Employee Referral Program – Building a Referral Culture

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Survey studies show that Employee Referral programs bring in the best hires in the shortest time.  John Sullivan writes extensively on the best practices.

In a recent benchmark survey of companies in China, all companies studied have a formal referral program and 100% offer a referral bonus to employees with successful hires.

The average bonus payout is roughly 3,000 RMB (slightly under 500 USD).  The upper range of bonus payments, are reserved for difficult-to-fill and managerial positions, on average is 10,000 RMB (1,600 USD).  The very high end of the range are between 25,000 RMB (5,100 USD) to 30,000 RMB (6,100 USD).  These payments are for the most critical and senior level hires for the company.

While I don’t have statics, a show of hands, indicate that the average referral rate is roughly 20-25% out of the total sourcing channels.

Survey Summary:

*Data collected by 招聘兄弟会,Q2, 2013.

Industry # of Participating Companies Average Bonus Range Minimum (in RMB) Average Bonus Range Maximum (in RMB)
Automation 2  ¥3,000
Banking 2  ¥5,000  ¥25,000
Electronic 1  ¥2,000  ¥15,000
Entertainment 1  ¥2,000  ¥7,000
Healthcare 2  ¥3,500  ¥10,000
Industrial 3  ¥2,833  ¥6,333
Internet 2  ¥2,000  ¥8,000
IT/telecom 8  ¥2,838  ¥10,250
Professional Services 2  ¥10,000  ¥30,000
Retail/FMCG 4  ¥1,875  ¥6,667
Grand Total 27  ¥3,258  ¥10,762
Payout Period Total
After Onboard 4
After Onboard (3 months) 3
After Onboard (50%) / After Probation (50%) 1
After Probation 8
After Probation (2 months) 1
After Probation (3 months) 1
After Probation (6 months) 8
Not Applicable 1
Grand Total 27

Building A Referral Culture

Out of the 27 companies surveyed, just one company does not offer any referral bonus.  Yet, that company achieves a referral rate of over 35%, year over year.  Only two other companies exceed this benchmark with 45% and 65% referral rates but, those other 2 offer referral bonuses.  The other 24 companies, even with bonus money, not a small sum, in China standards on the high-end, do not yield the high results as one might want.

 

The high referral rate are a results of the following:

Proactive Recruiters – they do the same things as what other companies might do, that is to send out referral notices by email or other company communication channels.  To achieve the desired referral rates, they go the extra mile by proactively engaging employees and managers for referrals.  They sit with them to go through their list of business cards and identify other leads.

Leadership Involvement – referrals is not just an HR activity.  Hiring managers announce vacancies to their team in staff meetings.  Managers encourage their staff to provide leads to the recruiting team for follow up.  This one company in particular have a referral lunch where senior managers will take successful referral hires and the referring employee out to lunch.  This reinforces management and leadership focus on referrals.

Engaged Employees – employees refer if they find an emotional connection with the company and people whom they work with.  Otherwise, there is no incentive for them to refer and if the work culture is poor, why subject their friends to an unhealthy work environment.  One recruiter suggested, we should look at the retention rate and its correlation to employee referral rates.  In this one company’s experience they have exceeded benchmark referral rates without monetary rewards.

 

Please refer to this presentation I delivered at the HREC 9th Annual Recruiting & Staffing Conference (July 16-17, 2013) in Shanghai, China.

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