Employee referrals are not a new topic in the HR and recruiting space. But the truth is that many companies phone it in when it comes to referrals, often leaving them with lackluster results. It takes a little time, effort, and intention to get a referral program into good shape, and the benefits are far-reaching.

Hiring A Players with Referrals

Data from one study shows that referrals are the best source for finding quality hires. Another expert says that referrals should be one of the top metrics that talent acquisition leaders focus on. And our own data at Lighthouse Research says that more than 80% of companies believe that referrals are important for measuring sourcing performance. Yet more than four out of ten employers are measuring nothing or only anecdotal information when it comes to referrals as a source of hire.

Referrals as a Talent Channel

You don’t create a great place to work. You defend it. -CEO of a firm with multiple “Best Places to Work” credits

Let’s face it. Many employees have not had the opportunity to work at a company with a great culture. But when they find one they inevitably become protective of the culture. This is a great tool for ensuring a strong referral program without having to constantly weed out poor performers and poor fits. It’s been said that A players hire A players, but B players hire C players, and companies of all sizes, industries, and geographies are trying to find those critical A players to remain competitive.

The right referral program needs to not only prioritize referrals as a source of hire, but it also needs strong technological underpinnings to help manage the volume and variety of referrals. Systems like MintMesh and others provide that functionality and help companies to get a grasp on what is typically operated as a “shoot from the hip” type of program. From an analytics perspective, being able to track quality of hire, time to fill, and other metrics and tie them back to the referral source is an incredibly valuable practice. Gathering the right data to support your referral practices is going to generate higher quality hires, ensuring those A players end up at your organization, not at the competition.

Using Referrals to Improve Diversity

Diversity has become an HR buzzword, thrown around in meetings and leveraged for positive PR, but what does diversity really mean?

Legally, diversity refers to the age, socioeconomic background, gender, race and ethnicity differences in your workforce. However, the concept of a diverse workforce encompasses more than that, capturing more nuanced elements such as religious and political views, social status, personality, communication styles, and cultural values.

Diversity sourcing, by extension, is a dedicated effort to attract, engage, and hire a diverse slate of candidates. An interesting twist on the diversity sourcing discussion is in referral practices. Anecdotally, it’s often believed that referral hiring will diminish diversity, encouraging people to refer their friends and colleagues that are just like them. In reality, diversity sourcing can be vastly improved with solid, intentional referral practices.

While virtually all companies say they encourage diversity, and the evidence for diversity as a business performance enhancement is clear, the question remains – how can we source and recruit a diverse workforce? There are three keys to success:

  1. Building a Diversity-Driven Culture-Having the best diversity programs possible won’t matter if your culture doesn’t support it. Diversity begins and ends with your company culture. It should be part of who you are as a company.
  2. Expanding Your Diversity Definition: In a conversation last month with the head of human resources for a U.S.-based construction firm, the leader said that the biggest challenge was filling a key technical role with diverse candidates, because the company had come to see the value in not just diversity of gender or skin color, but in diversity of thought. Candidates that entered the role from diverse backgrounds performed better, connected more thoroughly with their customers and peers, and lasted longer than more traditional candidates.
  3. Employee Referrals: Current employees are living, breathing advertisers for your company. Their testimonies about your organization provide an authentic initiative for potential hires. Missing out on their referrals could be the difference in being a market leader or a laggard. And as mentioned above, this allows your company to target more diverse hires in a way that traditional job postings and advertising just can’t.

Referral Benefits for SMBs

While referrals can help any company, I see the benefits to small and mid-sized businesses as being some of the most valuable.

Referrals are the most powerful tool in recruiting. A provocative statement, sure, but also proven to be true. Recruitment is the lifeline of all organizations and referral programs can deliver top talent to your door at a fraction of the cost of traditional recruiting. According to Dr. John Sullivan, if 50% of your company’s hires aren’t coming from referrals, then you need to get proactive with your referral program.

This is even more true for small and mid-size businesses. With tight recruiting budgets, limited organizational agility, and a need for highly engaged workers from day one, the SMB market can benefit from referrals by reducing costs, lowering time to fill, and ensuring long-term retention and engagement.

Cost

Costs for traditional recruiting sources far exceed those of referrals.Traditional recruiting can cost anywhere from $4,000 to well over $18,000 per hire, but recruiting with a referral program costs closer to $1,000.

Even offering financial incentives to employees for referrals is still a small price to pay for creating an army of talent scouts. Offering a $1000 bonus would still keep the referral hire cost far below that of other methods.

Other cost savings associated with hiring referrals include lower spending on advertising, job boards, and agency fees. Meritage Talent Solutions founder Kara Yarnot found that the typical agency charges a fee of 20 percent of a hire’s first-year salary, equaling $20,000 for a single $100,000 hire. If we’re comparing that to the referral program cost per hire data above, your organization could have hired 20 people for the same cost of one hire through an agency.

Referrals save costs and benefit the bottom line.

Speed

In today’s fast paced workplace, speed is crucial. Referrals can significantly increase hiring speed over traditional recruiting methods. Referrals are the fastest method to hire with an average of 29 days for referrals. Compare that with 39 days for job boards, and 45 days for career sites, on average.

This is due in part to the fact that you have a broader network when you’re prioritizing referrals. Your employees know the company better than anyone and with the rise of social media, employees have networks of contacts at their fingertips ready to tell their peers and friends about openings at your organization.

To get a sense of the size of this potential network, consider this: Pew Research estimates the average person has more than 600 social connections. If your business has just 100 employees, that’s a potential 60,000 people that can learn about your openings with a good referral program.

Not only do referrals start faster–they also onboard faster. A key part of onboarding, beyond understanding the workplace policies and requirements, is assimilating into the social fabric of the organization. By having a social connection already in the firm, the referral can onboard faster. This equates to higher productivity and performance from day one, which is critical for SMBs that don’t have extensive resources to train and develop competencies in new hires.

Referrals are faster to hire, start working quicker and out perform non-referrals.

Retention and Engagement

One third of new hires quit their job after about six months and 32 percent of employers say they expect employees to be job hoppers. This demonstrates the “revolving door” attitude employees have towards companies, but referral programs can increase job loyalty.

Referral programs are proven to decrease turnover and increase retention. 46% of referral hires are retained after one year as opposed to 33% for non-referrals. With referrals producing 25% more profit than their peers, this is doubly valuable for employers.

As mentioned in a recent blog, great companies are made up of great people, and referrals are the best source for bringing those great people to your front door.

Many companies are making an increased effort to promote diversity in the workplace, and for good reason. There are a multitude of benefits that diversity promotes, and every company can be improved by having a diverse set of employees. Here are some of the top benefits to be had by promoting and encouraging diversity in the workplace, and suggestions on how to build a diversified, inclusive work environment.

Create a More Qualified Company

In an extremely competitive economy, it’s important to hire the best possible employees. By selecting a diverse set of candidates to become part of the team, the company will be more likely to succeed. Employees with different perspectives and backgrounds create a more effective work environment. Continue reading

This week I have a treat for you. I had the opportunity as part of my role on the #SHRM16 social media coverage team to interview Rohini Anand, Senior Vice President of Corporate Responsibility and Global Chief Diversity Officer. She will be speaking at the SHRM Conference on June 20th from 2:00-3:15 in case you are interested in seeing her after reviewing this interview.

rohini anand sodexoBen: Just to get the ball rolling, please tell me about yourself and what you do at Sodexo. 

  • I currently serve as the Senior Vice President, Corporate Responsibility and Global Chief Diversity Officer for Sodexo
  • I am responsible for the strategic direction, implementation and business alignment of Sodexo’s integrated global diversity and inclusion initiatives, as well as Sodexo USA’s sustainable development, wellness and corporate responsibility strategies
  • I also lead the organization’s sustained culture change initiatives, as well as its integration in the overall business growth strategy

Ben: What is Sodexo’s biggest challenge when it comes to diversity and inclusion today?  Continue reading

dr ben carson leadership wisdomLast week I had the chance to see Dr. Ben Carson speak at an event. For clarity, this was a faith-based event, not a political one. I have seen the movie Gifted Hands twice (highly recommended!), and I was excited to hear some of his story in his own words. I picked up four pieces of wisdom on leading people and wanted to share those insights here.

Defining Diversity

Diversity is not a unanimity of speech or thought. It’s a respect for the differences around us.

We don’t all have to believe and say the same things to be diverse. What we must do, though, is respect others. Everyone is different from you in some way, even if it’s in terms of what music they listen to, what foods they like, etc. Respect those differences and the larger ones that still can permeate workplace decisions (color, gender, etc.)

Leading Technical People

Sometimes when leading technical people you won’t understand 100% of what they do. What is important, however, is to make them realize you appreciate and support them anyway. Carson’s mother made him read books and write reports for her to critique. The kicker? She couldn’t read.

She knew the importance of reading for learning growth and knew the skill was important enough to emphasize. She would highlight the papers and ask questions to help them realize that she cared about the assignments.

Motivating Others

At one point early in his career Carson was appointed supervisor of a road cleanup crew. The problem, he said, was that the crew wasn’t interested in doing any work! They were paid by the hour with a goal of 100 bags per day, so he negotiated with the team to pick up 100 bags for eight hours of pay plus any time saved. For instance, if they picked up the 100 bags of trash in six hours, they were paid for eight hours of work and got to go home early.

He said that his crew quickly became the most productive and others couldn’t understand how his team was doing more work than the others in less time.

How to Be Successful

Mr. Carson finished his remarks with this powerful quote:

Success is using your God-given talents to elevate other people.

I firmly agree. We all have unique skills, abilities, and talents. We should look for opportunities where our greatest passion meets our greatest strength and make the world better. It wouldn’t make much sense for me to try to build homes for people–that’s not my skill set. But planning a charity race? I am all over it. What’s your talent and how can you use it to elevate others?

I work for a government contractor in the defense industry. We have a large number of veterans working for us, so I am always looking for ways to understand them better. Recently I received a review copy of this book, and I was really excited to dig in. As usual, I read with an eye on the corporate culture aspects, and I thought the author, Emily King, did a great job of addressing those. Here are my top 4 “Aha!” moments while reading Field Tested-Recruiting, Managing, and Retaining Veterans.

#1 Put yourself in their shoes

This was the single best explanation for how a veteran must feel when they join the private sector that I’ve ever come across. Basically, the author asks you to imagine that you take a job in a private employer and work there  for twenty years. Then, you retire from that company and go to work for the military. Imagine the chaos and difficulty of trying to navigate the landscape of an entirely different organization and culture. That is how veterans feel when they come to work for us after completing a military career. Continue reading

When I was ten my baseball career went to heck. It was like someone threw a switch between my previously awesome self and my new terrible self.

I couldn’t hit. My throws were off. Neither I, my parents, nor my coach could figure out what the issue was.

Then I found out I needed glasses.

It was like a miracle to be able to see clearly again. When people ask me why I didn’t get glasses sooner I reply that at the time I thought everyone saw that way.

That’s a powerful message in more than one way, so I’ll say it again. I thought everyone saw the same way I did.

Before you assume something about a person, take a moment to reflect. Maybe you see things one way and just can’t understand why someone else doesn’t see as “clearly” as you.

Backgrounds, culture, and other factors can dramatically influence how someone behaves or responds to situations. Be conscious of that. You will be a better leader, employee, and friend for it.

This post isn’t here to make you feel like you’ve done something wrong. I need the reminder just as much as anyone else that we’re all different and that can be a powerful tool if we use it well.