deliver.
So how can you improve a winner? As you dust
off your ERP in an improving job market, Dave
Lefkow, an interactive solutions consultant
for HR giant TMP Worldwide in Seattle,
suggests these four upgrades:
1. Re-evaluate goals. Your reliance on
referrals-compared to other recruiting methods
and the dollars you allocate-may need tweaking
as the economy rebounds. To keep the program
working well, you’ll need to know whether your
employees embrace it, how often referrals are
made, which divisions of your company are most
active and why, and your expenses compared to
your returns. Track not only costs, but also:
• Quality of hires through tenure,
productivity and promotions.
• Activity by department and job function.
• Employee satisfaction with the program.
• Success rates and number of hires during
specific periods.
2. Look beyond cash. Money may not be the sole
reason employees make referrals. They want to
see their friends land great jobs. That’s why
boosting the bounty won’t necessarily increase
the number of referrals. You can increase
participation without ballooning expenses by
including different types of rewards.
Examples: A point system that adds up to
prizes like vacations or major gifts; free
passes to the employees’ choice of local
cultural or seasonal events; paid housekeeping
or babysitting; or even extra time off.
3. Automate. Putting the details of a referral
program online-including rewards, rules and
referral forms-saves HR time and money.
Off-the-shelf programs or third-party ERP
hosts can administer bonus payments
automatically, track the number of referrals
made and let employees check on the status of
job candidates referred.
4. Step up the promotion. ERPs can’t be
launched and then forgotten. They require care
and feeding. Ongoing promotion can be as
simple as an e-mail, an online newsletter,
postcards, paycheck-stuffers or a mention in a
company publication.
Source: “Improving your employee referral
program and justifying your investment,”
ERexchange, erdaily, Feb. 21, 2002.
New Stats On Employee Referral Programs
Eighty percent of the respondents to the 2001
Employee Referral Program Survey by the
Society for Human Resource Management and
Referral Networks said cost-effectiveness was
a primary benefit of implementing a referral
program.
On average, each exempt hire made via employee
referrals costs an organization about $800 –
the most frequently indicated reward amount –
given my 32 percent of respondents- was $500
to $1,000; each nonexempt employee costs an
organization approximately $333.
Some tips to designing a successful employee
referral program are:
• Publicize successful hires. Send a company
wide e-mail recognizing contributions, or when
issuing your report of resume flow, interviews
conducted, and individuals hired-make the
notation of ER beside the name - indicating
Employee Referral.
• Keep rules simple. Try to create guidelines
that are easily understood and address sticky
situations.
• Maintain clear records. For example,
timedating each resume will alleviate the
discrepancy between two individuals claiming
they have referred the same candidate.
• Build momentum. Increase the number of
referrals being submitted by holding a prize
drawing on a quarterly basis for those who
have made referrals.
• Officially kick off the program annually
with a new theme or updated look. Something as
simple as green 3D-like sunglasses helped kick
of the Sea Green Employee Referral Program.
Source: Employment Management Today, Summer
2001
Quick Tip:
Encourage co-worker friendships. Reason:
Employees with buddies at work are more
satisfied with their jobs, pay and benefits,
according to a Gallup Poll. The stats: 75
percent of workers with good friends on the
job plan to stay with their company for at
least another year, compared to 51 percent
with no friend at work. Recruiting tips: Hold
a “bring a friend to work day” or start
offering a program to “hire them both”: a
qualified prospect and his equally qualified
friend or colleague.
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