Here’s a story of “creative recruiting” worth recounting…a Nursing organization in a small East coast city was extremely frustrated with the lack of qualified nursing personnel they were able to attract.  They tried everything from billboard advertising to radio ads; but their efforts were consistently falling short of their needs.

Finally they devised a plan that worked.  They sent an e-mail to every Nurse who currently or previously worked for them or who had registered with them at any time over the last five years, asking for referral names of qualified RN’s. They offered every person who e-mailed to them the contact information on an interested referral, the chance to participate in a drawing for an all expense paid trip for 2 to an island resort in the Caribbean.

The offer ended up on a couple of the social networks and the organization got over 120 referral responses.  They subsequently hired 6 RN’s from this program… and one of their referring sources got a great paid vacation.

The company calculated that they actually saved money when compared to the costs of using more traditional recruiting methods to find and hire 6 qualified RN’s.  Nice “Creative Recruiting”!

Did you know that referred individuals who become employees…

• Stay at your company longer
• Are less expensive to recruit
• Are often more qualified
• Adapt to your company culture more easily

 To implement a referral program many companies offer a bounty to encourage existing employees to refer friends and acquaintances for job openings. The bounty can be in the form of a cash payment, merchandise, extra time off or some other incentive.

 There are numerous cases, however, when a company’s ERP (Employee Referral Program), just doesn’t work well. This often happen when the program is not sufficiently promoted by the company or there is a lack of communication about the program within the company. One of the keys to a successful referral program requires the company to follow-up with any employee concerning the status of any person that employee referred…not doing so may insure that the employee  might never make another referral. Lack of communication from the company can easily lead to a “Why bother?” attitude from the employee.

 From the employer’s perspective, effective referral programs must track costs like bonuses paid and promotion expenses incurred for a specific campaign. Surveys should be conducted periodically to check employee satisfaction with the referral program and to ask for input to improve the program. Management should also track the success rates and number of hires that are made using the referral program during specific periods.

 According to a recent study by CareerXroads, employee referrals on a national basis account for 28.5% of all external hires. That’s a statistic to really consider if you want to increase your success in recruiting and lower your recruiting costs.

 To improve or maximize the effectiveness of an ERP, it’s important to set measurable goals.  Goals like ”increasing the percentage of hires from employee referrals from 15% to 20% over the next 12 months”. You will also want to measure how the return on your investment in a referral  program compares with the results of other recruitment options you use.

 In addition, for ease of use and consistency, automate as much of your ERP as possible and continue to promote the program through e-mails, newsletters and employee rewards. 

 Finally, a secondary source for referrals that is both effective and increasingly popular is social and professional networking using sites such as LinkedIn, Facebook, Plaxo and Twitter for recruiting.  Social networking enables candidates to network their way into target companies on the strength of their existing business or personal relationships. It also allows employers to identify passive candidates they might otherwise not find.  

Pros of Referral Programs

• Typically low cost depending on the size of the bounty, especially if used prior to using more traditional recruiting tools such as classified advertising, job board postings, or third-party recruiters.
•  Sometime this “birds of a feather” theory yields great candidates. The theory is based on the assumption that great employees tend to associate with or know of other people with similar traits.

 Cons of Referral Programs

• There can be problems if a referred candidate is hired and doesn’t work out or isn’t happy in the job. This situation can cause problems for the employee who referred the candidate and sometimes necessitates the employer implement an immediate solution in what could be a delicate situation.
• There can also be problems when a referred candidate is not hired, potentially causing embarrassment for the person doing the referring and reluctance to offer additional referrals in the future.
•  Often employees can be reluctant to proactively solicit referrals even when a bounty is involved.
•  Promoting an internal bounty program can be costly in terms of time investment and out of pocket expense. In addition, an Employee Referral Program generates extra administrative reporting that needs to be managed.

 Tips

• If you start an Employee Referral Program you may want to initiate your program using smaller referral bonuses to keep costs down.  You can differentiate the bonus amounts you offer as your need determines. When you launch your program, provide your employees with a written explanation including the fact that the incentives may increase or decrease based upon market conditions for sourcing specific skills. In other words, you may pay a bigger bounty to find a referral with a scarce skill and less to fill positions requiring more commonly available skill sets.
• Create a form that your employees can submit when they refer candidates. Date and time stamp this form to validate the referral when it’s time to pay the bonus.
•  Track every referral transactions carefully.
•  Decide if you want to build in a waiting period, perhaps 30 to 90 days, after the referred employee begins work, before you pay the bonus; rather than pay the bonus as soon as the referred employee starts the new job.

Putting an Employee Referral Program together takes time and no small amount of effort, but The Sourcerer knows that a program like this can be a great way to hire!