The 4 Biggest Reasons why Employee Referral Programs Fail

Posted on: September 25th, 2013 by Andrew Greenberg No Comments

When companies experience hiring and retention problems, a strategic approach from the top down is the best way to address it, but that’s not always easy to achieve. In companies without newer applicant tracking systems with social media and employee referral integration, employee referral programs are often either non-existent or flimsy policies administered inconsistently. This is a big mistake, as an Ohio State University study shows candidates hired through referrals have a 25 percent higher retention rate than employees hired through other avenues.

Effective employee referral programs require dedication from more than the recruiter or human resources staff. They must be supported by top management and integrated into the company culture, promoted regularly and administered in an ongoing fashion. Read on to see what’s wrong with weak or ineffective employee referral programs.

They’re Not Administered Consistently

Is your company’s employee referral program administered consistently, without fuss and bluster, in a fair manner, and with clear guidelines and rewards? Or do employees have to wonder about what happened to their referral or wait a long time after a referral hire to get acknowledged? When an employee knows someone who is qualified for an opening at your company, do they know how to refer that person? These are issues that will discourage employees from referring good candidates they may know about, and work against your referral goals.

They’re Not Promoted

Companies using manual employee referral programs that are administered by human resources or another administrative department will waste their efforts if they don’t promote the programs. Even companies with automated or social employee referral programs won’t get the total benefit from them if they don’t actively let everyone know about their referral processes on an ongoing basis. Develop promotion plans along with employee referral programs implementation and administration processes for the best results and return on investment.

They’re Not Part of the Culture

Do your employees know about your company’s employee referral program? Do they think about referring top candidates who are friends, colleagues they’ve met through work, alumnae from the schools they studied at, or industry connections they know? Does your company compensate employees for referrals? Is your employee referral program on your company website in an attention-getting location? If you answer no to any of these questions, it’s not part of the company culture and it won’t be effective. Employee referral programs need to be part of company cultures for the most exposure, participation, and results.

They’re Not Mobile

Is your career site and employee referral program optimized for mobile? If not, with more and more people using smart phones, tablets, and other mobile computing devices, you’re losing out on candidates and referrals. Telecommuters, remote workers, traveling workers, and many in-house workers using mobile capabilities can’t send their referrals on the go if their companies’ employee referral programs aren’t accessible to mobile computing. Employee referral mobile apps and mobile-ready career sites with easy referral forms let employees send in their best leads when they are away from their desks.

Employee referral programs can be the source of a large percentage of quality hires that are happier and stay longer than other types of hires if they’re part of the company culture, promoted and administered consistently, and easily accessible by mobile devices.

Other important considerations for employee referral programs are recognition, compensation, and including external sources. Is your company encouraging referrals by paying for them or giving referring employees a choice of rewards for referrals? Does your company recognize employees for referring your best hires on its website, in newsletters, and in other communications? Is your employee referral program accessible to your external network, including vendors, business associates, and former employees, to widen the net and capture even more leads for quality hires?

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