Building an Employee Referrals Machine: 5 Questions to Make You Rethink Your Employee Referral Program

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Sesame Mish

Sesame Mish is Content Marketing Manager at Greenhouse. She is also pursuing an M.S. in Integrated Marketing Communications at Northwestern University. Sesame held previous roles at Marketo and TechShop. Besides a love for marketing and the written word, she enjoys playing volleyball, spending time with family, doing volunteer work, and rooting for her favorite team, the San Francisco Giants. Connect with Sesame on Twitter and LinkedIn.

There’s no tool more powerful in recruiting than a strong employee referral channel. According to Staffing.org, 88% of 73 major employers surveyed said that referrals are the #1 source for above-average applicants. So it’s no wonder that referred employees make a measurable difference in your organization—they have higher retention rates, engagement, and performance.

Clearly, having referred employees is the goal. But unfortunately, getting employees to refer candidates is not always easy. This is why recruiting teams strive to put together structured and attractive employee referral programs.

At last year’s Greenhouse Summit, we featured a panel of seasoned talent directors titled “Building a Referrals Machine.” Our experts—Kinh DeMaree, Director of Talent at Axiom Zen, Katherine Starros, formerly Director of Talent at MomentFeed, and Marissa Huang, Head of Talent at Figma—spoke about how they have drummed up excitement and increased employee participation in their referral programs, leading to higher numbers of referred candidates.

So, as you look to build out and perfect your employee referral program, ask yourself the following 5 questions and then reference our experts’ tips & tricks below:

Question 1: What’s the best way to approach employees about getting involved with your employee referral program?

Kinh says not to just tell your employees, “Hey, you—send us some referrals!”. This method won’t cut it; there needs to be a much more structured program in place.

Instead, take the time to conduct one-on-one meetings with employees to show that you’re invested in them (and clearly, invested in making your program work). Many employees—especially younger or entry-level—don’t realize that they are good resources for referring candidates until you make it known that they are. (Boost their confidence!).

In these meetings, get them to start talking about their background—where did they go to school? Which classes did they take? Who are their previous employers? Who are they connected to on social media? The goal is to pinpoint names of those in their network who do the same type of work as they do and those who do other types of work. The point is that our networks are huge and when asked to refer people, we typically only consider those who do the same type of work we do. So, as a recruiter, help your fellow employees think outside the box. They know talented people from all corners of the (metaphorical) office; you just need to remind them that that’s the case!

Kinh also notes that you should use these one-on-one meetings to get to know employees better. Discover their stories—their personal stories about their experience working at the company, from the hiring process, to onboarding, to their present day. Then, take an inventory of these stories and communicate the most dynamic ones to all employees so they can use them in their own recruitment of potential candidates at networking events and the like. Kinh notes that it’s these authentic, personal stories that shape your employer brand and lure top talent to your organization.

Question 2: What’s the most effective way to structure your referral program?

Katherine noted two prevalent problems in her organization when it came to its employee referral program: 1) employees were frustrated that they didn’t have visibility into where their referred candidate was in the recruiting process, and 2) employees were disappointed that their referral didn’t get hired. With the latter, they took the rejection personally, thinking their pitch wasn’t good enough, which led to negative feelings about themselves and the referral process to the point where they no longer wanted to participate.

Katherine took immediate action to alleviate these issues by implementing a much-welcomed points system. The points are based on how far a candidate advances in the hiring process so that even if they are not hired, the employee still gets a reward and is thus motivated to continue networking and referring. Overall, Katherine stresses that an effective employee referral program focuses less on the end result and more on the process. Keeping employees engaged—and thinking positively about the program—is paramount.

Question 3: What’s the best way to set goals and track your employee referral program’s progress?

Marissa says that measuring the success of your referral program should be a priority. The best way to go about it is by setting very specific goals, e.g. “40% of hires should come from referrals” and “overall, there should be a 75% program participation rate from staff.” Make sure that the goals you choose are ambitious but achievable—they should be a step up from where you’re at now. And this may be obvious, but just because your competitors are doing it, don’t aim for goals that are impossible to achieve. Every company is different—a 75% program participation rate may be considered as success in one organization whereas a 25% program participation rate may be considered just as successful in another.

Question 4: How do you communicate and market your referral program within your organization?

“Early and often.” That’s Katherine’s philosophy for keeping in contact with employees on the status of their referrals. Without having an open stream of communication to show the employee that they’re an important and integral part of the process, the program won’t work.

She goes on to say that her team informs employees of the referral program as early as day 1! (Part of the job is to bring people with you!). It’s important that employees are brought into the recruiting culture from the get-go so that they continue to keep the program top of mind as the days go by.

In addition, her team makes sure to use their regular all-hands meetings to plug the program and get specific about what they’re looking for at that point in time: new grads, those with great people skills, etc. This is also a time where they introduce new hires, and if they were referred, say who referred them. This helps give recognition where recognition is due and magnifies the contributions that fellow employees are making. Here, employees get inspired by one another.

In addition, Marissa points out that placing cute reminders (read: treats and handwritten notes) on employees’ desks to remind them of the referral program is a lot more effective than sending the same mass email reminder over and over again. Case in point: make your reminder a motivating—not annoying—one.

Question 5: What sort of incentives do you provide employees for participating in the referral program?

Though Marissa notes that a lot of companies have given cash or equity as a “thank you” to participating employees, she thinks that the most effective motivator is showing employees—through numbers and metrics—exactly how their contributions are helping the company succeed. When your company is small and growth is the goal, this is a particularly powerful message.

Kinh also encourages you to not go the cash route (her team gives employees non-cash rewards, like a “stay-cation” with their family, an outing with their team, or a donation to the charity of their choice). But, she stresses that if you are going to give cash, to make sure you mark it up so that the tax is already paid. The last thing you want is for your employees to associate any sense of loss with their participation.

If you’re interested in this content, you’ll definitely be interested in what we have in store for you at Greenhouse Open 2016! Click the button below for more details on our annual summit and networking event, taking place this May in San Francisco.

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Referral Programs