Ryan O'Donnell By Ryan O'Donnell • March 8, 2017

The State of Employee Referrals: 10 Trends to Consider in 2017

It is no surprise that employee referrals are the best source of talent. Several studies over the past two decades have found referred employees get hired quicker, stay employed longer, and report being more engaged. With the return on investment for hiring more referrals so high, "What is the current state of employee referrals?"

Just a few years ago, ATS (Application Tracking Systems) software was considered the premier platform for sourcing, screening and tracking applications. While the value of ATS is undeniable, today's employers are realizing that ATS software is not enough for a robust talent acquisition technology stack, especially when it comes to managing employee referrals. These employers are waking up to the fact they require a dedicated employee referral platform that enables effective management in order to obtain higher quality referrals.

As a result, many employers are looking to hire more referrals and improve their employee referral programs, which often have historically been neglected. A new survey by Sierra Cedar shows in Figure 66 that 75% of employers are planning to invest in a dedicated platform to improve their referral program over the next 12 months or are already evaluating tools today.

There are several major trends in talent acquisition, social recruiting, and technology to consider when looking to start, save, or expand your employee referral program. Here's what you need to know before you start looking for a dedicated referral platform for your company.

1. The Emergence of the HR App Store

Apple and Google are not the only tech companies with an app store anymore. In addition to mobile app stores, the major HRIS & ATS players are building App Stores of their own to help their customers easily discover, add and integrate new technologies. Previously, these integrations took months with several layers of approvals and calls.

Today HR apps are becoming increasingly simple to integrate as ATS leaders, like iCIMS who has expanded their offering of HR apps in the marketplace. This makes integrating new employee referral tools into your already existing ATS easier and more efficient than ever before.

2. Proliferation of the "Modern ATS"

Many employers, especially fast-growing start-ups and mid-sized companies, are hesitant to invest any new tools outside of their ATS, due to the perceived costs of new tools and integrations. As a means of alleviating this burden on employers, new ATS tools, such as Greenhouse, Lever and SmartRecruiters, have pre-built referral tools that are superior to some of their legacy competitors like Taleo, SuccessFactors, Kenexa-Brassring, and PeopleFluent.

Especially if you are a small to medium sized employers, you may want to consider switching to a modern ATS to improve your referral program instead of adding an extra tool to an older system. This allows employers with a limited recruiting budgets to revamp their employee referral program without adding any additional tools.

3. Emergence of Advanced Referral Apps

There have been significant advancements made to employee referral tools over the last few years. Early tools in the 2000's allowed employees to submit referrals via basic web forms within your ATS. After being modernized, these tools have become full-fledge applications that seamlessly integrate with your ATS and provide a powerful platform to run a high-performing referral program that generates over 25-50% of hires through employee referrals.

Today's more advanced referral apps enable employers to track program performance in real-time and optimize referral engagement while enabling employees to quickly send referrals via their mobile phones and virally share jobs on social networks. This emergence of more advanced tools allows employers to automate the referral program process and scale their programs with data driven decisions.

For employers who want to expand their referral program, it is important to evaluate vendors based on their ability to provide a seamless integration process, improve the employee / candidate experience, and customize their software to meet your unique needs.

4. Employer Branding and Candidate Experience Matter

It is no secret that applying to jobs is hard and time-consuming. Despite this fact, very few employers have taking steps towards improving the candidate's experience or attempting to meet the candidate's expectations. Luckily, a dynamic employee referral program can help. You can take steps today to improve the candidate's experience by improving the process for referrals.

Think about ways to improve the candidate experience if the candidate was a referral from the CEO. Start by putting SLAs in place, automating the process with high-touch communications and providing transparency to all parties throughout the candidate lifecycle. Advanced referral apps should have the option to optimize your application process so you can convert more applications so applying to your jobs and getting hired is a positive experience from day one.

5. Ubiquitous Personal and Professional Social Profiles

Social media giants, such as Facebook, LinkedIn, Twitter and WeChat, provide a dynamic platform for managing both personal and professional contacts. The average person has hundreds of contacts across a variety of platforms with rich data like location, employment, and education information. The good news is that this gives your company access to a large pool of potential referrals through your employees and broader networks.

As employers expand their employee referrals, considering how they will leverage their employees personal and professional networks is an important step to designing the ideal employee referral program. Social media networks are using this blurred line between personal and professional use of social media to their advantage. For example, Facebook has announced the addition of their job posting functionality that gives employers one more avenue for posting job announcements.

6. Ubiquitous Mobile Phone Worldwide

Mobile phone usage has skyrocketed in recent years, especially smartphone usage. According to Pew Research, 77 percent of Americans now own a smartphone versus just 35 percent in 2011. This means that nearly everyone has a computer in their pocket, which employers can use to their advantage.

Traditional employee referrals program require employees to manually submit forms via paper, email, or their ATS to Human Resources for consideration. In other words, for an employee to send a referral, they must be sitting at their desk and have the time to figure out how to make a referral. This leads many employees to not engage in the referral program or worse, they may forward resumes over one at a time to the nearest human resource representative.

When employees are out of the office, they should be able to send referrals when they meet with their friends and colleagues. With a mobile-first employee referral platform, employees can make a referral anytime. No more losing valuable candidates because your employees forgot to make the referral or filling up someone's inbox with non-compliant referrals. With a mobile first referral platform, they can make referrals any time, any place.

7. Ubiquitous Employer Social Profiles

Whether you realize it or not, your company probably has online reviews from past and current employees as well as prospective employees. Websites like Glassdoor and InHerSight give employees and candidates an opportunity to review your company, which should be taken into consideration when building a referral program. For example, within your company Glassdoor profile, you can see how many reviewers cite "Employee Referral" has how they got an interview, an immediate metric to consider when recruiting and prioritizing different recruiting channels.

Based on their engagement through positive ratings and reviews, you can send a powerful signal to potential employees why they should join your company. If your ratings go down, you can quickly identifying underlying problems within your organization and contribute to improving your company's workplace environment to ultimately attract more referrals.

Whether you're operating a startup business or you are a global employer, you are not immune to these types of reviews. Prospective candidates use these sites to determine if they would be a good fit for your company. Make a specific request to have employees review your company and rate your CEO on Glassdoor.

8. Localizing Your Global Referral Program

As global employers expand their employee referral programs, they face unique challenges due to currency conversions, local customs, and communication barriers. by relying on solely your ATS and Excel spreadsheets it can be nearly impossible to manage and quickly lead to a mismanaged referral program.

Dell, in a white-paper from HR Open Source, shared how their company doubled their referral hires from 19% in 2010 to 38% in 2015. Managing a cross-country employee referral programs can be an administrative nightmare, especially if your company has several international affiliates and subsidiaries.

Dell approached this challenge by designating a individual Global Referral Program Manager and empowering regional recruiting teams to "increase the promotion of the program, education of the program and ERP process/tools, and to develop new and innovative ideas to drive higher referrals." As more global employers invest in expanding their employee referral programs, they will need to consider how their applicant tracking systems, payroll, and employee referral program software can work across borders and languages for a streamlined referral program.

9. New Developments in Recruitment Automation

Are you tired of asking your team, "Who do you know that would be a good fit for this position?" No matter how many times you ask, the results will be the same. Thanks to today's advancements in machine learning, you can finally stop asking these questions and boost referrals at the same time with recruitment automation.

This is a promising area for future investment for employers who want to get a competitive edge in recruiting and reduce their reliance on external job boards by enhancing their referral program. New technology will scan your employees' connections and recent hires to identify specific contacts that have the right skills and are considered a good fit for your team. Using this technology, the possibilities to programmatically increase your referral program hires are endless.

For example, you can leverage machine learning to determine which employees send in the best referrals. Automation can be used to develop a referral program that continuously learns how to maximize employee engagement, optimize referral application rates, and lower recruitment marketing spend.

10. A Higher Standard for Employee Referrals

Every hire you make builds your company's network and expands your ability to hire more referrals. With 75% of employers planning to integrate a dedicated referral tool into their talent acquisition suite this year, now is the time to consider making this investment for your company. If you are considering switching your ATS this year like many employers who want a more modern talent acquisition suite, you must first make sure it doesn't adversely affect your employee referral program.

According to the Sierra Cedar 2016-2017 HR Systems Report, "For being one of the most highly adopted technologies, it is one of the least likely tools to be purchased as part of an organization’s existing Recruiting technology, with just 12% of organizations doing this today as seen in Figure 67." 

As more employers take this valuable step, employees will come to expect a consumer-grade referral program that more closely resembles Facebook, SnapChat and Tinder instead of Taleo, Indeed, or LinkedIn. The days of mass referral emails and Excel spreadsheets just won't do the trick anymore.

Are you ready to revamp your employee referral program and invest in modern talent acquisition technology that will help you hire more referrals?

About the Author:

Ryan O'Donnell is the CEO & Co-Founder of EmployUs, a mobile-service that helps employers hire more referrals and save money with every hire. Interested to learn more, visit our website to learn more and book a private demo.