I see so many companies waste a ton of money and time on advertisements , job boards, ATS’s , specialized databases, magazine placements, search firms and much more but they neglect the most powerful tool at the disposal of corporate HR”s arsenal: “the employee referral program”. Dont’ get me wrong we sometime need to use everyone of these approaches to find talent but thing long term and invest in the biggest talent ROI there is.
The venerable Dr. John Sullivan has identified some of the key metrics about the employee referral programs ROI (return on investment): The highest volume source of hire.
- #1 in quality of applicants 88% of 73 major employers say…
- Referrals are the # 1 best source of above average applicants.
- #1 in quality of hire source.
- #1 in 1st year retention source.
- #1 in retention –new hires post 180-days is 32% lower than the norm.
I will also argue that a properly run employee referral program that has executive support is a great vehicle to build and strengthen employee buy-in to the goals of the company. When management respects employees referrals and pays out quickly, they are sending a clear message to employees. We value your recommendations and want to reward you without a lot of fanfare and process garbage.
An employee referral program does require some time investments and requires that the recruiting team be rigorous in following up on all referred candidates. You cannot give an ERP lip service, you have to work it hard or your employees will give up on it quickly. A few years ago I met to consult with one company who did not want to have an ERP program because it was afraid it’s employees would refer more people like themselves. Wow and who hired and managed these employees. Talk about a management team that should get fired!
A program does not need to be a huge expense, you can pull one together by simply putting in place an ERP policy, communicating it and then launching key campaigns for key recruitment needs. The recruiting team can then follow-up using special codes in their ATS or simply on paper for smaller campaigns. The key is to follow a vigorous and timely process (see Dr J’s links above).
I will argue that the biggest investment is a time one, and you could pull a program together for under $500. Obviously once the program works you will want to make some additional dollar investments, but by then it will be obvious that the program deserves it.
I always suggest a company runs a pilot ERP program first in an area where they have key recruitment needs so that they can show executives the value of such a program. If the recruiting team is dedicated and focused they will hit a home run and be hero’s and you can be sure a ton of executives will jump on the ERP bandwagon. And don’t let “there is no money to do this” answer stop you from getting a program off the ground. There is always one bold maverick somewhere in the company with the balls to fork up some cash to do what’s right. Remember, they need great people to make them look good.
Try not to be too conventional in your approach to an ERP, take some risks. Make sure you tie your efforts into social media like Linkedin, Facebook and Twitter because that is where your employees are very active and they have created networks that tap into not only their friends but also their professional networks. If you are running a solid ERP program you have nothing to worry about as your employees will be your best advocates and represent you professionally. But beware if your program is just a sham and does not have the proper resource investment, your program will not be very popular with your employees and your efforts are likely to be disparaged on-line.
Still not convinced? Look at the various big time efforts going on in the corporate world to try and carve out the ERP social media pie. LinkedIn, Monster, Facebook and many others not only have ERP or referral networks in place but they are currently trying to figure out how to best capture this market. You can expect some significant action in the coming months and years. In my crystal ball, I see one of the social media giants pulling the trigger shortly on a huge ERP announcement. The key to its success will not only be how it ties in the recruitment/HR angle (the easy one to make) but to construct a solution that will tie in to future social benefits for the rest of the business community. Only then will they have put in place a game changer and have first mover advantage in this profitable space.
So if you want to attract better talent and have better ROI for your corporate recruiting function then cut some of your current recruiting expenses and sit down and figure out how you can put in place an effective employee referral program or how you can jump-start your current one. I guarantee recruiting at your company will never be the same again.