Why Employees Don’t Refer Candidates

“And now, I’m gonna hand it over to Tim from HR, for a quick update on talent.” Tim, your talent team’s HR business partner, dutifully saunters to the front of the room and takes his position at the podium. He reiterates headcount goals, goes over the open roles he’s desperate to fill, and then–stop me if you’ve heard this one before–implores the company to send over their referrals.

“Referrals are an excellent source of hire, they’re more likely to take the job and more likely to stick around, so please, think about who you know and send them our way.” Tim goes on to explain that for a limited time only, there’s a special $10,000 bonus for any referred senior software engineer who gets hired. Cue some chipper murmuring from the crowd.

So, how does this story end? With an influx of referrals and a slew of great hires? Spoiler alert: Bruce Willis was dead the whole time and so was Tim’s referral pipeline.

The data on the efficiency of referrals is well documented, the notion of working with people you know and trust is alluring, and the fat bonus check certainly doesn’t hurt. And yet, everyone has borne witness to their company’s Tim begging the company to send in their referrals. In such a clear win-win, why aren’t more employees keen on putting their contacts into their company’s hiring process? Glad you asked.

Incentivizing the Wrong Part of the Funnel

A successful referral program encourages employees to either send along the names of relevant contacts or facilitate an introduction between the candidate and the talent team. Everything after that is out of the referring employee’s hands, and yet, it isn’t until these later stages have taken place that the employee sees any benefit. With a lump sum bonus, you aren’t encouraging people to think of someone who “might be a good fit” but rather, someone who “has a really good chance to get hired”. The truth is, many of your employees don’t know the nuances and specifics of what constitutes a good hire, and they end up ruling out their contacts based on criteria they have no experience evaluating.

Delayed Gratification

In addition to encouraging your employees to focus on a part of the process they have no control or understanding of, a lump sum referral also isn’t immediately tangible. Let’s say your company’s interview process lasts 3 weeks, at which point a referral accepts an offer. They’ve got to give their company two weeks notice, and then of course they’re going to want to take a couple weeks to kick their feet up. You can’t be paying out huge referral bonuses unless you’re certain someone is going to stick around, so you’ll have a 90-day grace period to make sure the referred is a good fit. For good measure, let’s add on another week until your next pay period completes. At this point, it’s been 5 months since your employee passed that name along. If the incentive was the pursuit of this chunk of change, and the pursuit lasts half a year, you can’t blame someone for their waning enthusiasm.

Reputation is On the Line

Some employees fear a candidate who underperforms on an interview may reflect poorly on them as a professional. While this fear may be unfounded short of the candidate saying something wildly offensive, it’s important to understand people feel their reputation is at stake with parties on both sides of the interview table. If a referral doesn’t get the offer, or has a poor candidate experience, the relationship between them and your referring employee could suffer. Some candidates may not want to put their professional relationship with a contact in jeopardy just for a few extra grand.


Here’s Where You Come In

All hope is not lost, recruiting pals. There are various treatments for the above referral sicknesses, and wouldn’t you know it we’re going to list them out. At Teamable, (plug plug plug) we have the luxury of peering into a great many companies’ referral programs, and several of them have come up clever ways to keep that sweet referral train rollin’.

The most successful of them tend to utilize some variation of a monthly raffle featuring various prizes — for example, airline credit, spa gift certificates, or the right to re-name a conference room. Employees receive one raffle ticket for each person they refer, and additional tickets for how far each progresses. Since the drawing is monthly, employees are rewarded for their contributions in relatively short order, and as the drawings are done live, with exciting prizes, there is far more buzz and excitement than there is about a quiet lump sum direct deposit 5 months later.

On the reputation side of the coin, the answer is easier blogged than done. Your talent team needs to have an obsession with the quality of your candidate experience. Commit to touch points with the candidate and let your referring employee know the plan. Also, check in with the referring employee to keep them up to date on where exactly their contact is in the process. While you should strive to wow your candidate every time, no matter the source, the stakes are higher with referred candidates–you’re not just working to close that one role, you’re earning your right to your access that employee’s network for the duration of their tenure.

What are some other reasons why employees don’t refer candidates? How have you managed to change their minds? Hit us up in the comments!

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