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Is your employee referral programme a flop

One reason why employee referral programmes flop (and how to fix it)

Employee Referral

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Why your business needs talent scouts and not “bucks for buddies”.

Employee referral programmes (ERPs) always promise the moon to employers – massively reduced recruitment costs, much quicker time to hire and a welcome boost to retention rates. So why do they so often fall flat in reality?

According to recent research, 72% of employee referrals involve people who know each other well. This supports a widespread perception of ERPs as a “recommend a friend” scheme – and this simple fact can seriously undermine the success of the programme.

Introductions v recommendations

The problem boils down to a case of introductions versus recommendations. When an employee interprets an ERP as an invitation to recommend a friend, research shows that they will often be wary of doing so, fearing the risk to their own reputation if the person they refer isn’t deemed suitable – or even worse, is hired and then performs poorly in the role. This worry is accompanied by the risk of damage to their friendship with the candidate they refer. An introduction on the other hand doesn’t carry the same connotation of endorsement, removing the unease that many people feel in participating in ERPs.

A related problem is the fact that the close personal network of most employees is relatively small, especially when segmented by job role. In contrast, networks of “acquaintances” (such as LinkedIn connections) stretch far wider, with the average LinkedIn user boasting around 400 connections. Taking the view of a referral as more of an introduction rather than a solid recommendation opens up a much wider network of contacts to your ERP efforts, increasing your talent pool tenfold.

A final issue with the “refer a friend” perception of ERPs is that you run the risk of only hiring people cut from a similar cloth to your current workforce, limiting the diversity in your workplace and company culture. While ‘lookalike’ audiences are often seen as low-hanging fruit for time-poor in-house recruiters, there is a wealth of evidence showing the benefits to companies of building teams with different personalities, backgrounds and viewpoints, creating a more rounded and balanced organisation rather than a blinkered silo.

(Malcolm Gladwell’s influential book The Tipping Point emphasises the value of the “weak social tie” as a means of opening up the power of people networks in this way, and is well worth a read.)

The solution

Communication is the key to avoiding the above pitfalls and ensuring that your ERP is a hit, not a flop. Your ERP needs to be clearly pitched as a means of facilitating introductions, rather than recommendations, in order to neutralise any fears your employees may have in making referrals.

Furthermore, the focus should be on feeding your recruitment pipeline, rather than placing all of the emphasis on successful hires alone. Some ERPs don’t even reward the employee until their referred candidate passes the probation period, which gives a very clear signal that only ‘quality’ referrals will be rewarded. This approach also means that only a small minority of referrers will be recognised for their efforts. Instead, consider moving the point of reward earlier in the process – micro-rewards for referrals alone are one way of kick-starting your ERP, with increased recognition available as the candidate moves further through the recruitment process.

Whichever approach you choose to take, the way you structure and communicate your ERP is key to its success – and the benefits of quashing people’s fears about taking part is the first step towards a referral programme that works for everyone.

To see how a successful ERP works in the real world, check out our work with Assurant on their Talent Spotters campaign.