Ryan O'Donnell By Ryan O'Donnell • May 24, 2016

3 Common Employee Referral Program Pitfalls

**This is Part Four of "The Five Part Guide to Hiring by the CEO of the "Uber of Recruiting." Check out the introduction here.

Talent acquisition leaders know the key to a successful recruiting operation is a well-oiled employee referral program. Oftentimes, even the best intended hiring teams get bogged down in the details of recruiting and forget to maintain a healthy referral program. Here’s a quick check-up to test the state of your employee referral program.

1). How easy is it to make a referral?

Your employees have day jobs (that you're paying for), and recruiting probably isn't it. The people who are referring candidates to your jobs don't want to fill out multiple forms before helping their friend or colleague get connected with a hiring manager.

When was the last time you tried making a referral through your existing system? Count the number of steps it took to make a referral as well as how long. Remember if you want a high performing program, you need people to do all of those steps multiple times before ever seeing any rewards, so you cannot cover up a poor process with a big bonus. When faced with multiple steps to make a referral, people have more opportunities to get distracted, frustrated, or apathetic about referring.

Lowering the barrier to referring may make you concerned that everyone will refer everyone else, leaving your recruiters with another mountain of resumes to review. Although this may be true for traditional job boards, when a person is making a referral they are putting their reputation on the line, ensuring the best people get referred. Building on decades of research, industry studies of common sourcing tools, and our own analysis of more than 1,000 job seekers, referrals are still between 40-50 times better than traditional job boards. Making it easier to refer only increases the total number of high quality talent learning about your company.

2). Are your competitors hiring your referrals faster?

Referrals are proven to be your best source of talent (Highest performance, longest tenure, best value, etc), so failing to reach out quickly enough to these top performers leaves your referrals vulnerable to your competitors.

Candidates who get referred generally are well-networked passive candidates, as in they are not searching on job boards or your career website, but finding out about opportunities through their network. If they accept a referral, they are ready to take the next step at your company (and likely several others).

Just as referring a candidate should be easy, recruiting them to join your company should be seamless. Most recruiters wait days or weeks before reaching out to referrals. If you want to capture the best talent through referrals, be prepared to respond quickly, instead of days or weeks think minutes or hours. Your response time makes all the difference. 

3). Are you taking too long (or refusing) to payout?

Does it take your company 90 days to payout a bonus or, even worse, 6 months to one year? Do both people need to be employed during that period? What if a form is incorrectly filled out? Is a referral disqualified if the candidate applied for a job 3 years ago on a job board, but remains lingering in your ATS?

Unfortunately, these questions often shed light on the overall well-being of your referral program. If people feel like you don't trust or value their referrals, engagement will quickly drop. I'm not advocating for you to throw money around or throw out the rulebook, but simplifying and communicating what to expect should be a top priority.

How Can I Avoid These Pitfalls?

After working with over 100 employers who are all trying to hire more referrals, we have found three simple steps to make sure your company's referral program is optimized for growth.

  1. Set Clear & Simple Rules: Rather than having multiple rules, scenarios, and forms, set your program up for success by stating A) how long a referral must wait before a referral bonus is paid out, B) how you'll accept referrals, C) how quickly your recruiters must respond to referrals. For example, Acme Inc will pay you $3,000 whenever your referral stays employed for 90 days, all referrals are eligible unless they are already interviewing, and they guarantee your referral will be contacted within 24 hours. Don’t leave your employees guessing - give clear directions.
  2. Recognize Your Top Connectors AND Recruiters: When an employee is getting multiple people hired, celebrate those wins with personalized and public displays of support of them and the program. After all, if several employees are working there because of them, they are your best brand ambassadors and recruiting evangelists. The same goes for your recruiters. Recognize (and if possible reward) recruiters who consistently reach out to referrals within less than 24 hours (or even less!), this will set the tone for the rest of the company that referrals matter.
  3. Revamp The Process, Not the Program: Revitalizing your referral program may not require you to revamp the program, but the process. Instead of relying on your Applicant Tracking System to handle everything, investigate tools designed to remove the friction from referring and applying to jobs. Most of these tools integrate with your ATS to provide a better referral experience for job seekers and connectors alike, without disrupting your existing recruiter's workflow.

About the Author:

Ryan O'Donnell is the CEO & Co-Founder of EmployUs, a free mobile hiring app connecting employers and job seekers through trusted referrals. Called the “Uber of Recruiting,” EmployUs built a risk-free way for employers to hire more referrals by rewarding anyone for the network they've built. Interested in our free mobile hiring app to hire more referrals, visit our website to learn more and book a private demo.