Data should inform your hiring and your employee referral program (ERP). Especially since employee referrals are the top-performing source of hires. Companies like Better.com have recognized this and use data to point them in the right direction.
Referral programs are notorious for being ad-hoc. You announce a bonus and call it a day.
You might feel like you have a solid ERP in place, but you need to be setting and measuring Key Performance Indicators (KPIs) to make sure it’s working consistently and identifying opportunities to do better.
In a 2019 survey with companies from LinkedIn’s Top Companies Where the US Wants to Work Now list, the number one ranked area of recruitment investment was “shifting to data-driven recruiting”.
We’ve talked to hundreds of best-in-class recruiting teams about how they approach data driven hiring and referrals. Here are some of the KPIs they use to make data-informed hiring decisions. The tl;dr is that they use conversion metrics, engagement metrics, and overall hiring goals.
Start implementing your ERP key metrics with these
To set goals for your ERP and how much volume it produces, all you need is something you already have
Now, you can simply say “We’d like 50% of our hires to come through referrals”
This gets you
With your conversion rates and your referrals per employee, you can easily tell whether your referral program is on track to hit your annual headcount goals.
We often hear teams say things like…
“I think we’re getting 20-30% of our hires through referrals.”
“We have 30% of hires coming from referrals, which is good.”
Using the data-informed process above, you can find out whether your feelings match reality.
Outside of understanding your conversion metrics and the current hiring goals, there’s one more thing that you can’t ignore. External referrals.
Do not sleep on external referrals. 40% of hired referrals come from people outside your company. If you are keeping track of referral conversions, you should take into account where and who those referrals are coming from.
The above numbers should give you a base-line understanding of your ERP. Once you know what these numbers are, you can start comparing them to industry benchmarks and similar companies. We promise these will help you get executive buy-in for your next initiative.
Today we hear a range of monetary bonuses, vacation packages, office perks, etc. The list doesn’t really end. What should your referral bonus be? How is it going to impact the performance of your ERP?
Now that you have your KPIs and are measuring the performance of your own referral program, you need to get those industry benchmarks and comparisons to see how you’re stacking up. It’s time to take a pulse check on how some of the best companies are running their ERPs.
Now the good news - if you want to understand how other companies are doing it, the 2020 Employee Referral Program Benchmark report is out now!