Employee referrals are a proven way to raise the quantity and quality of the applicant flow in a supply chain organization. According human resources thought leader John Sullivan, Ph.D., 88 percent of employers report that referrals are the number-one source for finding and hiring above-average candidates. Plus, it only takes five employee referrals on average to make a hire. He writes, in “10 Compelling Numbers that Reveal the Power of Employee Referrals” from ERE Media, that retention of referred employees is 46 percent after one year, compared to 33 percent for users of career sites and 22 percent for users of job boards.
Referral programs vary based on company culture, supply chain organizational structure and overall goals. But the following six tips will lead most businesses to a successful effort.
1. Establish objectives. Have a clear vision of what should be gained through the program. While the primary goal is to find more candidates, there are other factors to consider. Ask yourself the following questions: What are our top hiring challenges? What talent gaps exist within our supply chain organization? Where does our highest turnover exist? How are hires generated from employee referrals performing compared to those from to other sources? Perhaps the program can help foster diversity or increase referrals in a specific area. Or maybe you want to generate referrals for 10 percent of warehouse hires, with 20 percent coming from employees. Being as specific as possible builds awareness so people can work together toward achieving goals.
2. Implement a tracking system. If you’re a smaller organization with only a few openings each year, it’s possible to manually track referrals. However, for bigger companies, referral tracking systems are required. Reduce complexity by making the process as simple as possible for employees to follow. Some great referral and recruiting programs to consider include GetAmbassador.com, Referral Rock, Extole.com and Jobvite.
3. Train your workforce. Make sure employees know how to generate qualified referrals. Train them on
- the qualifications you are looking for in a referred candidate, including specific supply chain skills, leadership values and other traits
- what employment gaps your company needs to fill
- how to properly use the system to refer candidates.
Consider creating a fact sheet that highlights key company statistics, details on the supply chain organization and other information employees can use to help generate interest from the people they know.
4. Provide timely feedback. If someone takes the time to refer a candidate, providing updates and recognition are critical and can make a huge difference to the success of the program. Don’t wait until a hire is made; at a minimum, use an automated email to thank the employee upon receipt of the referral, when a decision is made on whether to invite the referral for an interview and when a final hiring decision is made. The more transparent you are throughout the process, the more referrals employees will generate in the future.
Another way to increase engagement is to have the referring employee participate in the interview process with the candidate. The employee could welcome the referral upon arrival, take the person to breakfast or lunch, or lead the individual through a tour of your operations. Adding this high level of personal touch helps the employee feel appreciated and leaves a great first impression on the interviewee.
5. Keep employees engaged and aware. If your employees aren’t generating referrals, it’s typically due to a lack of awareness of current job openings and not understanding the proper protocol for referrals. Use a referral or applicant-tracking software to enable employees to refer job openings via email and social media channels. Or, if you don’t have these types of tools, weekly email reminders to your staff containing a list of job vacancies provides visibility and easy sharing of job postings.
Another proven engagement method is offering bonuses for each referral hired. Cash bonuses are always effective, but there are other options as well:
- A supply chain executive can acknowledge employees who referred new hires in an email announcement or at a town hall meeting.
- Create a point system. For instance, give employees five points for tweeting a job opening, 15 points for each referral, 500 for a hire and so on. They can cash in points for rewards such as a day off or a gift card.
- Simply send a thank-you note from the talent-acquisition team for each referral submitted.
6. Measure results. Assessing your employee-referral efforts is critical to understanding the success of the program and areas that could be improved. While metrics vary depending on the goals you’ve set, the following are a good place to start:
- Percent of hires that came from referrals: If this number isn’t as high as you want, simplify how employees submit referrals or adjust how you promote the employee-referral program within your organization.
- Percentage of qualified referrals: This is the number of referrals who are qualified enough for an initial resume review or first-round interview. If this number is low, your employees are referring the wrong people and need more training to better understand the job qualifications.
- Participation rate: Many times, a small percentage of the workforce is responsible for the majority of the referrals. If this is the case, enhance program promotions and provide better incentives.
- The quality of hires: This is a fantastic way to understand how well candidates referred from employees are performing within the organization compared to those hired via job postings, search firms or other means. If you’re getting great results from employee-referral candidates, you may be in a position to reduce your spend on other sources and invest more in advancing your employee-referral program.
A supply chain organization without a strong referral program is missing out on a great opportunity. Implementing these six core steps can significantly improve your ability to acquire top talent.
Rodney Apple is founder and president of SCM Talent Group, a supply chain recruiting and executive search firm. He has served as the APICS career coach since 2014 and routinely contributes supply chain career development content for members. Apple may be contacted at email@example.com.