Is your referral program a sinking ship?

Top 5 Reasons You’re Not Getting More Employee Referrals

To date, employee referrals remain the best strategy for sourcing quality candidates to fill your jobs. Even more so in an economy where people just aren’t leaving their current jobs. While a high percentage of retention rates for referrals hasn’t changed in more than a decade, they still only represent ten percent of new hires.

Why is this?

The fact that an employee would recommend a friend says a lot about how that employee perceives your organization: well enough to bring in a friend.

But the fact remains: Employee referral hires remain low.

Here are the top five reasons this is the case.

1. Your employees don’t know about your open positions.

This is the number one reason referral numbers are so low. Your recruiting team knows how many jobs are open to fill, but that info doesn’t get passed along to your employees. If no one knows, no one shows.

The best way to inform your employees is to offer a referral program with a strong reward system that incentivizes them to promote your jobs.

It’s a cost-effective way to manage your recruiting budget while engaging pre-screened, quality talent.

According to Glassdoor, referrals can increase hiring rates from 2.6 to 6.6%, beyond other sources.

2. You don’t prioritize referrals.

Your recruiter receives an application from a clearly referred candidate. You already know the value of a referral, yet referrals are slow to be contacted, or after an initial interview too much time passes before they hear from you again.

It’s the recruiter’s job to keep candidates in the loop throughout the recruiting process. This is accomplished by prioritizing and categorizing referrals as top talent.

How do you know they are top talent? Because your employee has already pre-screened them. They aren’t going to refer a person lacking the skills for the job.

Referrals should get priority treatment. Turnaround time is critical here.

With higher retention rates, a successful referral hire is consistently less expensive than others and definitely less costly than a hire that doesn’t work out.

3. Your referral rewards don’t incentivize employees.

This can go a number of ways.

One is you never change your rewards system.

If you offer the same reward over and over for every position available, ultimately employees will lose interest. Especially if that reward seems disproportionate to the work required to make the referral or you delay the payout.

Which leads to a second problem. You are slow to reward employees.

Usually, payout is tied to retention rates. The employee is promised a reward after the referral has been on the job for a certain length of time. Often the retention time is way too long to make payout worth the effort.

To overcome obstacles in your rewards program, measure which type of rewards are most effective, determine how many rewards have been claimed against how many are pending, and measure reward cost to other hiring costs and adjust up or down as necessary.

Also, most of the time it’s best to offer cash rewards than something else.

4. You exclude some employees from the program.

This is similar to number one. By excluding who knows about your jobs and who can refer candidates, you are limiting your reach potential for attaining quality hires.

You may want to open the referral process to include management and HR. You could even offer rewards to clients and former employees who left on a good note.

With some basic ground rules in place, you could go so far as to open up referral rewards to non-employees that have no relationship whatsoever with your organization. Sometimes people just love your company and know someone with the required skillset for a job opening.

Why limit yourself?

5. Your employer brand sucks.

No employer wants to admit this, but if the work environment at your organization is stale, lacking and, simply not motivating, this will kill any incentive for employees to refer their friends.

It doesn’t matter how inspiring the reward, company culture can have a huge impact on referrals.

Obviously, this requires some serious assessment of your employer brand to measure employee perceptions. But if referral numbers are low, it’s probably a good idea to take a look at your branding.

These are the biggest failures in your referral process. Referrals work well when proper focus is placed on these key areas so if you want to stop your referral rates from going down with the ship, I’d start with taking a look at the above.

Leave a Reply

Your email address will not be published.

Share This

Copy Link to Clipboard