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Employee referral program fifty percent of hires

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Employee referral program fifty percent of hires

  1. 1. EMPLOYEE REFERRAL PROGRAM “50% is the new ERP target” © Dr John Sullivan 1www.drjohnsullivan.com
  2. 2. 2 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%
  3. 3. 3 What are the business reasons for focusing on referral programs? Part I
  4. 4. Referrals produce the highest volume
  5. 5. 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
  6. 6. 6 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
  7. 7. Referrals produce high quality applicants
  8. 8. 8 #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
  9. 9. 9 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
  10. 10. 10 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
  11. 11. 11 Referrals produce quality hires
  12. 12. 12 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
  13. 13. 13 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)
  14. 14. 14 Referral hires have high retention rates
  15. 15. 15 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)
  16. 16. 16 Benchmark firms that you can learn from Part II
  17. 17. 17 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
  18. 18. 18 Let’s start off with 4 high impact strategic action steps Part III
  19. 19. 19 Strategic action #1 Prioritize and focus your ERP effort
  20. 20. 20 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
  21. 21. 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) 21
  22. 22. 22 Be careful Homer will refer people also
  23. 23. 23 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)
  24. 24. 24 Strategic action #2 Do not overemphasize monetary rewards
  25. 25. 25 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
  26. 26. 26 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
  27. 27. 27 2 examples… referrals don’t require $ bonuses  Reached and maintained a +70% referral rate with no $ rewards  Edward Jones reached 55% with no bonus
  28. 28. 28 Strategic action #3 Be proactive in seeking out referrals
  29. 29. 29 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
  30. 30. 30 “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
  31. 31. 31 “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
  32. 32. 32 “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
  33. 33. 33 Strategic action #4 Broaden the program and expand it’s eligibility
  34. 34. 34 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)
  35. 35. 35 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)
  36. 36. 36 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)
  37. 37. 37 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)
  38. 38. 38 Next: A long list of tactical action steps that can dramatically improve results
  39. 39. 39 Action steps Tips for improving referral volume
  40. 40. 40 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)
  41. 41. 41 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
  42. 42. 42 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)
  43. 43. 43 Action steps Educate your employees
  44. 44. 44 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
  45. 45. 45 Google has a story inventory A story Inventory for recruiters and employees
  46. 46. 46Source: Whirlpool
  47. 47. 47 Action steps Set referral expectations in order to minimize “junk referrals”
  48. 48. 48 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
  49. 49. 49 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+
  50. 50. 50 Action steps Referral cards can have a high impact
  51. 51. 51 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.
  52. 52. 52 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)
  53. 53. 53 Action steps Utilize high-impact but low-cost rewards
  54. 54. 54 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)
  55. 55. 55 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
  56. 56. 56 An example… rewarding frequent referrers Expedia’s frequent hire club $1000 plus a travel coupon for each additional hire
  57. 57. 57 Action steps Technology features to consider
  58. 58. 58 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)
  59. 59. 59 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
  60. 60. 60 Action steps Administrative actions for improving program results
  61. 61. 61 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)
  62. 62. 62 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)
  63. 63. 63 Action steps Avoid these 4 high impact ERP program killers
  64. 64. 64 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)
  65. 65. Any questions ? JohnS@sfsu.edu 65 Did I succeed giving you a handful of useful ideas?

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