How Google Dramatically Increased Referrals (Hint: More Money Didn’t Work)

May 27, 2015

Google, after years of painstaking, data-heavy research for which the company is famous for, realized that employee referrals made the best hires. That’s not completely surprising, as there have been several highly-publicized studies backing that claim.

So, since the search giant is self-admittedly obsessed with hiring only the very best, they made a real effort to get more of them. And that meant investing more money in referral bonuses.

Unsurprisingly, that didn’t help at all. And neither did streamlining the referral process, interestingly enough.

Instead, what made all the difference was taking a marketing approach to “nudging” employees into making more referrals. And that worked, big time, to the point it increased referrals by more than one-third.

What didn’t work

As mentioned, Google’s first attempt at getting more employee referrals was doubling the bonus for employees for referring a friend. Originally, employees would get $2,000 for referring someone who was ultimately hired, with Google later increasing that to $4,000.

Did it work? Not at all, as the amount of referrals remained the same after the bonus increased, according to Google’s head of people operations, Laszlo Bock, in his newest book Work Rules!.

“It turned out that nobody was meaningfully motivated by the referral bonus,” Bock wrote in the book. “People (who referred other employees) actually loved their work experience and wanted other people to share it. Only rarely did people mention the referral bonus.”

Google even streamlined its referral program, requiring referred job candidates to take fewer interviews than a typical applicant and ensuring recruiters reached out to referrals within 48 hours of receiving them. While that improved the way Google employees felt about the company’s referrals, it didn’t actually increase the number of them.

What did work

So what did Google do? Well, it took a marketing approach to “nudging” employees into making more referrals by reminding them about specific open positions and then encouraging workers to comb through their networks for someone who might be a good fit.

For example, Google would ask employees questions like “who is the best finance person you ever worked for” or “do you know a great salesperson in New York”, according to Bock. By being so specific, employees were much more likely think of someone and then refer them, Bock wrote.

Additionally, Google held “sourcing jams” where a group of approximately 25 Googlers would comb through their LinkedIn and Facebook contacts with recruiters waiting on standby. If a Googler came across anyone good, a recruiter would immediately follow up with them, Bock wrote.

The takeaway

People don’t refer someone for a bonus. As Google found out, people refer other people because they both believe in them and they believe in the company they work for.

Increasing referral bonuses will do little to increase the number of referrals your company will receive. Instead, the path to more referrals is:

  1. making your company a great place to work, so people want to encourage other people to work there, and
  2. nudging your employees into referring their colleagues more by reminding them of specific job openings and encouraging them to comb through their contacts for the best people.

Bottom line, employee referrals can’t be bought. They are generated both by creating a great place to work and by reminding employees to make them.

* image by etnyk

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