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Start an Employee Referral Program

Start an Employee Referral Program

Adapted from the book Finding Keepers: The Monster Guide to Hiring and Holding the World’s Best Employees by Steve Pogorzelski, Jesse Harriott, Ph.D., and Doug Hardy. Published January 2008 by McGraw-Hill.

Are you ready for an employee referral system to succeed? To paraphrase Professor Frederick Reichheld (from his excellent book, The Ultimate Question), what really matters is whether your current employees would recommend your organization to their friends.

Chris Forman, president of human resources consulting firm AIRS, believes that you train amateur recruiters by telling stories. He says: “Employees remember stories. Right now we’re looking for customer service representatives, so I told people, ‘I was out to dinner the other night and I had the best waitress in the world. She was phenomenal. She was smart, she was
there, she was on time, and I gave her a 30 percent tip. And at the end I gave her my business card and said, you know what, if you ever get sick of this, give us a holler.’ People get that. I tell our engineers that when they attend a meeting of the Upper Valley [Connecticut River] Engineers Club, they should go up to the smartest person in the room and say, ‘You’re the smartest person in the room. I would really love to have you work with me. Why? Because you’re the smartest person in the room.’ ”

Chris points out that a good referral system can break old rules, for example, about hiring relatives. “This might sound counterintuitive, but we love nepotism.We have brothers-in-law and sisters who work here. My father works in the business. They’re our best employees. You never hire two people at once, but when people say don’t hire friends, neighbors, or relatives, they might be overlooking great candidates.”

There are plenty of ways to set up an employee referral program, from the most informal bonus system in a small organization to a full-blown system that identifies and tracks the employees who make the greatest contribution. Managers can offer additional incentives to people who bring new hires into their departments. Individuals might receive a better raise based on the performance of the people they bring in. You can teach essential networking skills to every employee and broadcast victory stories. You can offer a portion of the reward when a referral is hired and the rest after 3, 6, or 12 months.

Rob O’Keefe of TMP Worldwide Advertising and Communications suggests a variation he calls a “preferral” program:

A referral program works on the premise that an employer notifies employees about open positions and employees think about who they know that would meet the requirements and do well in the organization, and then rise to action.

A preferral program first focuses on identifying employer brand evangelists at the height of their evangelism (when they first join the company), and staying with them throughout their employment experience. It asks these evangelists to identify potential referrals across all positions in the organization, regardless of whether they are open or not.

In other words, use employees to fill the pipeline with candidates before you need them. Intelligent engagement by employees who promote your employer brand is the ultimate outreach. It belongs in any recruiting program, in any recruiting discipline. Its common name is networking.