Sunday, April 12, 2015
Sunday, January 11, 2015
A quick search of "Employee Referral Programs" on Google will produce 81,300 results.
Everyone it seems has written an article or two (or three) about the importance, the value and the how to of ERPs (we'll address other types of referral another time). Guilty as charged.
Lots of content easily found shows companies how to tweak their programs: Incentives for…, Communication to…, Management of… , The Five Best… etc. etc. Lots of nuanced debate is almost always current at online sites discussing the best ways to improve an employer’s referrals - the quality, population diversity, size of rewards and more.
A firm’s success with referrals - typically their #1 external source of hire - is traditionally measured by the % of hires attributed to it. For most US companies referral hires range from 20% - 40% of the total by source. In a few firms, recruiting leaders measure the quality of their referrals and correlate referrals to conversion rates, early employee success, retention, and other performance measures.
There's no question that a well-designed and run ERP has great ROI and yet, with 98% of employers claiming to value this as Source #1, there is still an extraordinary gap. What's missing? The candidate. Not just any candidate. Most candidates. Your prospects who may have researched you, decided they want to apply and don’t know or don’t appreciate that they are disadvantaged by their lack of knowledge and awareness. In the end, the company is as much a loser as the candidates.
Don’t think it matters?
In 2013 TalentBoard (the non-profit driving the Candidate Experience Awards) asked ~45,000 candidates applying for jobs to nearly 100 employers if they were aware that the firm they were applying to had an ERP. Half said No. We are only surprised that number isn't higher.
Few firms have any mention of an ERP on their career site let alone any indication of how likely it is that a candidate would be hired if they were referred. (We have published estimates from several data sources that show a referral is as much as 14 times more likely to be hired versus a candidate of equal quality who has no referral.)
In 2014 TalentBoard dug a bit deeper with the 95,000 candidates who completed a detailed survey sometime after applying to one of more than 120 employers. Here are a few results to consider: (Much more can be found at The Candidate Experience where later this month you can register to get this year’s whitepaper.)
Of the five most valuable tools in their job search, candidates rated referrals sixth.
95,000 candidate were asked (and 77,000 of them answered) to choose their top five tools to learn about [the] job they applied to from a list of 20 possibilities. The five chosen the most were:
- The Company Career Site (65.5%),
- Job Agents (53.7%),
- LinkedIn Career Page(s) (24.7%)
- Online ‘Groups’ like LinkedIn, Yahoo, Google+ (24.0%) and
- Employer Reviews like those at Glassdoor and Best Places to Work (19.9%).
But that’s only the beginning of the story. When we look at just the (~12,000) candidates that had accepted an offer at the time they responded, Employee Referral Programs tie for second place (at just 26%). ERPs tied with Employer Reviews. The Company Career Site is still picked as the top job search tool by 65% of the respondents and still ranks #1.
It's only when we slice the data for the (~8,000) Candidates who told us that they became aware of the position they applied to via an employee who referred them that we see a spark. No surprise here. This group ranked ERP #1 at 59% - tied with the Company Career Site. Logical progression. But does it matter in the end? Yes.
Referrals as a source is a critical factor in predicting a better candidate experience.
Those 8,000 candidates who became aware of the employers position, whether they were hired or not (although 34.1% of them had an offer of employment when they completed the survey), gave a Candidate Net Promoter Score* for the employer they applied to of 35.
Similarly, the Candidate Net Promoter Score* for the 6,052 candidates who became aware of the position they applied to because they were contacted by a recruiter contacting (we didn't separate 3rd party from internal sourcers/recruiters because candidates are not good at differentiating the two) was 30.8. (We’ll let others debate this particular finding)
And the punch line is that the Candidate Net Promoter Score for the 61,000 who responded that they were made aware of the position they applied to through all other sources (just not ERPs or called by recruiters) was 16. By the way only 10% of this group noted ERPs among their 5 most valuable tools).
*The Candidate Net Promoter Score used here is based like the original NPS on a scale from -100 to +100. Our calculation is similar but not the same as the measure (NPS) used to assess customer loyalty (see Wikipedia for a detailed definition and history). The candidates of companies participating in the 2014 Candidate Experience Awards were asked whether they "would refer others…" and the percent responding ‘1’ was subtracted from the percent responding ‘4’ to achieve a number between -100 and +100. The company scores ranged from -20 to 59 and we show strong correlations the Candidate NPS and 6 comprehensive ratings of candidate experience. Eventually we expect the Candidate NPS to indicate the relative difficulty of a firm in hiring quality candidates in a competitive environment.
There are many factors impacting a candidate’s experience and subsequent attitude about an employer’s brand as a place to work or whether they would re-apply, refer others or even continue their relationship with you as a customer. One of these factors is your ERP and not being aware of it or knowing that a referral is more likely to lead to a job is a disservice to the candidates you seek and, potentially, a halo effect that prevents quality candidates without referrals from being fully considered. At the least employers should consider:
- Sharing details of the company ERP on their website
- Sharing the % of hires you attributed to your ERP in the last two years.
- Asking prospects who apply whether they "would refer others…"
- Assessing what practices, if any, are different for referrals than for those who apply without.
Sunday, November 30, 2014
We were asked to predict the future. We declined. It is too easy. Everything is possible when you are never held accountable. Instead, we took a brief step backward to see how the results we produce today hold up against the past.
One metric seldom used today, the “Staffing Cost Ratio”, a relationship of the ‘Total Cost to Acquire’ (essentially the CPH) to the ‘Total Compensation Paid, was calculated at 11%. Non-exempt hires were estimated at 25% of the total - but not separately broken out. Regional and industry differences existed but the respondent numbers were too small to be ‘diced’ properly. The Time-To-Start was calculated and defined as the number of days between the date a position was approved and the date when a new employee starts work. (Note: This method could add weeks to other metrics for calculating Time-to-Fill).
Average Time-to-Start ranged from 41 days for the 28 firms responding in the Finance/Insurance category to 54 days for ‘IT’ employers. Large firms were 59 days. Average for all: 52 days.
What is different in 2014 from 1997? What will be different in 2015? Everything…on the surface. Not so much when you scratch that shiny covering.
- Quality of hire: missing in 1998, it is heavily discussed today, but, at least back then we weren’t deluding ourselves that we could measure it from a proprietary algorithm matching methodology that purported to find people who will fit our firm’s ‘culture’ without following those hires 1 -2- 5 years down-stream. Only a few employers and service suppliers can talk intelligently about conducting longitudinal concurrent and predictive validation studies without looking foolish. That won’t be changing much in the next year.
- Big data: missing in 1998 (although we know where some is). Even more heavily discussed today but when you get right down to it, the lack of standards defining the differences in practices between firms and those same firm’s discipline and willingness to manage the risk required to collect data (and share it) is holding back better decision making (and it is going to improve slower than the technology to give it meaning).
- Workforce Planning, Succession Planning, Hiring ahead of need, hiring with intent to T&D over extended time-frames before deploying, investing in analytics/ROI for specific sources: colleges, interns, agencies, referrals, etc. have all moved the recruiting needle some in the last 17 years- certainly enough to predict a revolution, just not enough to experience it.
- Shiny objects are enjoyable but distracting if not connected to results that matter. The differences that should count are to be found among the stakeholders- the business leaders, recruiters, hiring managers and candidates. If, as an employer, you ask each one of your stakeholders whether the hiring process today is better AND whether their own personal and professional results were improved as a result of participating in it compared to years ago (i.e. purchasing power, quality of life, career progression, business accomplishment, etc.) what would each of their answers be? We think any substantive differences that have occurred during the last 17 years are debatable.
They don’t have to be.
What emerging technologies give us and, what we take great pleasure in annually imagining is the ever-expanding horizon of future possibilities, an extraordinarily interesting and enjoyable (but too often disconnected) exercise that doesn’t always match ‘IRL’. Futurist and pundit anecdotes are always entertaining but, “the future”, as someone has put is so well, “is already here and it is not very evenly distributed”. For the unique practices we see today to become a common practice tomorrow, practitioners need to step up their game and focus beyond the next shiny object with the discipline to try it, measure it and share their results.
Rather than predicting the next 10 game changers that might emerge in 2015, maybe it’s better to take one of this year’s solutions and connect it to an old-fashioned business result- Quality, Time, or Cost. Pick one, or two (not all three) and project just how you much you can improve it in a year.
That’s what we want to read about. Create your future don’t predict it. By this time next year, look back, share your journey and change the future for someone else.
(Full disclosure: We haven’t written an article about the future of recruiting since 2002. It was published in the EMA Reporter, a SHRM quarterly journal, in 2 parts and entitled “Staffing 2012: How Talent and Opportunity Connect- Parts 1 and Part 2. Much of what we wrote then did not come true by 2012. We, of course, claim we weren’t wrong. We are just off by a couple more years.)