the next generation of employee referral programs will focus on improving quality of hire

The Next Generation Of Employee Referral Programs

Will Focus On Improving Quality Of Hire

© Dr John Sullivan 1 www.drjohnsullivan.com

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Definitions and quantifying

the business impacts of ERP hires

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Definition

Define quality of hire from referrals The % of improvement in the “on the job

performance” (i.e. output and retention) of new hires from referrals

Compared with the average performance level of new hires from all other sources

Note: you must somehow “tag” employee referral applications… in order to later determine whether ERP hires were better on-the-job performers

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Outside sources already verify ERP’s new hire quality

Source effectiveness 1. Employee referrals2. Large job boards3. Niche job boards4. Temp to perm5. Recruiters 6. Trade media7. Staffing services8. College recruiting9. Career fairs10. Co-op education11. Mass media12. Military

Source: staffing.org

Source effectiveness (out of 5)

1. Employee referrals 3.442. Social networking sites 2.983. Corporate career pages 2.754. Internal job boards 2.52

Source: Aberdeen Group

Employee referrals are #1 and they are 25% more effective…

than corporate career pages

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Top performers utilize referrals

ERP’s work best when you’re recruiting a top performer “Over 93% of the top performers in their field

do not find their job from a job posting”…

“Instead, they are referred by someone they know, such as a friend or networking contact”

Source: Forbes 8/03/2014

BTW, top performers produce the best referrals

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Q of H Measurement

You can measure the performance improvement of referrals versus other hiring sources… using 4 basic methods:1. Comparing the actual job performance output/

retention numbers (sales, customer service, production etc.)

2. Compare the % of improvement in performance appraisal scores

3. Compare the hiring manager’s rating of the new hire’s performance on a 1-5 scale

4. Compare the % of new hires that the manager would rehire after 6 months on the job

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The business impacts

By working with the CFO… you can prove the business impacts of better Q of H from referrals? Start with jobs where the output is already quantified The new sales people hired from referrals sold an

average of $869,000 their first year, While sales people hired from all other sources

averaged only $790,000 their 1st year… The added $79,000 is a 10% performance

improvement And $79,000 per hire over 15 hires = $1.2 million

every year they are retained

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The business impact

Next, quantifying the business impact for jobs where there is no quantified output measure Let’s assume Coke calculated the % differential

in performance appraisal scores of new referral hires over hires from all sources

They found that the ERP performance was 10% higher than hires from other sources

The yearly average revenue per employee at Coke is $261,000 (found on MarketWatch.com)

$261,000 X 10%... means that the value added by each referral hire is $26,000 for every yr. they stay

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What performance should you expect

from “the next generation” of ERP?

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ERP “next generation” performance scoreboard

1. At least 10% better on the job performance

2. Volume of all hires exceeds 50%

3. The highest retention rate

4. The shortest time to fill

5. > 30% of top performing employees participate

6. < 10% low-quality junk referrals

7. They can be the lowest cost per hire source

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Action steps for improving ERP quality of hire

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ERP Q of H performance improvement steps

#1 – The ERP must shift to a data-driven approach… where data reveals… Which employees provide the best referrals The best sources for identifying referrals The best job performance prediction factors The most effective rewards The best way to communicate The most effective ERP rules and policies Common errors and problems

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Action item #2

Change the motivator to “referring for the good of the team” Emphasizing the reward payout makes

employees focus on the money… (Only 11% of employees make referrals because of the “opportunity to earn bonus income”)

Convince employees that it’s every team member’s responsibility to be a 24/7 talent scout

Help employees realize that “with better players”, the team will win more often

Convince every teammate that they deserve to work alongside and learn from the very best coworkers (no slackers)

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#3 - Improve applicant quality by requiring this information

1. The job title or req # you are referring them for2. Verify they have not “found you” and there is no

personal relationship3. Show you have seen and assessed their work4. Assess, rate and then tell us about their skills and

knowledge… and how they are superior5. Assess, rate and then tell us about their cultural

fit… so they do not dilute our culture6. Assure us that you have sold them to the point

where they will accept an interview, if asked7. Honestly rate them with an overall A+, A, or B+

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More steps for improving ERP hire quality

Provide a story inventory

Provide a referral toolkit to educate your

employees on how to refer (DaVita and Whirlpool)

Referral cards are effective for customer service

Offer a once a year CEO ERP recognition dinner

Use the mobile platform for applying /communications

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The sources that produce the highest quality referral hires

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#1 – The best approach is being “proactive”

“Give me 5” “retrieval cue” approach (Google & DaVita)

Proactively approach top performers and ask themto identify the top 5 people in their field… using these “brain stimulator” categories

The best performer you ever worked withThe most innovativeThe best team playerThe best managerThe best working under pressure

Then ask the employee to contact these 5 individuals and try to convince them to apply

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#2 - ERP Q of H performance improvement steps

Boomerang referralsUtilize your corporate alumni group to… identify top-performing alumni that work in high need areas and assign an employee to them (DaVita 16%)

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#3 - ERP Q of H performance improvement steps

Reach out to job references for referrals

Identify top performing hires from last year

Call their references that said accurate things

Thank them

Ask them “Do you know anyone else as good?”

Consider hiring the reference

Ask them to be a future reference source

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#4 – ERP Q of H performance improvement steps

Expand referral eligibility to well-connected individuals that know and like your firmCorporate alumniRetireesVendorsSpouses Strategic partnersCustomers

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Additional great sources for quality

Ask new hires during onboarding

College student referrals

Assigned referrals

Referrals from those with a track record of

successful referrals

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Errors that reduce quality of hireDiscourage employees from submitting “they

found you” referralsDon’t “spam” all employees with referral requests

that cause fatigueNot giving individual employees feedback about

the quality of their referralsDon’t withhold payment… everScraping contact lists won’t work simply because

the names have not been pre-assessed or presold

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Benchmark firms that you can learn from

GoogleFacebookThoughtSpotDeloitteErnst & YoungEdward Jones AccentureDaVitaAricentChildren’s HospitalJobviteAccoloCACI InternationalAcumen Solutions

Remember the ERP open question session Wednesday at

2:30 PM

[email protected] 24

Did I provide you with a handful of actionable items?

www.drjohnsullivan.com

the next generation of employee referral programs will focus on improving quality of hire

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