By Richard Doherty


If the following recent article is anything to go by - Startup Ups the Ante for Employee Referrals – an incredible $20K referral bonus for employees - employee referral programs are certainly increasing in popularity!


Given that referred employees typically perform better and are 15% less likely to quit than other types of new hires and referral programs can open up difficult to access talent pools, this makes perfect business sense. I would also suggest that typically low cost-per-hire statistics for referred candidates may also have had an impact on increasing the popularity of employee referrals (although perhaps not for the startup referenced in the linked article above!).


According to an article in the NY Times, many companies are putting significant effort and resources into increasing the proportion of hired candidates that come from referrals. Deloitte are cited as having increased the proportion of non-entry placements sourced via referrals from 28% to 45% between 2010 and 2013.


Historically, the proportion of hired candidates that have been referred has been perhaps lower than desired due to the “friction” in the referral process. What I mean is that it hasn’t been particularly easy for employees to refer their friends/contacts:



It’s often difficult for employees to find the vacancies that are relevant for them i.e. I work in marketing so it’s likely I’ll be able to refer candidates for marketing related vacancies;
It’s not easy for employees to actually submit and track the status of their referrals;
There is a lack of transparency in the process, so employees feel like they are dropping their referrals into a black hole. This is particularly concerning for employees when a referral bonus is involved.




If your organisation is planning to increase referrals, how do you plan to do it? I would suggest that you need to look at removing the “friction” from the process:



Set up a mechanism where employees can specify their preferences in terms of the types of job they want to refer candidates for. Once these preferences are set up, email them directly with details on new vacancies that match their preferences. Employees will no longer have to actively search for jobs to refer candidates to, these jobs will automatically drop into their inbox;
Make it easy for employees to refer candidates. This will need system support – getting employees to email their referrals to a generic recruitment email address just won’t cut it. Ideally make it easy for employees to match candidates from their external networks to open vacancies. Again this needs system support and it requires integration with external social networks like LinkedIn. Provide an online referral platform that integrates directly with employees’ external networks and makes recommendations on who would potentially be a good fit. Then with a couple of clicks facilitate the submission of the referral(s);
Make sure that the referral platform provides sufficient visibility to the referrer employees so that they know what’s going on and don’t plague the recruitment department with calls;
Make sure that the referral platform is easy to use and engaging, otherwise it simply won’t be used. Throw in a little gamification to drive engagement and more referrals;
Make sure you’ve closed the loop between your referral platform and your ATS so that referral awards are not forgotten;
Finally, don’t forget that you can have the greatest referral program in the world, but if your employees are disengaged you won’t receive the volume and quality of referrals you desire. Gallup has found that engaged employees are twice as likely to mention that their employer is hiring than actively disengaged employees;



Employee referrals are a great opportunity for many organisations to attract better quality candidates that typically stay longer with your organisation, but it is essential to have the right processes and referral platform in place to make your referral program a success.

For details on Oracle’s innovative solution for referrals and social sourcing, take a look at the Oracle Social Sourcing.



Richard brings more than 14 years of cloud based HCM solution experience to his role as HCM Strategy Director at Oracle, based in the UK. As HCM Strategy Director he has a thought leadership role and works closely with Oracle’s strategic customer accounts to explore the opportunities and benefits that can be realised by the deployment of leading edge HR solutions. Follow Richard on Twitter: @RichardDoherty
https://blogs.oracle.com/OracleHCM/entry/which_sourcing_channel_is_increasing