employee referrals

Why referrals (especially in start-ups) should be a top priority

Why Referrals should be top priority

Why Referrals should be top priority

Why referrals (especially in start-ups) should be a top priority

Author: Stephanie Heisz, Talent Advisor, TalentMinded

From the time that I got my first “real job” I learned quickly about the power that employee referrals can have on a company and its culture. As well, after working in the start-up world, I have seen first hand how important it is to tap into the pool of talent in your network to hire people who believe in your company and mission. 

As it turns out, I found my current employment through a referral.  It’s easy to see why my employer is tapping into their referral network before posting positions online–hiring through an employee referral is faster, more cost effective and generally a better culture fit–and I’m living proof! I would also go as far to say that the majority of people I know found their first and often second job through a referral. 

It’s important for companies, especially tech start-ups, to understand the end-to-end value of an employee referral. Here are some of the reason employee referrals should be your number one, if not only source of hire when you are in the early stages of growing your business–and they may be different than you think.

JOB HOPPING HAS BECOME THE NORM

“Job hopping” has become the new norm; 91% of millennial workers only anticipate spending 3 years or less at one company. With so many options out there for a lot of skilled talent, especially in tech, it’s easy to keep fast tracking your career forward with great leaders and great companies.

Being a millennial I can attest to this myself and I see it happening within my network all the time. We have the mindset of always thinking about the next best thing. When I talk to people in my network about their current jobs, the majority are not planning to grow their career within the current employer or foresee the opportunity to do so. 

So there are two key points to this: 

1.       Given millennials may move jobs more often, having someone you trust refer them into your company can be a good sign.  Often times we dismiss ‘job hoppers’ thinking they can’t hold down jobs or get fired.

2.       Cutting through the noise on job boards and inmail ‘spam’ or avoiding it all together by going direct to your immediate referral network can be a key competitive advantage especially in a tight labour market. 

EMPLOYEE REFERRALS = HIGHER RETENTION RATES

We have entered into a time where it is easier than ever to apply to jobs and find them online – or the jobs find you! With tools like LinkedIn and Indeed, people can apply to multiple jobs with ease and/or receive daily notifications about jobs that match their search criteria. When applying to, and getting jobs, is this easy, it is essential for employers to look at other methods of employee retention.

Employers who have employee referral programs have 25% higher retention rates of employees after two years than those who do not. When you already have the inside scoop on a company, and know people who you respect within the company, it helps in making a smooth transition. Employers who use their network for referrals, and not just internal employees, have a better chance at extending their reach into the labour market and attracting talent who are pre-qualified ‘fits’ for the company.

My first experience with this was when I worked at a bank during my undergraduate degree. After my first year of employment, I referred two people to the company–one that I had worked with, and one a fellow student. At this bank, culture fit was very important, and since I had a great sense of what it was really like to work there, everyone I referred was hired and stayed and moved up in the company.

When you think about companies who have had success in hiring through employee referrals, like my current employer TalentMinded, the ROI is in employee engagement, retention, lower cost and time to hire and company growth.  

SO HOW CAN YOU INCREASE EMPLOYEE REFERRALS?

A lot of companies, especially start-ups, give employees perks for referring people to the company. It’s standard to have some sort of monetary compensation or tangible reward to motivate employees to tap their networks. We find most companies offer a minimum of $1500 per hire paid out after 3 months or half and half during the probationary period.

There are other things companies are trying in an attempt to fill their pipeline with quality referrals for hire.  I have a friend who works for a company that is doing some cool things with their referral strategies and its working. For example, they give their employees extra vacation days if they hire your referral.  They also take the employee and their referral out for lunch the first week the referral starts and make sure they publically recognize the employee’s contribution through a monthly newsletter and townhalls.  

Another way to increase your referrals and get your employees jazzed about digging deeper into their networks is to give it a brand of its own.  Try creating a sub-brand for your program with a logo and tagline to match.  This will help get your employees rallying behind something more tangible and visible then just an email reminder from time to time.

The ‘ask’ for more effort and energy in driving an increase in qualified referrals should also come from the top down.  A message from the CEO can be more powerful than a standard HR policy announcement or poster in the lunch room.

Lastly, consider rewarding your brand ‘ambassadors’ beyond your company walls.  Encourage referrals from external networks and people who know you and the company well.  Being a start-up usually means your small, so why not reward ALL the people that care about your success.  Extend your reach by expanding your rewards to other raving fans around you.  And as we mentioned, it doesn’t have to all be all about the dollars and cents. As stated in one of our earlier posts, “Why don’t companies reward the people who care about them”, it’s the thought that counts – don’t underestimate how far a $25.00 Starbucks card can go in helping you build your brand!

Essentially I am a firm believer in employee referrals based on what I have experienced personally as well as the success I have witnessed through my network and their career paths. Having some sort of employee referral system in place, that employees will actually pay attention to and action, should be a top priority when crafting your recruitment strategy.

Please feel free to share some of the things that your company does to drive referrals!

Author, Stepahnie Heisz, Talent Advisor, TalentMinded

 

 

 

 

What tech start-ups can (and should) be doing to rev up recruiting

We regularly attend events and meetups focused on start-up tech CEOs growing their businesses.  Regardless of the theme - how to get financing or build a winning marketing strategy - the challenge of finding and hiring great talent always comes up in the conversation!  

 

When projects can’t move forward or sales slow down because hiring isn’t happening fast enough; - this can be big trouble for executives.  It’s hard for organizations of all sizes to recruit the right talent.  And by now, if you’re scaling quickly, you’ve likely experienced the cost and pain of making a wrong hire.

 

Recruiting can be especially challenging when you are new or nobody knows you exist, you’re competing against big brands and big budgets and chances are you’ve tapped out your immediate referral networks.   

 

The good news - recruiting awesome talent for your start-up or growing business isn’t impossible.  Some may argue, ‘there’s no shortage of talent’ - you just don’t have the right strategy to go about finding the best people.

 

If, like most start-ups or growing business you are hoping that everyone wants to work for you because you are unique, your people make the difference, or you have a foosball table with a fully stocked bar fridge, you are mistaken.  No one knows who you are in the job market, so they aren't going to walk in the door resume in hand.  Posting a job and praying the best people are waiting for you - well, as they say ‘hope is not a strategy’.

 

There’s a famous quote from Abe Lincoln, "If I had eight hours to chop down a tree, I’d spend six hours sharpening my axe."  This is the key to great recruiting.

 

So how are you preparing for hiring?  Here are some tips to give you a competitive advantage and start building a quality talent pipeline.

 

1. Find out what truly makes you unique - conduct surveys and focus groups – internally and externally starting with the people who work for you, and the people who know you (advisors, consultants, family and friends).  Develop an understanding of why people want to work for you and why they stay.  Go beyond your product or solutions and dig deep for the true meaning.  Ask yourself, how you are changing the world or the lives of your customers?  And don’t assume you know what it is.  Take the time to better understand your target audience and what makes you special.

 

Everyone is looking for top talent - your ability to articulate what makes you unique, in a creative and compelling way, beyond the solutions you build, will be a critical tool in your talent strategy.  

 

2. Unlock your online ‘brand real estate’ – social media platforms like Indeed, LinkedIn, Glassdoor etc., have free company review pages where you can develop your company profile, add photos and employee testimonials as insights into your culture.  Get a head start on developing these channels of influence.  According to Glassdoor, 94% of candidates are likely to apply to a job if the employer actively manages their employer brand (e.g., responds to reviews, updates their profile, shares updates on the culture and work environment). (Glassdoor survey, October 2014)

 

No matter how small you are, you have a brand and a culture. Once you start promoting opportunities in your company, people will start looking for information.  Savvy candidates will start looking for evidence that you and your company are as awesome as you say you are. What they find will determine their next course of action - apply or move on.

 

3. Write creative job ads – this takes time and several drafts, maybe even outside help. An awesome job ad could prove to be the key to getting the right, quality candidates applying.  Don’t underestimate this – it can be a huge difference maker!  In our experience, the quality and appeal of your job ad (not to be confused with the formal job description) impacts the quality of the candidate pipeline by up to 80%.  

 

Jobs get ‘served up’ daily through social networks and there’s no better way to get to the passive candidate than tempting them into a conversation with a compelling vision of something better.

 

4. Get a recruiting technology!  There is nothing worse than a tech company recruiting on email!  Your process should be agile and engaging and relevant to this century.  What’s often referred to as ‘inbox recruiting’ is clumsy, cumbersome, and super inefficient for both the candidate and whomever has to sift through all of the resumes.

 

There are many cost effective candidate management solutions on the market that pay for themselves 10X over in time and capability. 

 

5. Rev up your ecosystem – start planting seeds with your referral ecosystem – and not just employees - consider all your ‘Friends of the Firm’ - vendors, customers, advisors, followers, University alumni, friends, local schools – whoever the best talent might be friends or acquainted with.  Don’t just limit your referral bonuses to employees.  There’s a good chance your next hire is a friend of someone you know and cares about your success.  Start nurturing and creating value in those relationships; so when the time comes you can tap in.

 

Failure to plan your recruitment strategy may cost you customers, funding, revenue or worse, a rushed decision on a wrong fit hire.  

 

Recruitment isn’t just posting a job and waiting for candidates to apply. That’s not how you land your best customers and it’s certainly not how you get the best people to share in your vision and want to work hard for you. You’ll need all cylinders activated to get your message to the right people – it takes time, a good process and strategic planning, but it’s not impossible.  

 

Don’t get caught without a customized recruitment strategy. Like Abe and his axe (you knew I was going to come back to that!), invest in the front end of your hiring needs. At TalentMinded, we are expert axe sharpeners.  We help companies scale by providing smart, effective and efficient recruitment processes and strategies that drive profitable results.  If you need a better talent acquisition strategy to help your company grow or just need some good advice on technology solutions or best practices - reach out - we’re passionate about helping great companies scale!

Why don't companies reward the people that care about them?

Why do organizations not reward external people (like alumni, clients, followers) for referring company career opportunities to their friends/family, social networks and other channels?  There are some companies that do but at TalentMinded, more often than not we uncover organizations that are just in the stages of perfecting their internal employee referral programs; they’re not even thinking out of the box! 

Years ago I worked at a company that paid out rewards to what they called, ‘brand champions’.  If you referred a new business opportunity and/or a candidate that was hired they would present you with a gift card of your choice.  There were terms and conditions of course, but overall the success of the program was less about the monetary value of the reward (in this case it was usually $250.00) and more about the passion for the brand and recognizing fans for helping them succeed.    

It was through programs and values like this that they built an engaged community of external brand champions that believed in the mission, cared about their success and always took the time to help.  It was about building strong partnerships and relationships and it worked!  The program was so successful in fact, it was like having another recruiter on their payroll! 

These types of channel referral programs are not new to how businesses drive sales and revenue, so why are they virtually obsolete from how we attract and acquire new people to our companies?

Leveraging a company’s external reach to talent through broad social media networks and other spheres of influence is core to recruitment success in today’s digital world, especially for new start-ups.  Much like a strong marketing program, to survive (or at least compete) companies must optimize all channels in the talent ‘ecosystem’ to drive awareness and ultimately create better quality, predictable talent pools. 

We know the best candidates (and customers) come from referrals – inside and out – so we’re curious – what’s stopping companies from developing this type of external program to help access and reach the right people for their business?   

We’d love to hear your successes, challenges and thoughts on external referral programs!

Comments welcome or reach out direct at kim@talentminded.ca

Author: Kim Benedict, Managing Director/Co-founder, TalentMinded Inc. www.talentminded.ca