The 3 Biggest Mistakes Companies Make With Their Employee Referral Programs

July 27, 2015

Most large companies - and an increasing amount of mid-sized and smaller companies - have some sort of employee referral system, and for good reason: studies show referred candidates are more likely to get hired than non-referred candidates and stay at their jobs longer, if hired.

The problem is, too many companies commit one of three fatal flaws that undermine the effectiveness of their referral program, according to Kara Yarnot, who studies referrals in her role as president of Meritage Talent Solutions. Those mistakes discourage employees from referring candidates in the future, causing the program and the company to suffer, she said.

“Referral programs are great,” Yarnot said in an interview with LinkedIn. “But, just like most things, if they are done poorly, they can turn into negative.”

Specifically, the three most common and most demoralizing mistakes companies make with their referral programs are:

1. They don’t set or deliver on expectations

“This is the most important thing to think about when setting up a referral program,” Yarnot said.

When a company wants to set up a referral program, the first thing it needs to do is determine exactly what it can accomplish, Yarnot said. For example, if the recruiting team is stretched thin as it is and won’t be able to respond to every referral, the rest of the company needs to know.

“You really want to respond to each referral, even if it is a mass rejection email,” Yarnot said. “But if you can’t, you need to communicate that with your employees.”

The number one killer of any referral program is when an employee refers a friend, expecting the company to reach out to them, and their friend never hears from the employee, Yarnot said.

“If your employees are referring good people but no one is getting a phone call, they’re not going to find a reason to refer ever again because you’re putting them in a personal bad situation,” she said.

The solution is to clearly communicate expectations upfront and then ensure if those promises are being kept, Yarnot said. For example, if a talent acquisition team says it’s going to respond to every referral, the head of talent acquisition should track if that’s really happening.

2. They neglect giving an employees recognition for referring someone

When an employee refers someone and that referral gets hired, the employee has helped your company. Companies should recognize the employee in some way, both for their extra effort to help the company and because it encourages more referrals, Yarnot said.

The most common form of recognition is money, but it doesn’t have to be, she said. Yarnot cited examples where employees who successfully refer candidates are publicly thanked by the company’s president at their all-hands call or given a company track jacket.

“It doesn’t have to be anything costly,” Yarnot said. “A public thank you from the CEO, for example, goes a long way.”

3. Recruiters don’t tell their employees about open positions

Do you know what positions are open at your company? Well, you might, because the vast majority of people reading this post are recruiters; but it’s almost assured most of your company’s other employees do not.

So, companies say they want more referrals, but most employees have no idea what positions are open within the company, Yarnot said. So few people participate, and the referral program withers away.

The solution is for the talent acquisition team to somehow communicate open positions to a company’s employees. There are tools that do that automatically, although organizations can do it manually by sending out weekly or monthly emails showing the company’s open positions, or mentioning them during all-hands calls, Yarnot said.

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*Image from Death to the Stock Photo