At WilsonHCG, we’ve teamed up with Talent Pulse from the Human Capital Institute (HCI) to explore the latest trends, insights, and challenges in talent management. Specifically, we recently released a unique report – Making Referral Programs Count: Sourcing Quality Hires through Employee Networks – in an effort to provide HR/talent practitioners and decision makers with prescriptive methods to rehabilitate the health of their human capital, while likewise empowering employees and leaders to effectively address current and future challenges.
For this report specifically, we released a 28-item questionnaire to C-level, VP-level, director-level and manager-level industry leaders to gain insight into employee referrals and their unique impact on both competitive advantage and bottom-line performance. WilsonHCG and HCI received in-depth feedback and best practices from more than 200 leading organizations across the globe, all delving deeply into the ways they’re leveraging the full strength of their employee networks to source and attract the highest quality of candidates. You can access the full, complimentary feature at the link above, and below are our top seven takeaways from the research.
1. Many agree on the importance of brand ambassadorship, yet most aren’t willing to promote their organizations. Why?
According to our research, 85 percent of HR leaders agree strongly that employees are their most effective employment branding tool. However, just 41 percent of employees would recommend their place of work to a friend or former colleague. The report suggests that companies have quite a bit of work to do in order to encourage active employment brand ambassadorship; it starts by first creating a culture and workplace people want to “be” but likewise feel empowered and inspired to promote across social media, job review websites and through referrals, among other ways.
According to Mary Megali, Director of Talent Acquisition at OpenText EIM (Canada’s largest software company and named by the Financial Post as one of Canada’s 10 Best Companies to Work For), “You cannot just put words on a screen and tell people who you are; you need to discover who you are and live and breathe that authenticity.” As Ms. Megali explains, companies first need to discover and define their brand, because falsities will be recognized – not only by candidates but by the very employees companies are seeking to morph into willing, excited brand ambassadors
2. Employee referrals have become an integral brand ambassador/talent strategy.
Nearly 30 percent of surveyed organizations have increased their use of employee referrals over the past year alone. There are several reasons for this continued growth. According to Shaunda Zilich, GE’s Global Employment Brand Leader: "We need to face reality, trust is at an all time low ... People want to know from other people what it’s like to be part of a given company; people trust other people." Moreover, and in line with Ms. Zilich’s sentiments, talent acquisition is shifting toward comprehensive, strategic talent management – that is, competitive advantage being contingent on all facets of talent strategy working together and relying on one another.
For example, referral programs not only empower your people but, as you receive applicants from top performers, this allows the organization to develop targeted personas around your highest performing employees. Referral programs are also one of the most impactful ways to increase retention. Referred employees are often more engaged from the start, as they enter the company with a positive impression of your culture, mission, vision and leadership. They’re also entering with a unique level of trust, having worked directly with a friend, family member, former colleague or professional contact to initially explore the role and company.
3. The top-four ways companies are turning their employees into brand ambassadors:
As noted above, just 41 percent of respondents would refer their employer to a friend or former colleague, while 22 percent say they actively would not serve as brand ambassadors. For those who are having significant success leveraging their workforces as brand ambassadors of the company and supporters of talent strategy, these are the top four ways they are doing so:
- Referrals (82 percent)
- Surveying employees/asking how to improve company culture (52 percent)
- Relying on “positive workplace culture to cultivate self-initiated brand ambassadors"
- Using employees as “welcome ambassadors” for new hires during onboarding
As noted above, employee referral programs have become somewhat synonymous with brand ambassador initiatives. Specifically, companies are realizing the importance of support from their most influential people; toward this end, they’re investing more in their workforces (as explored more below) while relying on them to help align all phases of talent acquisition and management.
4. It’s more about finding/keeping quality talent than cost savings.
We asked respondents their top reasons for creating and/or building upon their brand ambassador employee referral programs. The responses were encouraging, as three of the top four reasons were directly related to strategic improvements as opposed to transactional or strictly cost-related:
- Find candidates with a stronger culture fit (45 percent)
- Have high-performers refer other high-performers (38 percent)
- Lower recruiting costs (30 percent)
- Find higher-quality candidates (28 percent)
It’s no secret that companies with the most successful brand ambassador and employee referral programs are incentivizing their employees to take part. Specifically, of the 74 percent of surveyed companies (between 1,000 and 10,000 employees) who incentive their referral programs, 92 percent have cash incentives with a the median cash value of $1,000 ($500 appeared most often).
Moreover, companies achieving the most success specific to their referrals programs are doing so through a “well-planned and well-executed referral program” that is “communicated and marketed throughout the workforce.” A single, company-wide email regarding your referral program will not suffice, and companies need to make sure their workforces know such programs exist. The rules, guidelines, incentive, process, and timeline must be known to all stakeholders.
As GE's Ms. Zilich explains, “You have to ask yourself the tree falling in a forest question. If we create a campaign or ad and nobody experiences it – is there any sound? Is there any impact?” This is vital to consider for external marketing, but also for internal marketing strategies. The marketing and talent strategy lines will continue to blur, as the most successful organizations are realizing the importance of aligning talent strategy efforts (in this case employee referrals) with the promotional campaigns set forth by each company's marketing department and, in turn, their brand ambassadors.
6. Just 35 percent of organizations measure quality of hire.
Despite broad understanding of its importance, as well as the number of organizations relying on brand ambassador programs to increase the quality of their workforces, only 35 percent of respondents indicate measuring quality of hire in any form. Quality of hire is a metric that can help determine the effectiveness of your recruitment sources (e.g., job boards, referrals, direct application on company careers webpage) and recruitment strategies. It’s perhaps surprising, then, that just one-third of surveyed organizations track this key performance indicator at all.
For those that do measure quality of hire, the majority evaluate multiple data sources to gather the most accurate picture; the most common data points include:
- Performance evaluations/ratings
- Manager feedback
- New hire satisfaction surveys
Respondents rated employee referrals as the third most effective source for quality hires. Interestingly, though, referred hires were rated just one percentage point higher (52 percent) than hires from social media (51 percent) – indicating that respondents don’t feel (or perhaps don’t know) there is much difference in hire quality whether the source was LinkedIn or a referral from an employee. This is likely because, for most respondents, the quality of hire metric is not assessed and still viewed as a “proxy metric” for job performance (i.e., of an unobservable or immeasurable variable that can’t quite be “defined” by measurement).
7. Leaders need to own the referral process and be held accountable.
According to feedback from the surveyed organizations, referral programs need to be a top-down strategy. As one leader stated, “Senior leaders need to believe in the program and be part of the design and, possibly, the implementation so that the rest of the organization has a chance to be familiar with it and participate. It can help set the culture if done correctly.” As another leader stated, “Make your referral program exciting and stay in front of colleagues. Make them feel important and recognize them for referring.”
Many parts and pieces will factor into the creation, implementation and communication of a brand ambassador and referral strategy. However, what’s clear from the report and industry leader experiences: genuine buy-in and investment from senior leadership can be a significant factor in whether these programs succeed or serve as a mere blip on the radar of employees’ daily tasks.
The research shared above is just a sampling of the content, conclusions and feedback from the 200+ surveyed organizations. For a deep dive into all things brand ambassadorship, employee referral programs and the impact on an organization’s bottom line, we encourage you to check out the full report: