![]() The smallest company in the top-40, employing just over 3,000 employees, has a dedicated team comprised of a program manager, communication specialist, and full-time recruiter. Applies dedicated resources. Every one of the companies with a program in the top-40 had a dedicated program manager in place to drive the strategy and execution of the employee referral program by the end of 2007.How Top-Performing Programs Spend the Extra Money Start tacking on the savings related to decreased turnover and increased productivity and you can easily see why companies with top-performing programs are not pinching pennies. Immediately that should register a recruiter time savings, but think of the time savings for all managers and employees involved in the assessment process! If you have ever spent time as a line recruiter, a few of these data points should have jumped out screaming at you! At the very least, applicants via the ERP were 13 times more likely to meet job requirements, and 17% more likely to accept an offer. The following chart presents the minimum and maximum observed data points between employee referral program hires and hires by all other sources combined with respect to each of the measures previously mentioned. While not all 40 completed the analysis, those that did found some startling numbers. If those systems were valid, that performance must be worth something, right?īased on that statement, we looked at the companies with top-40 ranked employee referral programs and asked them to complete a statistical analysis of their programs’ performance, looking in particular at the factors mentioned in the opening of this article. In 2006, Booz Allen Hamilton surveyed 73 major employers, and 88% found that hires made via employee referral performed better on the job than candidates hired via other sources as measured by their companies’ performance appraisal systems. Other, more strategic recruiting professionals, see the added cost-per-hire and start to wonder what return warrants the added investment. Some people see the added cost-per-hire to run a world-class program and immediately think it would never work in their organization. If early statistics prove indicative, by year’s end it will require hiring more than 62% of all hires via employee referral to rank among the best in 2008. By 2007, that percentage had grown to 46%. In 2006, it took hiring 38% of all hires via employee referral to make the top-40. The top-40 performing programs invested more, paying out nearly $5,855 per hire on average, and that difference had nearly nothing to do with the reward. ![]() Our research found that the average-performing program, one that produces approximately 26% of all hires, had a cost per hire (inclusive of bonus amounts paid) of $2,306. ![]() Those activities have a cost associated with them, some of it fixed, some of it variable. World-class programs elevate program execution to an art form with scientific precision, and carry out a number of activities that average programs often overlook or discount. One question that nearly everyone is asking is “How should we budget for a world-class employee referral program?” It’s a great question. Past experience with ERPs, success stories in the media, and unrelenting demand for top talent has led nearly every major company competing for talent on a global level to either initiate a new program or reinvigorate an existing program in 2008. While on average only 1:3 firms measure the economic impact of these factors, those that do can easily attest that employee referral programs produce one of the highest ROIs in the HR function and possibly even the enterprise. Meet minimum standards of productivity faster.
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