Great Article on Employee Referral Programs

John Hassett, Recruitment Process Outsourcing, was quoted in last week’s issue of Workforce Management on referral programs. John provided insight on different approached employers are using. See link and full text article below with John’s insight highlighted.

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Despite Success, There Are Reasons to Be Wary of Referral Programs

Employers unfamiliar with referral programs can inadvertently create an HR phenomenon known as inbreeding, which occurs when companies continuously recruit candidates that are virtual clones of the existing workforce population.

By Gina Ruiz

Employee referral programs consistently are recognized as among the most effective methods for attaining talent. Candidates are usually strong cultural matches with an organization who tend to hit the ground running and have a low likelihood of early departure.

According to a 2007 CareerXroads survey, employee referrals are the No. 1 external source of hire—accounting from almost 30 percent of new talent. Twenty percent of survey respondents said one out of two employee referrals result in a hire.

But for all the good that employee referral programs can yield, they also cause problems. It’s simple human nature; people often gravitate toward individuals with similar tendencies and characteristics. Employees tend to know—and recommend—candidates who resemble them in some way, whether it’s the same college degree, comparable professional background or the same country club.

With that in mind, it becomes important for companies to realize that referral programs are not always the best recruiting approach. In fact, referral programs can sometimes thwart such objectives as changing corporate culture, assembling a workforce with a new set of skills or bolstering diversity, says John Sumser, a recruiting consultant and author. “If companies are trying to get out of a rut or rehabilitate a dysfunctional workforce, referral programs are going to hamper those efforts because all they will do is produce more of the same type of worker,” he says. Companies also should remember that employees may not always make sound decisions when it comes to referrals, basing a recommendation on family or a friendship rather than objective criteria like professional experience. This is a precarious situation because it can erode the quality of a referral.

What’s more, employers unfamiliar with referral programs can inadvertently create an HR phenomenon known as inbreeding, which occurs when companies continuously recruit candidates that are virtual clones of the existing workforce population. It stifles the flow of fresh talent with new ideas, says Peter Weddle, CEO of recruiting consultancy Weddle’s.

It’s a situation that can create insularity and complacency and harm an employer’s competitive edge, says Paul Rowson, general manager of WorldatWork in Washington. What makes the misuse of referral programs damaging is that given a positive reputation, companies often fail to recognize when these initiatives are hindering their efforts. “Sometimes companies will blindly push these initiatives forward without first determining whether it makes strategic sense,” Rowson says.

Myths, myths, and more myths (continued) #7

#7) RPO Doesn’t Work (or so I’ve heard…)

One of the reasons (among several) that I could never be a journalist is that, at heart, I’m a completely optimistic human being. People are generally good, I live in a great country, our economic system is the best in the world, and overall, life moves along in ups and downs, but its movement is always upward and onward. Our rising standards of living, our life expectancies, and just about every aspect of life in general on this planet is better than it was, say, 50 years ago.

Yawn….who wants to read that? Have you watched the Science Channel lately? Have you seen how violently our sun and planets will die, to say nothing of the universe itself in 100 trillion trillion years???!! As if we didn’t have enough to worry about right here and now…

The job of a journalist is, in part, to report the news, and it’s hardly news that everything is going along swimmingly. So by definition, they report on all the things that have gone wrong, whether the subject is the war in Iraq or a highly specialize business function. Which brings me to this latest myth, that the general outsourcing of recruitment services doesn’t work, doesn’t save money, doesn’t produce better candidates, and doesn’t deliver on it’s promise. And should you feel thusly, you’d be forgiven for thinking so, given that what little media you may have read about RPO may not have been entirely positive. Likewise, you may have the same impression based on media reports whether the subject is RPO, EPO, HRO, EBO, or any one of a dozen other “O’s” that comprise the alphabet soup of 21st Century business. Added to the media’s predilection for the depressing, is something more basic to human nature that every customer service department knows well: if you like something, you might tell 1 or 2 other people about it; if you don’t like something, or if something’s gone wrong regarding a purchase, you’ll tell several dozen others about your experience. So word of mouth, the best form of advertising, is a cruel double-edge sword indeed.

So yes, we’re all familiar with the failures, some of them spectacular, around HRO and its variations. No one ever said this was perfect. Far from it.

But what of the successes? The computer manufacturer who by outsourcing and assessing new inside sales reps grew revenue by half a BILLION dollars. The IT firm that shrank time to fill by 50% and will save $800K in recruiting costs this year, or the industrial rental giant that saved over $1M in recruiting costs last year, and looks to save even more this year. Why aren’t these in the news?

The most important retention metric of all

Have you ever been on a boat with a hole in it? Unfortunately I have. What would you do? As a kid, I would try to get a bucket and feverishly bail the water out as fast as I could. Usually it left me exhausted, frustrated, and at the end of the day, the boat would either sink, or, in the best case, after all that work, I would be left with the same amount of water. As an adult, I’d like to think I would approach the same situation a different way. I think I would look for the hole, try and patch it up and then bail out the water. To me that makes the most sense, just like waiting for a snow storm to be over before I shovel my driveway, and why I wait until the very end of fall before I rake my leaves. I hate doing things over again, and I hate wasting my precious energy (I’m also a little lazy).

Myths, myths, and more myths (continued) #8

Myth #8: RPO Costs Too Much

As we continue down the list of what I’m calling “myths“, or rather misperceptions, surrounding the use of recruitment process outsourcing to augment or replace an organization’s recruitment/staffing function or processes, somewhere on the ranking order we’d have to come to cost. The notion that RPO, by providing so many of the additional resources, and additional infrastructure not currently present in your existing process, would almost by definition be more costly certainly is not unreasonable. In fact, the question is all but universal.

But think about it for a moment…and allow me to really torture a metaphor, if you will. If I’m riding a horse and buggy to work, and this old mode of transportation isn’t cutting it for me anymore and I decide I need to do something more contemporary, I’ve got three choices. I can design and build from scratch my own automobile, assuming I have the money and resources to do so (to say nothing of the expertise required). Or I can cobble together some of the best aspects of this automobile to my horse and buggy, which may cost less, but which will still not give me a great car.

Or lastly, I can go out and buy a car from someone who makes cars. Now as absurd as it may seem, 100% of the people in this world, save for the odd eccentric here and there, go out and buy a car when they want to own a car, and yet 90% of these same people when they are in a senior recruiting position will effectively choose the option to either a) build from scratch their own “car”, or will b) cobble together some hybrid of parts onto their old “horse and buggy” recruiting process, ensuring again that their “car” is neither great, nor even much of a “car” for that matter.

Yes, it’s a stretch, I know. But not so much so that the logic is flawed.

What metrics does your recruitment department track?

I recently sat in on a great presentation about six sigma processes and how it applies to call centers. I’m not technically on the operations side of call centers, but I have done a fair amount of work with them over the years, and still consult with many of them on the recruitment side of the house. I think that there are lot correlations between the two industries, especially in the way that everything you do can be measured, and the most successful organizations, whether it’s recruitment or call centers, do a ton of performance measurement and analysis on the data they collect.

As I listened, a few things began to run through my head. I began to think about how many recruitment organizations, both on the corporate side and on the agency side, don’t measure their recruiters’ production. I also began to think about what key performance indicators are the most important to measure for a recruiting department, regardless of the environment, industry, corporate, RPO, temp agency or contingent search. It shouldn’t matter. There are probably additional metrics that may be important to you based on what you are recruiting, but in general the core KPI’s (key performance indicator’s) should be the same for every organization. They should also be derived from the needs of your customer as any six sigma black belt would tell you before they sweep your legs.

Myths, myths, and more myths (continued) #9

#9) You’ll lose control

This should probably be ranked number #1 or #2, but since we’re not going in any particular order here on the myths that surround recruitment process outsourcing, let’s get this one taken care of right from the start.

Part of the advantage of using RPO to drive your talent acquisition processes is the ability to allow you to focus on what is central and core to the business. Far from losing control, an RPO engagement finally allows you to TAKE control of these processes, and scale the acquisition process so that for perhaps the first time ever, you can be proactive in these areas, rather than reactive.

Ok, that’s sounds like a consultant wrote it.

In English, it’s simple. When it’s you and six other recruiters, and 200 plus angry or eager hiring managers, all complaining that you aren’t sending the right candidates, or aren’t sending enough candidates, and everyone has as many reqs as they can handle, and your budget’s been held flat or even cut, what do you do?

Myths, myths, and more myths

Ten to be exact.

One of the most surprising things that I encountered when I entered the brave new world of recruitment process outsourcing was the pervasive antipathy of recruiters to the services of our industry. Now notwithstanding the outsourcing/right-sourcing argument we talked about earlier, when I, or any RPO vendor for that matter, show up for a meeting with the CFO or SVP of HR and there’s recruiting staff present, we can sometimes get same sense of “welcome” that Tomás de Torquemada must have had when entering a new town during the Inquisition. In other words, it can be a bit chilly.

But like many things that are new (if something that’s been around for 25 years or so can be considered “new), I’ve also come to understand that what people don’t like about RPO is not RPO itself, but rather what they think RPO is. It’s the perception more than the reality.

So although this topic has been done before, it obviously has not been done to the point of actually becoming part of our great collective recruiting subconscious and so we’ll do it again. Let’s dispel some of the myths that are associated with RPO:

Recruiting in the year 2337

After my rather long missive about why you can’t sleep, part of which I contributed to, since at least 5 minutes of your life was expended READING that, and why Web 2.0 Recruiting might just be a “tad” over-hyped, I couldn’t resist including one of the funniest recruiting videos I’ve seen. Sometimes we just gotta laugh at ourselves Enjoy.

Michael

PS. If your company blocks YouTube on its network, you won’t be able to see the video.

And you wonder why you can’t sleep…

Back in the day, there was no such thing as recruiting. At least not in the formal sense. When companies had job openings, they advertised them, and candidates would submit written applications and/or resumes, which were screened by hiring managers who would decide who to bring in for interviews. And when senior positions became available, two things would happen. First, the company would promote someone from within (I know that sounds rather “quaint” these days, but really…it used to happen). If for some reason someone internal truly wasn’t available, they would start calling their networks (we used to call these “F R I E N D S”) to see who knew whom, and would find someone that way. It was simple, but so were a lot of things.

Of course, some of us actually remember what it was like before this whole “Internet” thing took off and when telephones were used for calling people.

As opposed to say…taking pictures. Or watching Miley Cyrus videos.

We paused for station identification…

There are a thousand advantages to working for a big company. Resources, capital, thought leadership, market share, benefits…the list goes on and on. There are also some downsides, of course, not the least of which is some of the red tape that can come from doing something relatively simple. Like a blog. So just as we were get started here with our little recruiting emprise, along come some very nice, well intentioned, folks who’s professional responsibility it is to make sure we drop anchor at the point of departure, and make sure that this is all going to be kosher. Which is mixing metaphors, I know, but you get the idea. To torture the metaphor even more, it was their responsibility to see to it that that we didn’t go off half cocked. So having deemed us fully cocked, I suppose, and having been vetted, blessed, and more or less approved, we can now move forward with suitable approbation (or at least enough to get by)and the highly desirable Aon logo intact, and experts lined up, we’ll return to the business at hand.

So worth the wait, dear readers.

Michael

Outsourcing, or “right-sourcing”?

Let’s face it…RPO, or recruitment process outsourcing, can be the source of pretty intense arguments, both pro and con. And usually, the way it shakes out is that those who are selling RPO services are “pro” and those in the trenches are “con”, and it’s left to someone at an EVP or the C-suite level to pull the trigger and actually get a deal done, usually as a cost-cutting measure.

But why? “Back in the day”, when I had nothing but a set of marching orders to hire 400 - 500 folks a quarter, four recruiters, no ATS, and enough resumes to paper the Great Wall of China, it didn’t take long before I figured out I wasn’t going to hire my way out of this situation…and that I needed help.

A blog you can use. Really.

Welcome to the latest recruiting blog on the Internet. According to Google, that makes this something like the three hundred millionth blog on the ‘net devoted to the subject that’s near and dear to our hearts, and judging by the numbers, it must be that every recruiter in the country is writing something like three or four of these, in addition to the time spent responding to their colleagues’ blogs. The reality is, though, there are only a select number of sites that we, as recruiting professionals, have come to rely on for various aspects of our career. And not just blogs. Commentary from noted pros and thought leaders who have a knack for getting us the latest information on what’s working and what’s not. And what we need to be looking forward to…or at least, what we should be.

You’ll find some of that here. Every day, we’re talking with recruiting leaders and executives about their challenges, and what they feel they need in order to to be more effective, more strategic, and more cost efficient. And as we’re sharing with you the all too familiar stories about doing more with less, we’re going to leverage the experience of Aon Consulting and share some of the stories of how others are addressing these problems and transforming their organizations in to world-class, strategic business partners.

That’s what makes this blog different. For the first time, Aon Consulting, with 6500 professionals, $1B in revenue, and industry leadership as a premier HR consulting organization, and specifically our Human Capital/RPO division, is going to make the case that there is a better way. And no…if you think this is going to be only about RPO, and why you should outsource everything to us, you’d be mistaken. Because the reality of RPO is that it’s not for everyone, and too many of the failures of an RPO engagement that we’ve all read about in the papers or on the ‘net are precisely because the wrong thing got outsourced to the wrong people at the wrong time for the wrong reasons.

There are a hundred different arrows in your recruiting “quiver”, and we’d like to share our 26 years of expertise on some new ways to take those arrows, and hit your target. So welcome. And enjoy what we know will be a lively discussion. Because at the end of the day, what makes for a successful blog is the same thing that makes for a successful conversation: two way communications.

Michael