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.

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Sourcing isn’t a new activity in the talent acquisition world. There have always been hard to fill jobs, but we’re seeing more of this kind of issue than ever before. In fact, a recent CareerBuilder study puts the cost of open positions at nearly $800,000 annually, tallying up costs that ultimately hurt business performance. Organizational leaders say these are the top problems caused by jobs they can’t fill:

  • Productivity loss: 45 percent
  • Higher employee turnover: 40 percent
  • Lower morale: 39 percent
  • Lower quality work: 37 percent
  • Inability to grow business: 29 percent
  • Revenue loss: 26 percent

In addition, our Lighthouse Research study of talent acquisition priorities pegs sourcing as a top area that business leaders plan to focus on in the coming year (just 1% behind onboarding, which was the highest priority).

In this episode of We’re Only Human, host Ben Eubanks is joined by the amazing Madeline Laurano, co-founder of Aptitude Research and co-host of Research on the Rocks, another HR Happy Hour network show. She and Ben discuss some of the key aspects of sourcing, such as employment branding, recruitment marketing, and technology’s role in the process. Madeline shares some great insights in this episode, and she stumps me at the end with a question that shouldn’t have been that hard to answer!

In addition, they examine the impact of AI, machines, and algorithms on the sourcing world, breaking down some of the hype and illuminating an amazing competition that pits recruiters against robots to see who is the best at sourcing great candidates. Not to spoil the surprise, but the real story here exemplifies that to get the best results, we need humans and machines working together. Get all this and more in the latest episode of We’re Only Human on the HR Happy Hour podcast network.

*Please note, if you like the show topic and want more in-depth discussion of sourcing and recruiting in a future episode, please feel free to comment below or email me!

Check out our other episodes in the We’re Only Human podcast archive.

The new year brings new challenges and opportunities as we attempt to whip our HR and recruiting functions into shape. One of the new projects we’re working on at Lighthouse is our Global Talent Acquisition Sentiment Study. With more than 400 votes, we are helping to narrow down the most pressing priorities and topics across the talent acquisition function. The infographic below offers some insight into what those priorities are, and my forthcoming report on the topic will delve into how the data shows differences in US and non-US populations, what trends are driving the relative importance of each of these issues, and what to expect in the coming months.

I’m also delivering a presentation on this topic in March and would be glad to share these insights with your group in a lecture, workshop, or webinar. Just reach out via my speaker page and we can discuss. 

Below are some of the noteworthy findings.

Key Priorities are Not Function-Related

Some of the key priorities in the study that came out on top were focused not on specific practices in recruiting, but on more broad aspects, such as process improvement and business alignment. This is a positive finding, because all too often when I’m working with clients I see that they have a great onboarding or branding program, only to find out that it’s working in opposition to their goals and business strategies.

Onboarding, Sourcing, Candidate Experience Top the List

It consistently surprises me when I see a group of talent leaders prioritize onboarding. Not because it is unimportant, but because it seems like so little effort is placed on it in reality. It’s possible that 2017 is the year we turn that around, making this a strategic differentiator for growth.

Next up is sourcing. I see a great divide between the highly capable digital sourcing professionals and the rest of the HR and talent leader community. This is so pronounced that it almost seems like a different profession, akin to marketing or customer acquisition more so than HR.

Finally, candidate experience was barely edged out for third place. In our recent research on the candidate experience, we pointed out some not-so-obvious ways to improve this practice with assessments, video interviews, and more. This discipline is steadily becoming more of a concrete science for talent leaders, which means we can find what works, make specific process improvements, and deliver higher value to our future employees.

One final note: you’ll notice that not much room separates any of these in the infographic below. This is good in that companies have their priorities in order, but it is also challenging, because when we have competing priorities it means we’re going to be less effective. It is critical to find the specific talent practice your team needs to work on and make it happen before attempting to move to other opportunities in the list.

Lighthouse 2017 TA Sentiment Study Graphic

were-only-human-logoThe idea of a “gig” isn’t anything new, but the concept of using gig workers as an alternative source of talent certainly is. More companies are starting to realize that getting a job done doesn’t always have to mean creating a requisition, posting a job, interviewing candidates, and making an offer. In the case of some new applications on the market, companies can bring talent to their front door at the veritable push of a button. Yes, really.

In episode 5 of We’re Only Human, host Ben Eubanks interviews AJ Brustein, cofounder and COO of Wonolo, an on-demand hiring application. Ben and AJ discuss Wonolo’s beginnings as a startup within Coca Cola to solve a specific talent challenge and how it spun off into its own brand. In addition, they talk about how companies can make use of gigs to not only meet company objectives, but to help meet the needs of workers as well. It’s a fascinating conversation and one that will challenge your assumptions about the on demand workers you meet on a daily basis.For more information about Wonolo, check out http://www.wonolo.com

If the gig economy topic interests you, be sure to check out my previous post on the topic about how to use the gig economy to find talent.

Subscribers click through to stream the show below or click here to visit the podcast site. As always, if you subscribe on iTunes, Stitcher, or your favorite podcast app, you’ll be notified of the new shows and never miss an episode. 

To check out other episodes of We’re Only Human or learn more about what Ben’s up to, check out the podcast or the Where I’ll Be page.

Last week I published some new research that frankly surprised me. When we hear about video interviews, assessments, and hiring processes, we expect candidates and employers to be on opposite ends of the spectrum.

But it’s not the case. When asked a series of questions, both groups responded similarly, and the priorities for each group matched in terms of ranking, even if not in terms of exact percentages. In short, it was a very interesting set of research. I’ve posted a chunk of it below, but to read the full piece you’ll need to head over to Lighthouse Research.

The Candidate Experience: Perspectives on Video Interviews, Assessments, and Hiring

In some ways, hiring looks very similar to what it did twenty years ago. People search for positions, indicate interest, and are filtered down until the most promising candidate is offered a job. However, the technology we use has upgraded considerably over time. Today employers have tools to increase efficiency and efficacy, including video interviews, automated assessments, and more.

In a recent Lighthouse Research study backed by mroads, we explored some of the key aspects of hiring with video technology from both candidate and employer perspectives. The November 2016 pulse survey reached more than 250 individuals and employers, uncovering some interesting findings that both validated existing beliefs as well as uncovered some new insights. Here’s what we found out.

lighthouse special report

Key Findings

  • Stress Factor: Nearly 8 in 10 job seekers say that video interviews are as stressful or more stressful than in-person interviews.
  • Attracting Top Talent: 61% of companies say that peer interviews and interactions would be the best way to attract top talent with video hiring solutions.
  • Candidate Preferences: Nearly 25% more job seekers said they would prefer a live video interview to an in-person interview.
  • Candidate Assessment Perspective: Just under two-thirds of candidates think the right kind of assessments—those that give them an opportunity to showcase their skills or a work sample—prove their value in the hiring process.
  • Candidate Experience: Candidates believe that resumes are just as valuable as employment tests/assessments (25% each), but half of candidates say that video interviews are the most valuable tool for helping them stand out in the hiring process.

Click here to read the rest of the article (1,600 words total)

I realized this weekend that I didn’t let you guys know about a free webinar I’ll be doing tomorrow with RecruitingBlogs. If you’re interested in joining me for the session you can sign up here

Talent mobility. If you’re not familiar with the term, it’s the practice of using internal talent to fill roles as well as creating new paths and opportunities for your staff. It has a whole host of impacts and benefits.

  • Recruiting: instead of immediately looking externally for talent, you consider your internal talent inventory to determine if you have someone you can move into the role.
  • Retention: by using internal staff for filling positions, you increase retention and drive satisfaction for career-minded employees (this used to be Millennials, but I’ve heard stories of all types of workers fitting this bill).
  • Learning and development: instead of putting someone in a class, you give them an experiential/social learning opportunity by plugging them into a new environment.

In the webinar I will be talking about some companies that have made talent mobility a priority, from Chipotle to Hootsuite and World Bank Group to Tata Consultancy Services. Each case study tells a slightly different story, and I’m excited to share those examples.

In addition, we’ll look at some different sources of research on the topic that allow us to dig deeply into why this talent process matters. The research I’m doing these days around gig workers and the talent economy (I’ll be sharing some info on this in my next post) points to the fact that people want more control over their own careers and development. With that in mind, giving them flexible opportunities to contribute, grow, and develop just makes sense if we want to not only engage them, but keep them long term.

If that sounds interesting, I’d love to have you join. I try to make my webinars fun and entertaining (lots of stories) while still giving you some actionable takeaways.

Body Movin’: Why Talent Mobility is King of Retention

Today the second episode of We’re Only Human aired on the HR Happy Hour Podcast Network. The show is focused on recruiting analytics, owners, and accountability. My guest for this show is Kristina Minyard, the Senior Talent Manager at Ignite. During the show we covered some of the interesting aspects that separate staffing and corporate recruiting as well as some of the common challenges and opportunities for recruiting leaders.

Show Notes

Episode 2: Recruiting as a Service

The We’re Only Human show was created in part to help showcase the personal aspects of the employment relationship, and recruiting pulls in a variety of opportunities to explore those interpersonal relations. Despite changes in technology and strategy, many organizations are struggling to find the right talent. Is it about picking the right tools, or is there a more fundamental issue at play with the hiring manager, recruiter, and candidate interplay?

In this episode of we’re only human, host Ben Eubanks interviews Kristina Minyard, Senior Talent manager at Ignite. The focus of the conversation encompasses the candidate experience, how to develop a partnership with hiring managers, and some radical thinking around ownership of recruiting metrics. Ben references the recent Lighthouse study around the Modern Measures of Success in Talent Acquisition which can be found at the link below.

Modern Measures Research:
http://lhra.io/get-report-barriers-talent-acquisition-measurement/

Kristina’s information:
Twitter: http://twitter.com/HRecruit
HR Pockets Blog: http://hrpockets.com