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ERE Webinar from 11/12/08, presented by Dr. John Sullivan.
Citation preview
UPDATING YOUR EMPLOYEE REFERRAL PROGRAM
Practical Tips That Can Dramatically Improve Your Programs Performance
ERE.Net WebinarNovember 13, 2008
© Dr. John Sullivan
www.drjohnsullivan.com
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Dr. John Sullivan’s summary bio
Former Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees
Has advised over 250 major organizations in 30 different countries. His appeal is so broad, that work has been translated into 23 languages
Monthly column in Workforce Management Magazine Columnist for the Electronic Recruiting Daily Author of eight books and more than 750 articles. SHRM called him “One of the industries most respected strategists” & the Best
Practice Institute honored him as one of the Top 10 Leading Thinkers in HR Staffing.org noted that he was “the father of HR Metrics” and Fast Company
magazine called him the “Michael Jordan of hiring” He has been quoted by the Wall Street Journal, Fortune, the NY Times, the
Financial Times, CFO Magazine and have been interviewed by CNN and the CBS and ABC nightly news
Currently he is a Professor of Management at San Francisco State University and the chief consultant of the management advisory firm DJS
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Dr. Sullivan’s current books
ComingSoon!
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Topics
1. Benchmark firms and performance targets
2. Referrals programs in a down economy
3. Things to add to increase program performance
4. Common errors to avoid
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Benchmark Firms
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What is your referral rate? (% of all hires)
AmTrust (78%)Intel (71%)SG Construction (70%)Quicken Loans (68%) Rackspace Hosting 66%Covenant Health (64%)Cisco Systems (62%) FirstMerit Bank (56%)Edward Jones (55%) (with no bonus)The Turner Construction Corporation (56%)Booz Allen (52%) Northrop Grumman Space Technologies (52%)Symantec (51%) 7
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You must change your ERP
to fit with a down economy
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Action areas during a down economy
1. You must prove your ROI / business case
2. Use OPT to shift the work (Other People’s Time)
3. Shift the motivators
4. Prioritize jobs
5. Increase quality by using proactive referrals
6. Reduce the volume of low quality referrals
Changing your ERP during a down economy
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During a down economy…
What is the business case justification
for referrals?
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“Employee referral programs are #1 (at leading
practice firms) in delivering the greatest volume of
hires, an improved quality of hire, and improved
retention at all levels.”Conclusion of DJS research
For external hiring
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# 1 in ROI
1. Employee referrals 82%*2. Organization's Web site 71%3. Campus recruiting 60%4. Niche job boards 58%5. General job boards 51%6. Search firms 42%7. Networking technology 36%8. Commercial résumé databases 33%9. Career fairs 30%10.Newspapers 15% * Satisfaction with the ROI of the source -January 2006 survey of 73 large employers with a mean of 139,000 applicants Source: Direct Employers/Booz Allen Hamilton
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The business case for referrals
An example of the business results an ERP can
produce
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Business impacts of shifting hiring sources
Source: 2003, Major US Healthcare chain, source comparison study
Program results Referrals Source A
Cost $2,796 $1,877 - $919
Offer Acceptance Rate 95.4% 81.2% + 14.5%
Voluntary Turn < 1 yr 9.3% 22.1% + 2.3X
Voluntary Turn > 1 yr 3.2% 12.5% + 3.9X
Termination rate < 1 yr 1.2% 4.4% + 3.6X
Performance results 14.36% Baseline
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The net gain from the performance increase alone
A +14.36% improvement in the average revenue
per employee is $70,800 per each new hire. For
60 hires, the added revenue is $4.3 million
Because the better performing new hires will stay
longer, the savings would continue over multiple
years
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During a down economy…
Shift some of the recruiting work to employees and
managers
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Shift the work to others
“Do more with less” using “OPT”Target 50% referrals, so employees do some of the sourcing and sellingGet employees to build up their social network profiles to attract candidates
PDA / name dump parties for names
Blogs by employees to attract
Events (Bring back 3 names) >
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Shift the work to others
“Do more with less” using “OPT”Encourage employee generated videos (Deloitte)
CEO calls to candidates
Shift the work to others
Create a “Friends program” Where employees in the same job can answer questions, provide stories and better examples than any recruiter can
Ask for volunteers
Pre-screen out all but the best
Provide them with the referral credit
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During a down economy…
Shift the motivators away from dollar rewards
Don’t “make it about the money”
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Motivate by focusing on “helping the team”
Convince employees it’s in their best interest to make referrals by…Using the “Help the team" approach that emphasizes the employee’s benefit from working alongside great peopleShowing them “who” suffers with a long vacancy or a bad hire (Remind them what it is like to work alongside “Homer”)Correlating high referral rates with business goal attainment and high individual bonus rates
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Change the rewards
Emphasize drawings or raffles
Make the prize something that is “talked about”
- Trip around the world
- Trip to the South Pole
- College tuition
- Reserved parking spot next to the CEO
- One on one lunch with the CEO
- First choice of vacation or shift schedules
A parking lot full of BMW’s will impress
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Change the rewards
Provide a cheap gift for those that don’t win
A $25 gift card or a Starbucks card as a thank
you
Give a coffee card only for first-time
participants
A handful of free movie tickets for the whole
family
A small reward for finding “names” or
“leads,” even if it is not an immediate referral
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Change the rewards
Pins and plaques Recognize them with a plaque, award pin, T-
shirt, cubical item etc.
You can also place their name on a plaque or a picture in the lobby
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Change the rewards
Hold a once or twice a year dinner with the
CEO to celebrate all those that have made
successful referrals
Let them appear in company advertising - Work with the advertising department to allow individuals that successfully refer an opportunity to appear in regular company product advertising
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Change the rewards
Don’t forget the personal touch
A handwritten note – a personalized note or call
from a senior executive thanking the referrer that
made a high impact referral (Amazon)
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The Army gives a “referral promotion” to PFC before boot camp
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Promotion for a single referral before your
start!
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Change the rewards
If you do decide to use cash
The average bonus amount generally varies between $1,100 and $1,500
Several research efforts have shown that bonus
amounts above $1,500 have little impact on
increasing referral rates or referral quality in
companies that practice the "help build the team"
philosophy
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During a down economy…
Prioritize jobs
Because you can’t do it all well
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Prioritize positions
Do not make all job openings eligible
Because volume kills quality
And some jobs fill better using other sources
(CFO)
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Prioritize positions
Focus on high priority positions
Mission critical jobs
Hard to fill jobs
Jobs with a high previous referral success rate
“Sudden” vacancies in key positions
High volume jobs (more EE participation/ PR)
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Prioritize business units
Focus on key business units
Focus on high performing and high-growth
SBU’s
Focus on SBU’s with high referral success rates
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Be careful
Some referrals stink
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Proactive referrals are where, rather than “advertising” to all employees for referrals, you instead…
Proactively seek out targeted employees and ask them directly for referrals
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Proactively approaching targeted employees
Proactive means to approach…Top performers - approach employees that are
in the top tier of forced ranking or performance appraisal scores
Award winners - capture the names of internal and external award winners
The well-connected – approach employees that are well connected in their profession / industry >
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Proactively target these employees
Proactively approach Employees with a successful referral history
Approach employees that in the past, have made successful referrals
Employees formerly from “target firms” –
Push referral “needs” to employees that came from “target firms” (ActiveNet)
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Proactive follow-up meetings
Consider a “follow up” meeting
After a great referral, it’s smart to schedule a follow up meeting with the person…
- To thank them (And their manager)
- To learn about the approach that they used
- To ask them for more top names (Amazon)
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Examples of 3 proactive referral tools
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3 Effective “proactive” referral tools
1. Reference referrals
Identify top performing hires from last year
Call the references that said accurate things
Thank them
Ask them “do you anyone else as good?”
Ask them to be a future reference source
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3 Effective “proactive” tools
2. Give me 5 – Proactively approach top people Best manager you ever had Best team leader Best idea person or innovator Best out of the box thinker Best person that "ran into" burning buildings Best problem solver Best sales person that beats you Best student in college that was so smart Best mentor Best technical skilled person Best international talent Best customer service person Best replacement for "you" when you’re promoted
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3 Effective “proactive” tools
3. Blue light special for critical openings
When you have a sudden critical need
Put a “blue light” sandwich board in the lobby
Also, send a “I need your help” flash e-mail to
people in the same job family
Ask the relevant manager to mention it as part of
their regularly scheduled meeting agenda
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During a down economy…
How you can reduce the volume of referrals that
occur as a result of the high unemployment rate
(and low quality)
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Set these expectations… to reduce volume
5 Expectations of referring employees (not rules)1.We are looking for referrals that will make our
firm significantly better2.Participation is a privilege… so we expect you
to put the firm and your team first and to act as a mature adult throughout the referral process
3.Normally… we expect no more than 3 a month (Because we want the very best)
4.We expect you to know their work from personal experience
5.Normally, we do not want family or social friends (Unless they are clearly superior)
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Require this information… to reduce volume
Five bits of information that we need from you
1. Tell us the job # you are referring them for
2. Assess & then tell us about their skills/ knowledge and where they are needed
3. You must assess them and then report their cultural fit… so we do not dilute our culture
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Require this information… to reduce volume
Five bits of information that we need from you4. Did you seek this top individual out? (We expect
you to seek individuals out)
We are not interested in “they ask you” referrals, when someone approaches you & specifically asks to be referred.
5. Now rate the referral on a A+, A, B+ or B scale
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Program elements to add to your referral program
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List of “things to add” to improve performance
1. Be responsive2. Develop a story inventory3. Employment branding4. Employee education on how to improve referrals5. Expand eligibility6. Getting manager’s attention7. Referral cards8. Diversity 9. College grad referrals
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Add responsiveness
Respond to every referral (make it appear personalized)
Thank both within 24 hours (72 hr rule)
Tell them what they should expect next (timing
and steps)
Make an interview decision within 5 days
Notify both when there is a rejection
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Add a story inventory
Catalog powerful stories to aid EE referrals1. Do a Google search2. Check press clippings & press releases3. Check best place & functional award applications4. Check HR benefits brochures5. Ask employees “why they stay”6. Ask new hires “why they said yes” 8. Use “We do that lists” culled from best place
articles9. Ask “superknowers”10.Create stories (B of A, MGM)
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Consider a story book
Zappos publishes a book full of 300+ employee written stories about what it’s like to work there (Available on Amazon)
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Add educating your employees
Educate them on how to find great referrals
How to find them on-line (forums & networks)
At conferences (Take a smart person to lunch)
Capture names during interviews
Offer training on how to convince them
What we have to offer side-by-side comparison
Teach them “the right day” to ask >
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Educate employees on the “right day” to ask
Day of merger
Boss/ mentor/ best friend / CEO left
Lost a promotion
After their yearly bonus
After their performance appraisal
When their project is ending
Last kid graduates
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Add expanded eligibility
Expand who can refer
Allow managers and HR to participate BUT provide an “opt out” or charity option
Former employees, alumni & retirees
Customers (Retail, Hollister)
Spouses (Addie and $2,000)
Consultants, suppliers, vendors
Strategic partners
Stock holders and the BOD
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Add getting a managers attention
Reward managers for referrals and great talent management
Set targets - Sometimes just raising the goals and expectations… can cause an increase in referrals
Post charts or “thermometers” much like how
"United Way" programs publicize their progress
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Add referral cards
Use “attention getting” referral cards Limit referral cards – only give cards to employees that can accurately spot talent. And even then, limit them to 10 cards a monthInclude phrases that excite and make them want to take action A memorable shape/ design – make it unlike a bus card… so they will know it’s something elseGive them a unique contact point – don’t direct them in a web site with all other applicants
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A WOW referral card – An illustration
Apple loves innovators…
and you WOW’ed me!
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As you unfold it… you see
I don’t impress easily…
but we might just have a black turtleneck
that fits you! Call me tomorrow!
408.738.1922 Steve
Would you
like to be part
of the team that
invented the ipod
and iphone
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And on the back you see
Because there are so few really talented people
in the world…
I just wanted you to know
Someday… you will work at Apple
If you got one… do you think you would call?Would you tell anyone else?
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A referral card – An illustration
That was
Super Service!
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A referral card – An illustration
You would be a
At StarbucksCall 403 334 9832
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Add a focus on diversity referrals
Tips for improving diversity referrals
1.Make diversity a primary goal
2.Use “affinity groups” to spread the word
3.Talk to current and former diverse employees to
identify what your firm has to offer
4.Consider a higher reward for diversity referrals
5. Use business events where diversity can be “seen”
6.Put together a diversity recruiting advisory board
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Add referrals for college grads
Endeca gives a flat screen TV as a referral bonus
for college students referring a friend that gets
hired
Intuit offered a $50 award to students who
referred someone that was hired, they hired over
half of those who were referred
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Add employment branding
A great employer brand increases referral successAwards for “best place to work”Functional awards (Virtual close)Being quotedWriting and giving speechesBenchmark studiesAcademic case studiesWOW web pageInternal branding for consistency (Libby Sartain)
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Other things to add
A global component
An internal redeployment component
Utilize your employees social network contacts
Identify “why” there are low referral rates with
some managers and business units
PDA party/ name dump
Boomerang referrals
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Program elements to avoid in your ERP
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Avoid these program “errors”
1. Delaying the reward/bonus payment 2. Referral spamming by employees3. Failing to continuously re-energize the ERP 4. No ATS marking of ERP apps for metrics5. Equal rewards for all jobs6. No feedback on weak or bad referrals7. Individual recruiters can "ignore" referrals 8. Not tracking referral rates by manager9. Giving big dollar bonuses 10. Too many rules
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Avoid these program “errors”
11.Not weighting EE referrals based on the referrer’s track record
12.ERP applications are not given priority treatment in the recruiting process
13.ERP program manager turnover and poor documentation
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An illustration of how far referrals have come
An animated viral video released on YouTube & Google Video is from Yellojobs.com
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Did I make you think?
Any questions?
www.drjohnsullivan.com70