Ed NewmanMay 04, 2017

Employee Referral Reinvented

Last week, I wrote a post challenging you to rethink the employee referral. The post focused on the problem with the long-standing policies and programs companies use to promote employee referrals. Additionally, these same policies and programs can actually diminish the value of an employee referrals as a source. In particular, the policy where we only allow one employee to get credit for the referral.

If we can all agree that the true value of an employee referral lies in the fact that one of our own people knows and endorses a candidate, then why do we have a policy that limits the number of endorsements a candidate can have to only one employee? I can tell you the reason. It’s so we don’t have to pay more than one referral bonus.

What if we wipe the slate clean and forget about the employee referral program as it exists today? What if we completely flip the paradigm, and instead of limiting the referral credit to one employee, we try to give credit to as many employees as possible?

You’re probably asking – how?

Here’s my idea for completely reinventing the employee referral program.

Cash referral bonuses are completely eliminated. Instead of cash, the credit for employee referrals becomes engrained in the overall rewards and recognition program of the company. In return for quality employee referrals and hires, the employee can accumulate points to be used for online shopping. Or, perhaps the employee can receive an extra day of PTO.

The amount of points rewarded will vary based on the value of the information provided. For example, if an employee refers someone they worked directly with in a previous company will garner more points than if they just refer an acquaintance.

Tap into the collective workforce for candidate endorsements. Instead of begging employees to refer someone to a job, we tap into the collective workforce to identify the employees who might know a particular candidate. At Phenom People, we call this the Enterprise Talent Graph. Then, we systematically ask them to provide an endorsement, and we do this for every candidate.

For example, let’s say a candidate who recently worked for Company X applies for a job on the career site. The system identifies every employee who worked for Company X during the same time period, and it pushes a request for an endorsement.

This endorsement can be as simple as a thumbs up, thumbs down, or neutral. Included in the request for endorsement, there could be a question about relationship type or specific skills. The goal here is the simpler, the better.

All of the endorsements get rolled into an overall score. You might consider this the weight of the collective endorsement by your workforce.

You don’t have to get rid of direct referrals altogether. Employees can still make direct referrals (worth extra points), and we will still market and promote the need for employees to refer quality candidates. However, once a referral is made, all other employees connected to the candidate will be asked for their voluntary input.

The benefits of rolling out this type of program are significant, including.

1. Instead of just getting one endorsement, we get as many as possible and maximize our collective knowledge about a particular candidate. Imagine if you tap into your alumni network as well.
2. We will get valuable information on every candidate that has a connection within the company, not just the people our employees thought of referring.
3. In addition to positive endorsements, we get any negative feedback as well. It will be more balanced, and will mitigate the halo effect.
4. Overtime, you can correlate the endorsement data with the performance of the referred candidates to determine which employees are better at evaluating talent. Endorsements from employees with better track records can be weighted more heavily than others.

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What do you think about reinventing the employee referral program?