The Holy Grail of Hiring is Employee Referrals. Period. End of story. If you don’t get it, you shouldn’t be in the business of hiring people. Please do not pass go, do not collect $200. (Wait, is it still $200 for passing Go in Monopoly? You would think inflation would have adjusted that!)
Drafted, an employee referral startup, apparently (Hey, Cait, reach out to us!) that no one has heard of, but put together some great data around employee referrals that we must share! Here are some of the takeaways (click here to get the full report):
- Overall across all employer sizes, the average number of referral hires is 27% (1 out of 5), on the high end, it’s around 44% of hires.
- The average referral hire bonus is around $2000, the highest found for a “super hot” spot bonus we are desperate was $30,000.
- “Referrals” is the most popular source of hire regardless of company size and corporate age.
- 60% of Referral Bonuses come with restrictions, like, a probationary period before you get your cash (30-180 days range). (Lame!)
- Non-money referral rewards are increasing, including: gift cards, corporate recognition, charitable donations, and dinner with the CEO.
- There’s no real 7-degree of Kevin Bacon going on. Most referral hires are one-degree of separation from the employee.
Let’s breakdown the finding!
First, a good data set, but about 70% of those reporting are SMB to Mid-enterprise, so keep that in perspective. Only 30% of the respondents had an employee size of more than 1,000. Also, Greenhouse killing it on the ATS data front – check out the report.
Does 27% of hires being referral hire sound about right? Feels about right, I like to think organizations can get to the 40% mark, but your culture has to be really dialed in, and you better have employee referral automation built into your recruiting stack to make that happen.
I’m not a huge believer in we have to pay referral bonuses to get our employees to refer from their network. It’s the 80/20 rule. 20% of your employees will refer their friends and family for jobs you have open, regardless if you paid them or not. 80% of your employees will never refer someone, regardless if you pay them or not. So, we are kind of paying money out for no reason. Turns out, some employees are just Employee Advocates.
In terms of “Hot Jobs” “Spot Bonuses” upwards of $30,000 for a one-off here and there. Yes, you can turn some of the 80% into referral engines. So, if you’re going out and using an agency and paying $40-60K for a hire, getting one for $30K is a bargain, in comparison.
What do employees really want for referring their friends and family?
Some interesting takeaways from the report around non-monetary “rewards” employers are giving to their employees for referrals. I think, for the most part, the vast majority of employees would be completely satisfied with being recognized for helping out.
I do like things like charitable donations in the employee’s name, as many younger employees (GenZ, Younger Millennials) really like this. But, I really also like having lunch, dinner with the CEO. Not many employees get one-on-one time with your senior executives, and this might be the most valuable thing you can give away. Just don’t make it a monthly group luncheon, that completely takes away the value!
How can you get more referrals?
The Sackett “C” Step method for more employee referral hires:
- Turn on employee referral automation. Turns out if we remove friction in terms of our employee’s ability to share our jobs with their network, we’ll get more referrals.
- Engage your small set of employee advocates weekly with what’s hot, etc.
- Follow up, live, with every single employee referral you get. Two ways: one with the actual referral, even if they don’t fit, two with the employee who referred and what you did and what will happen.
- Public Recognition and Scoreboard. Let everyone know who referred whom, and by department/Hiring Manager run an ongoing scoreboard of which groups refer the most talent.
- A high-level executive overview, monthly, to your C-suite on employee referral activity.
The fact is you will not, on average, get more or better hires than you will get from your own employees. If you want to be world-class at talent acquisition, you must be world-class at delivering employee referral hires.
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