Best Practices for Achieving Talent Success Maturity
Building and Running a Successful Referral System
With insight from
Former CHRO, Professional Board Member
Libby Sartain is an independent advisor, working with companies on human resource issues. With more than 30 years of experience in human resources, she is also an author and frequent speaker, using her HR leadership and management experience at companies in technology, transportation and manufacturing. She led human resources at Yahoo! and Southwest Airlines during transformative periods. Both companies were among Fortune magazine’s “Best Places to Work” during her tenure. She is the former board chair of the Society for Human Resource Management and is on the board of Manpower Group and is the Vice Chair of the Board of AARP.
With research and insight from Sierra-Cedar.
Who it’s for:
HR managers, recruiters
What you’ll get:
An internal email template about the company referral program
Why you need it:
To obtain better talent faster through your company’s internal referral program
When it applies in the talent success process:
Before or during recruitment
Creating Your Referral Program
To ensure that your company has the best talent available, you need to tap every possible resource for talent. That means looking inward to your employees to tap their professional and personal networks. With some direction and incentive from you, your employees can help you build a strong, reliable workforce with more A-players.
Why Referred Talent Is Effective
Referred talent is beneficial for your company in several ways.
- Referrals are more likely to succeed. *
- Referred talent is a good cultural fit. *
- Referrals reduce your cost to hire. *
Fifty percent of organizations use employee referral applications. * The same study found that another 24 percent of organizations are evaluating future use of employee referral applications.
For A-player Talent, Create a Great Referral Program
The best way to get your employees to refer top talent to your company is to create a referral program that offers clear goals and meaningful incentives. You’ll need to establish your medium, determine the rewards, set your terms and conditions, and then get executive approval before launching the program.
Establish Your Medium
The best medium for your referral program is one that is already commonly used at your organization. Is everyone addicted to Slack? Throw a referral channel on Slack or create a special tag. Do people live and breathe inside of an intranet home page? Add a link to the landing page.
Deciding where your referral program will live is a major step, as you will also have to decide who will track and maintain the referrals. Some questions to answer include:
- Should your referrals go to a website landing page?
- Should they all be tracked via email?
- Should you use an automated system to track referrals?
This is a conversation you should have with executive leadership and your development team to decide which medium is best for your referral program.
Set and Determine Rewards
Now you have to figure out how you will reward employee referrals. Rewards could be monetary, such as gift cards, or they could be nonmonetary, like company tickets to an event or something else of equal value. Monetary rewards will likely have the most universal impact on your workforce, but it’s a conversation you should have with your executive team. Remember that referrals are saving your company money in the long run.
Employee referrals are the best source of hires. But to do it right, be creative and make it fun. At Southwest Airlines, we often used contests to get employee referrals for high-volume hiring needs, offering drawings for prizes and incentives like vacation trips to participants and a grand prize for the employee who referred the most new hires.
At Yahoo, we made this part of the new-hire process. A few weeks after a new hire was in place, their recruiter would take them to lunch and ask for three great referrals who they would most like to work with in the future.
At Facebook, they use a “Ninja Hunt” — a quick practice that allows recruiters to build a database of top talent through employee referral. The Facebook Ninja Hunt uses informal meetings to gather a group of employees together to have them go through their contacts and point out great connections or — in Facebook terms — hunt for the next set of Facebook Tech Ninjas. Since employees and recruiters are in a face-to-face meeting during these sessions, recommendations can be talked about freely and openly. Dell Computers uses a similar approach called a “jogging session” to jog employees’ memories about the people they would most like to meet with. And don’t forget to offer free beer and pizza or some other incentives to entice participation.
— Libby Sartain, Former CHRO, Professional Board Member
Set Your Terms and Conditions
If you have a legal department, you will want to run your referral terms and conditions by them. Otherwise, it’s best to err on the side of caution. You will want to make sure your terms and conditions clearly lay out that employees will not be paid for referrals until the new hire has started (and, in many cases, stayed a minimum number of days), how long the referring employee will have to wait to collect a reward, and how the reward will be paid. You will also want to be clear on whether a reward will be paid if an employee refers a candidate who previously applied to another role or applies again after being rejected or not accepting an offer for the position they were referred to. As SHRM lays out in “Recruiting: Employee Referral Program Procedures No. 1,” * setting limitations on who your employees refer and how they refer talent (such as family members) will be important, as well.
With all of the elements of your program in place, you’re ready to get started on your referral program.
You’re ready to take your plan to management for review and approval. After you receive approval, you can begin communication about the referral program with your employees.
Putting It All Together: Internal Referral Program Email Template
Using templates for referral programs helps you consistently apply recruiting best practices to be able to hire and engage more top performers more easily and effectively, and polish your company brand as an employer of choice.
Subject: [Your Company]’s Employee Referral Program Is Now in Place
We wanted to let you know about our new employee referral program that is effective immediately.
As you know, we are currently hiring for [open positions]. If you know anyone who would be a good fit for [your company] culturally and has the abilities necessary to perform [this position/one of these positions], please have them send a cover letter and resume to [established email/landing page], and make sure they let us know you referred them.
Here’s how our referral program works: Select someone you know who meets [your company]’s criteria [link to company values/hiring criteria, if applicable]. Have your referral send a cover letter and resume to [established email/landing page], and make sure they let us know you referred them. If your referral is selected for a position, you will be awarded [your reward]. You will be [paid] via [payment method] [within 30 days of/three weeks after] your referral’s start date.
Follow our referral program rules [link to company referral program rules, if applicable] to ensure that your referral is qualified.
Please feel free to share this [job posting] with your professional networks and on your social media accounts.
Thank you for helping [your company] acquire the best talent possible.
[Your email signature]