How Employee Referrals Empower Candidates and Improve Diversity

Hosted by

Madeline Laurano

Founder at Aptitude Research

About this episode

How Employee Referrals Empower Candidates and Improve Diversity

Host: Madeline Laurano

Guest: Gerry Crispin, Founder of Career Crossroads

In this episode of Radical Research, Madeline Laurano apeaks with Gerry Crispin to discuss employee referrals.

– Importance of employee referrals as a source of hire

– How to empower candidates to have a fair experience

– Cultural nuances of employee referrals

– How can employee referral programs enhance diversity in the workplace


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Transcript follows:

Madeline 0:20
Hi, everyone. Welcome to another episode of Radical Research on the HR Happy Hour Podcast Series. My name is Madeline Laurano. I’m the founder of Aptitude Research and today I am excited to be joined by my longtime friend, mentor, and sometimes therapist, Gerry Crispin. Hi, Gerry, how are you?

Gerry Crispin 0:40
Hey there, Madeline, it’s great to be here. I love Radical Research, I think it’s important to get the insights that you can really derive from some of the data that’s out there. So it’s cool.

Madeline 0:54
Yeah, it’s been a crazy few years. But Gerry, you know, I think the very first podcast I ever did was with you. So I love you’re circling back and doing some of these topics again. And you’re, you know, for anyone that hasn’t heard of Gerry, which is probably only like one person out there. Gerry is the founder of Career Crossroads. He is very passionate about talent acquisition, he’s the true expert on all things related to talent acquisition. And Gerry, you’ve been traveling up a storm, you’re a Burning Man, you’re an HR tech, you just had an event in Chicago. You know, maybe you could share a little bit about that that recent Career Crossroads event?

Gerry Crispin 1:35
I think one of the things that’s really important for all of us is how do you, you know, keep learning. And for me, if I’m not actually doing it, I periodically I’m not recruiting personally to hire somebody. The it’s really listening in on conversations that I have at an HR tech or whatever. So we live this past week, we were in Chicago with our leadership at a resort. So it was kind of a it was kind of a summit, you know, kind of thing. We had about 30 heads of talent acquisition to focus in on what’s keeping them up at night. And those conversations are pretty extraordinary it because they really are forced to talk to each other, in a way. And, I really enjoy it. It’s great. This issue around transparency, for example, is becoming a critical component of how we think about how recruiting is evolving. And, you know, some of the referral issues, I think, are part of that in terms of how we think about being transparent about who we’re trying to get when we’re dealing with referrals. So yeah, it’s cool. Yeah.

Madeline 2:57
Yeah, I love what you’ve dealt with Career Crossroads. And what you know, Chris Hoyt is working on with you as well, because you’ve built this community of TA leaders and the passion and the challenges and strategies that you bring out is just nothing comparison or industry.

Gerry Crispin 3:10
The weird thing is that I’ve learned a hell of a lot about community just going to Burning Man.

Madeline 3:16
Oh, I’m sure.

Gerry Crispin 3:17
And I think over the three times that I’ve done that, in each case, Chris Hoyt and myself have applied new ideas to our community to really inform people but also hold our members accountable for the, you know, the the, for the principles on which we should be operating a recruiting operation. So that’s exciting to me.

Madeline 3:48
Yeah. And transparency is a big part of that right. Burning Man is about being transparent and building trust. And you’re kind of radical transparency. So Gerry, we’re going to talk a little bit about referrals today, because this is a topic I know, that’s near and dear to your heart, you publish for many years a source of higher report. And that was the standard in our industry. It’s probably the only research report for years and years on recruitment and talent acquisition. And it was probably 50 pages, you had so much data. Referrals was the number one source of hire, as I recall, every single year, and it seems to be still the case. Referrals are the number one source of hire, but there are so many nuances with referrals and so many challenges. So I’m hoping we can talk through some of those nuances.

Gerry Crispin 4:35
We showed, I stopped doing it 2015, and the reason I did is because when you really looked at source of hire, there were so many gray areas that fundamentally it it diluted if you will, our work and and it as a measure. And so that’s that’s continued to evolve to something More like the effectiveness of a source rather than rather than source of hire. And so that’s that’s a key issue. But yes, referrals in the United States, so in our society, represent probably between 12 and 50%. Of all hires. And, and if you did nothing, it might be about 12. But about 90 Plus and think I in your report, 90 plus percent of employers in either have a formal or informal kind of referral program in the United States. And and the better ones move it probably closer to 30 to 40%. But I think the typical ones show about 25% of their hires are from referrals. And so and so the question is, where do you stack up? You know, how does that differ by industry, etc, or location?

Gerry Crispin 6:09
And, you know, are you getting the value of those referrals in terms of retention, improve retention, improve performance, or any other kinds of things, and companies that really look at that are starting to, I think, improve the, the way in which people come to you the one big problem, and this is, this is outside of some of these other nuances is that we, we are so focused on getting an employee to tell you who they would refer that we fail miserably in every company in telling the candidate, how many referrals we actually get, and encouraging them to talk to people that they can find maybe on LinkedIn, that they either know, or have an affinity with, in that work in the company. So if I, if I went to as the same school, I could go to LinkedIn and say, How many people work in this company that I’m interested in and graduated from the same school I did, or worked either next to me, or maybe not next to me in a company that I once worked for. And if they did, that, they should be able to appease, you know, to appeal to one of those individuals and say, Hey, we don’t actually know each other. And we’re not really connected on LinkedIn at this moment. But you and I have this in common. And I’m targeting your company as an interesting place, I would love to be able to better understand if my impression of your company is right, if that employee brand that you guys are pitching is for real. And if it is, then I’m I would love for you to be my referral. Now, we haven’t taught a lot of candidates how to do that. Right. But the candidates who do do that are getting up to bat in a way that no one else is. And so that is extraordinarily powerful.

Madeline 8:22
And that’s the first nuance, I mean, that I wanted to talk about it’s you know, referrals tend to be one way that’s the traditional view of referrals is we wait for employees to have a few extra minutes, find a few people in their network and send that to recruiters to be able to think about referrals. We don’t empower the candidates. And everything in talent acquisition right now is about fair and equitable experiences in our workforce. How do we give candidates the that ability to have that fair experience and to be able to get up to that.

Gerry Crispin 8:55
Unless we tell the candidates all of the information, if that’s we’re transparent to the candidate, as to the impact of that. But I will tell you, even recruiters aren’t familiar with that data. So here’s the question you should be asking yourself as an employer, and that is not how many total referrals you get, but how many referrals you get for each and every opening on average, that you want to try to, you know, to deal with. And when you narrow that down to those jobs and job families that really are conducive to referral, you know, recruiting. The one, the one thing we have is in the formal programs on average. For years, the number was four out of 100. So 4% of the of the applications included a referral that was part of the formal program. Now. Every recruiter who’s looking at and an ATS sees a little checkmark, it says referral, guess what they are, they’d be crazy not to click on that resume or that application and look at it. Now, half, let’s assume half of all those referrals, and all of the other candidates are not good. So we’re down to 50 people, and two of them are qualified. And we’re referred, almost 100%, those two are going to be part of the slate that you present to the hiring manager. And I gotta tell you, if I think about that, from a statistics point of view, you have probably a 25% chance to get up to bat if you’ve got an employee in the company who referred you, right, right, versus what one in 50. And so you think about that, you’re almost at a 10 time advantage of getting up to bat for a company that you apply to, and those candidates who get that will always be able to find a referral in almost any company. And so those who are coached, they’re going to have a better chance of getting the job. It’s the way it’s the way they can game, if you will, strategy.

Madeline 11:28
Yeah, and I think another challenge with that is a lot of the traditional ATS systems aren’t set up so that if a candidate goes on their LinkedIn profile and finds employees that they’re connected with, that employee might refer that candidate through just in an informal email to someone, but it’s not tracked in the ATS as a referral. So a lot of these newer systems, these employee referral systems that are really gaining a lot of traction right now, are more sophisticated and are really looking at it from the candidates perspective, not just from the employees perspective, I mean, it has to be tracked as a referral to be considered.

Gerry Crispin 12:05
I’m a fan of another company being able to hang on there ATS a more sophisticated employee referral program, tracking tool. But very few of the large enterprises are using them. So there’s real opportunity there. And part of it is because they don’t recognize that their system is antiquated, and that there’s a lot of actual referrals that they’re missing as a result of that, from what you described, for example, as a candidate who’s trying to get a referral, but it never gets into the system, right? Or let’s just take a sourcer. How many companies have sourcers? Well, they do. There’s a lot of them, what’s one of the things you learn as a sourcer is to is to is to go to the hiring manager and the people working for the hiring manager and asking them if you can, if you can connect to people that that you see who are on LinkedIn, and who are connected to them. So that hiring manager might be connected to 40 or 50 people and of those 40 or 50, there might be six or seven, that the sourcer looks at and says oh, this person might know somebody, or might be interested. But but the only time that that’s going to happen is is at the end. And by and large, it’s a non tracked referral.

Madeline 13:42
It’s a non tracked referral, and then it goes nowhere, because recruiters are not thinking like that.

Gerry Crispin 13:47
You don’t get the bonus. So if that’s part of the program, or or you don’t realize the percent that the percentage of people referred, who ended up being hired, in fact, is much larger than you imagined it was.

Madeline 14:01
Right? Right. So that’s the first nuance is this shift from employer focus referral programs to candidate empowered referral programs where we’re letting candidates control that path and being able to track those referrals. This, the second nuance that I want to talk about, because I learned a lot about this from you is the global piece. I think we if we look at the US, and we think referrals are the number one source of hire, does that translate globally? And are referrals either the number one source of hire or are they even effective? In other regions?

Gerry Crispin 14:37
Yeah, and it depends totally on the cultural nuances that exist in different parts of the world. So, you know, look at it this way. And I’ll just talk about extremes because obviously you can do it in a lot of different ways. I know that when I looked at similar programs in Australia, they were getting referrals and they weren’t getting referral hires for Doing some of those programs that were at 5% versus 15,20, 25%, in the United States. So it does not seem to be as strong a indication that I need to deal with that, in places in Asia, where face is important, if I, as an employee, give you a referral, and you don’t treat that referral with respect, and even if you don’t end it, and you don’t hire them, I lose face, I was faced with my family, I really was faced with whatever so. So my reluctance is there.

Gerry Crispin 15:42
And in the extreme, I may be even forced to leave the company, as a result of my embarrassment in relation to those kinds of things. And that’s an extreme, but you hear it happening in interesting ways. In other cultures, where people are extremely poor, for example, I’m not referring anybody but somebody, my family, I don’t care if they can do the job or not do the job, I have a responsibility to try and help them get a job. So I’m going to do a lot of referring, but you’re going to have to figure out if they can do the job. So there’s, there’s those kinds of issues. So it’s all over the map and our willingness to spend money on it. Even in the United States, there are still a number of companies where the hiring managers and the leaders say, there’s no bonus, there’s no incentive for the for the, for the employee, to refer anyone. And in some companies, there’s almost enough money, that they wouldn’t do their job. And they would just spend time trying to find people and actually become a side recruiter for you. So it’s fact to me, this is fascinating. And we’re continuing to learn.

Madeline 16:57
And that’s interesting, a professional referral within the company, you bring up something is interesting, too, with the friends and family piece, because that comes up quite a bit as well, how do we trust that the referrals are truly the right candidate for the right role versus just wanting to help out?

Gerry Crispin 17:15
You know, that it within that referral system, you have a lot of pressure from people who think that it’s okay to make sure that their kid, or they’ve made a deal with someone in another company that I will help your kid, get a job, my neighbor’s kid, get a job with my company, and my kid will get a job with your company and that kind of horse trading. That goes on. And it’s it’s not a large number. And you know that it’s a band typically at the leadership level where this is happening. But the both the problem with that is that it especially in a public company, and in one in which you are saying that you want more diversity more want more whatever it tends to, to eat at your own motivation, as a recruiter, that people are pressuring you to hire people who are on the edge of qualified for given jobs. Some companies basically have a category for hiring those folks. That’s that’s called I don’t know, summer job, you know, as opposed right, intern, right? Some companies push their strong enough where ta can push back in relation to it. And some are just, you know, ticking off the recruiters who happens to comply with putting, you know, favored folks into place. And that changes the perception of fairness. And so I think it’s an abuse. It certainly does exist. It’s not talked about openly enough, right. And it irritates the hell out of folks. But But I would, I would have a policy that, you know, for friends and family, I would, when I worked at Johnson and Johnson, I would say probably during the course of month, I interviewed at least five and offered them help in terms of how they think about getting a job.

Madeline 19:30
Right, it’s almost an advisor.

Gerry Crispin 19:34
It’s advisory exploratory so if you can shift it that direction, then you are offering these leaders help, if you will, that satisfies them to some degree but you’re not promising them that or being forced to pressure them to hire their kids.

Madeline 19:53
Yeah, and it’s interesting because it’s not just at this young you know, intern entry level job this friends and families stuff happens even at executive and management levels within organizations, but I love this idea of like summer summer jobs because we are around DEI and this is the, this is the last nuance, right? It’s the DEI issue, which is not new within referrals, it’s always been talked about, do referrals, destroy your DEI initiatives, if you’re just hiring the same people you’re already employing? Or is there a possibility that it actually can support and enhanced.

Gerry Crispin 20:29
If you’re in a construction firm, let’s say, and there’s very few women, a very few people of color, very few, you know, people with different ethnicity, for example, simply because that firm has been around a long time, and they’ve kind of hired people like themselves. If you have an employee referral program, and you do nothing to talk about the issues that you have from under-representation, naturally, they’re going to, they’re going to probably over represent people who are like themselves, but if you if you talk about the challenges that we have, in being able to find more people who are qualified, who can represent different gender, ethnicity, etcetera, races, and, and give them, you know, at least an attaboy, or an add a girl in doing that. If they’re demonstrating that they should be promoted, involved in in managing larger groups, it gives some indication that they, they’ve learned how to be an ally of other folks, right? All of those things, there are ways to reward the individual without not necessarily the monetary side. For for paying attention to what’s going on. And, and if you send people to a conference, for example, if you say to them, please, in the conference, don’t come back unless you have a couple people that you’ve met that you can refer. And ideally, that among those that you refer, please make sure you find people who are not looking like you. Right, but who are involved and engaged and passionate about the same profession and work that we do here. And that’s, that’s a natural, you know, appeal, if you will. And as a result of that, you certainly would increase the percentage of diverse individuals who are referred. And that’s something that you can monitor and make sure that it’s equivalent to or close to equivalent to other sources of hiring.

Madeline 22:58
Yeah, and I think even that first point that you bring up about this shift from employees just having to volunteer their network versus candidates finding employees at an organization, they’re interested in changing the conversation around DEI to because we’re saying, Can candidates that just aren’t coming up, as the people that look just like the people working at this organization be able to have a fair opportunity and experience here?

Gerry Crispin 23:26
Yeah, to be I mean, if you if you want to be a little bit dramatic, before you apply for a job as a candidate, if it said, Hey, by the way, here’s some information you might want to see the this is, this is the percentage of people from the here are the top 10 universities that are represented in our in our demographic, here’s the percentages of women in some of the key jobs and and you can see that in some cases, it’s underrepresented. And we are making an affirmative effort to try to make sure that if that we can capture folks who are qualified and interested in our work, and you know, if we provided some of this kind of data, you know, here, here are some of the companies that we have been hiring from in the past. Now, the reason why a lot of companies won’t do this stuff like that is because they’re afraid it embarrasses them, you know, that they’ve been overly sensitive to trying to steal people from this company or that company or whatever. So audit yourself and take a look at how you how you present it. But if you start to give candidates some sense that there’s people like them who work here, and that there are people that you could reach out to, here’s, you know, an affinity group for whatever. And here are people who volunteered in that affinity group to be contacted. You know, if you have an interest in Our company, and you know, some of them, and you can do it so that they don’t have to take every single, you know, person who wants to contact them, it’s limited to three or four a month or something to that effect. So there are techniques and ways to significantly improve your ability to engage referrals, that that come from many years of experience of those people together and comes from right now in real time.

Madeline 25:36
Well Gerry, I think that we should do the source of hire report together, I think we should revive the source of hire report and do it together. Because you know, so much.

Gerry Crispin 25:46
I would love to be able to do it. But I think there’s one other source of effectiveness is probably a better way to describe it. And because there are there are sources, for example, that are small, but highly effective, right? Because you can’t hire people using some of the other sources. So I love this. I love this concept that ATEP worked on a couple years ago, around source effectiveness. And so I’m going to make sure that you have a copy of that.

Madeline 26:29
Yeah, me too. Thank you so much for joining me and talking about referrals.

Gerry Crispin 26:35
My pleasure.

Madeline 26:35
Thanks, everyone for joining us.

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