2014 MERITAGE TALENT SOLUTIONS EMPLOYEE REFERRAL TRENDS REPORT
Introduction The 2014 Employee Referral Trends Report, a research initiative by Mertiage Talent Solutions, was launched in December 2013 to uncover trends in challenges in employee referral programs. Over 100 recruiting organizations in a variety of industries and geographies participated in the survey. The intent of this research is to identify what changes are happening in employee referral programs in light of the social recruiting and marketing focus of talent acquisition. It does not provide a business case for employee referral programs, as that data has been confirmed in countless other studies over the years. This report will help employers identify features and processes they should consider adding to or removing from their existing programs. It will also help those employers with no current formal program identify features and processes to be included as they launch their program. Current employee referral solution providers can use this report to identify potential markets for their products, as well as services and features that employers are looking for. 2
SURVEY RESULTS Companies with Formal Employee Referral Programs Does your company currently have a formal employee referral program? 86% Formal programs are most common in very large employers. of respondents with more than 50,000 employees 71% of companies report having a formal employee referral program For companies with fewer than 500 employees only 59% of respondents reported having a formal program 59% 3
Companies with no current formal program The smallest companies are the least likely to launch a formal program. 36% 65% No plans to launch a program. Less than 500 employees. plan to launch a program in the next 18 months. Companies with 10,001 to 50,000 employees are most likely to launch a program. Reasons reported for NOT launching a formal program: Cost Concerns Company size doesn t support a program Already receive quality referrals without a formal program 4
PRIMARY REFERRAL PROGRAM TRENDS IDENTIFIED 5
TREND # 1 Social Referrals - Driven by the implementation of 3 rd party Referral Technology 6
Tools Used to Manage Program 2014 MERITAGE TALENT SOLUTIONS EMPLOYEE REFERRAL TRENDS REPORT 70% 60% 64% Currently have program Planning to launch program 50% 40% 30% 20% 10% 55% 50% 18% 14% 27% 3% 0% 18% 0% Spreadsheets Referral Functionality in ATS 3 rd Party Referral Solution Other Not Decided What are Social Referrals? Social referrals can take two forms. 1 2 First, a social referral can come from an employee sharing a job posting on their personal social networks and having a social connection apply to that position based on the social share. Second, a social referral can be generated by a 3 rd party referral solution that reviews a company s open positions and matches those positions against an employee s social network connections skills and work history. The referral solution will then suggest to they employee that he/she refer their connection for the open position. 7
Tools Used to Manage Program 70% 2014 MERITAGE TALENT SOLUTIONS EMPLOYEE REFERRAL TRENDS REPORT 60% 64% Currently have program Planning to launch program 50% 40% 30% 20% 10% 55% 50% 18% 14% 27% 3% 0% 18% 0% Spreadsheets Referral Functionality in ATS 3 rd Party Referral Solution Other Not Decided It appears as if manual spreadsheets will be a common tool in all programs for companies of all sizes, despite the existing tracking and reporting functionality of ATS and 3 rd party solutions. Are those solutions missing some customer requirements? 18% vs. 27% Referral Functionality in ATS 3 rd Party Referral Solution Movement is away from using the referral functionality in the ATS and towards 3 rd party referral solutions, with 27% of companies planning to launch a program using 3 rd party vs. only 18% using their ATS solution. 8
Tools Used to Manage Program 2014 MERITAGE TALENT SOLUTIONS EMPLOYEE REFERRAL TRENDS REPORT 70% 60% 64% Currently have program Planning to launch program 50% 40% 30% 20% 10% 55% 50% 18% 14% 27% 3% 0% 18% 0% Spreadsheets Referral Functionality in ATS 3 rd Party Referral Solution Other Not Decided 50% of companies with current programs use the referral functionality in their ATS. Will they be surpassed by the new programs relying on 3 rd party solutions? Kenexa, JobVite and Taleo have referral functionality that is most commonly used by their customers. 9
3 rd Party Referral Tools Companies planning to launch referral programs are more likely to use 3 rd Party Referral Tools. 27% Planning to launch program 14% Currently have program As 3 rd party referral technologies are new to the talent acquisition technology space, it makes sense that established programs would be less likely to use these tools. These employers, should be aware that newer programs will be capitalizing on the social referral features of the 3rd party tools and consider adjusting their technology appropriately. Most Popular 3 rd Party Referral Tools: Other solutions in the space: All of the 3 rd party referral tools are based on social referral functionality. 10
SATISFACTION WITH CURRENT REFERRAL TOOLS How Satisfied Are You With Your Current Referral Tools? 63% of respondents who are Very Satisfied use a 3 rd party solution. Very Satisfied Neither Satisfied or Dissatisfied Very Dissatisfied Partially Satisfied Partially Dissatisfied 83% of respondents who are Partially Satisfied use ATS Solution, 11
TREND # 2 Moving Beyond the Employee Referral Program Companies are recognizing that individuals outside their employee base are great sources of referral candidates. Thus, they are inviting them to participate in their referral programs. Former employees and customers are the most likely to be included in these programs. 12
Individuals Beyond Employees Included in Program Alumni Customer 48% 70% 80% 100% 22% of respondents with programs already include nonemployees in their programs. Social Media Connections 48% 60% 17% Vendor 35% 40% An additional 17% plan to expand their programs to include non-employees. Other 26% 20% 45% of respondents planning to launch programs with include non-employees in their programs. Currently have program Planning to launch program 13
PROGRAM STRUCTURE BENCHMARKING Our survey also revealed interesting data about program structures, including management models, goals, rewards and results. 14
GOALS OF REFERRAL PROGRAMS Increasing the Quality of the Candidate pool is the top goal for companies. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 93% 67% 61% 36% 58% Increase Quality Increase Quantity Decrease Time to Hire 49% 27% 27% Increase Retention 32% Increase Diversity Currently have program Planning to launch program 18% 9% Other 2% 2% Don t Know 15
REFERRALPROGRAM MANAGEMENT Referral Program Structure 80% Currently have program Planning to launch program Centralized program management is the most common management structure. 70% 60% 50% 40% 30% 76% 64% 20% 10% 0% Centralized 27% 9% 0% 16% 9% Decentralized Hybrid Not yet decided Most companies with programs use between 1 and 3 FTEs In HR to manage the program. Other departments, including accounting and payroll, also have resources dedicated to program management in approximately 50% of companies with programs. 16
Referral Program Incentives 2014 MERITAGE TALENT SOLUTIONS EMPLOYEE REFERRAL TRENDS REPORT Cash awards to employees for referral hires are the most common incentives employed. 59% of companies offer or plan to offer cash incentives for referral hires. Average Cash Incentive Paid for Referral Hires Non-Cash Incentives Offered for Referral Hires 73% 69% $ $ Currently have program Planning to launch program 25% of companies offer or plan to offer non-cash incentives for referral hires. 26% 9% 2% 0% 4% 18% Less than $1000 Between $1000 and $4999 $5000 or greater Don t know 54% Prize Drawings 35% Others 27% Company Logo Items 15% Vacation Days 18% of companies also offer incentives to employees for submitting a referral such as cash, prize drawings, company logo items, gift cards and coupons for dinner, movies and coffee. Other incentives include coupons for movies, dinner, coffee; music cards, and awards points. 17
PROGRAM RESULTS Referrals Continue to be a Primary Source of Hire for Employers with Referral Programs % of External Hires that are Referrals 0-25% 26 50% 27% 38% 47% 8% of companies with referral programs report that more than half of their external hires come from their referral program. 51 75% 76 100% 4% 4% 25% of companies report meeting or exceeding their referral program hiring goals. Don t know 7% 25% of companies don t actually have hiring goals for their program 18
Referral Program Enhancements Most companies with programs are looking to make changes and improvements in their programs over the next 18 months. Some of the common changes being considered include: Integrating program with employees social networks Providing ability for employees to refer via a mobile device Improved marketing of program to employees and other participants Standardization of program across the company Expanding program to include non-employees Improved measurement and metrics A complete overhaul of the current program and technology 19
Key Takeaways The #1 trend in referral programs is towards social referrals. Many 3 rd party referral solutions are based on social referrals, each with its own focus and value proposition. In order to best leverage your employees networks and compete with other companies launching and/or enhancing their programs, employers should strongly consider incorporating social referrals into their programs. As it is becoming increasingly difficult to find talent with the specific skills and abilities needed to grow the business, many companies are following the #2 trend in referral programs and including individuals outside of their employee base in their referral programs. Former employees, customers, vendors and social media followers are all potential sources of top talent. Few companies are actually meeting their referral program goals, thus they are often looking for ways to improve employee engagement, candidate quality, and program measurement. 20
COMPANY SIZE AND LOCATION Respondent Demographics Data Company size 32% 22% 11% 21% 14% Fewer than 500 Between 501 and 2,500 Between 2,501 and 10,000 Between 10,001 and 50,000 More than 50,001 16% 23% 56% 5% Location Regional U.S. only Global Other 21
About Meritage Talent Solutions Meritage Talent Solutions is the premiere consulting and advisory services firm in talent acquisition. Our goal is to help our clients disrupt the talent acquisition process and marketplace. We provide a blend of solutions to impact the way companies acquire talent. For employers, we introduce customized innovative strategies, processes and technologies that enable you to position your company as a leader in talent acquisition. We can also assist you with technology assessment, selection and implementation. For vendors, we amplify your product design, marketing and go-to-market strategies from a talent acquisition executive perspective. We can help you position your product or solution for maximum exposure to your target market. We have helped clients in various industries and markets disrupt traditional ta lent acquisition and product approaches to maximize ROI, improve designs, and customize sales strategies. Contact us today at info@mertiagetalent.com to discuss your consulting and advisory needs. 22