An Oracle White Paper January 2013

Social Networking with a Purpose: Building Your Referral Machine

Social Networking with a Purpose: Building Your Referral Machine

Introduction Word of mouth has become word of Web. Social networking is here to stay. The reach, benefits, and expectations surrounding social media are endless—matched only by the pitfalls and misconceptions associated with implementing a social media strategy. With social networks blurring the line between business and personal, today’s interactive Web technologies are helping people to connect and share ideas and content with a huge potential audience. What’s more, they’re making this process much faster and more efficient than ever before. Tasked to do more with less, marketers and recruiters are especially attuned to these benefits and are looking for technologies that can tie real ROI to the way business is being conducted on the social Web today. Despite the vast reach of social networking, however, most recruiters are facing tremendous pressure to fill open positions from seemingly limited talent pools. As a result, they’re spending more time than ever posting jobs, searching networks, and sifting through résumés for topquality talent. In fact, most recruiters who have started using social networking tools and technologies have only seen their workloads grow. This is because they tend to view social networks as quick, easy channels for blasting job openings to thousands of people—and unqualified applicants are responding in kind. Thus, there has been a dramatic increase in the number of résumés submitted but no accompanying increase in the quality of applicants. Is the promise of social recruiting, then, a myth? Or are recruiters simply using today’s tools with yesterday’s mindset? This white paper demonstrates how you can employ a referral strategy to leverage the power of social networking for measurable ROI.

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Social Networking with a Purpose: Building Your Referral Machine

Recruitment Trends SelectMinds (acquired by Oracle in November 2012) commissioned Survey.com to examine recruiting perceptions, practices, strategies, and trends among HR professionals in July 2011. Specific focus was given to understanding employee referral programs and involvement with social media sites. An online survey was conducted to collect data for this study. Respondents consisted of HR professionals in executive or director roles. HR professionals were asked to compare how their organizations’ hiring requirements, recruitment budgets, and HR department size had changed from 2010 to 2011. Hiring requirements saw the largest increase, with 41 percent of respondents indicating that their hiring requirements had grown since the previous year.

Referral Strategy The very nature of social media encourages referrals, and referrals are invariably the best, most costeffective source of new talent. Referrals produce high-quality candidates at a low cost.

Figure 1. Quality-of-hire ratings

Rehires (34 percent) and referrals (33 percent) provided the highest-quality hires, according to survey respondents (see Figure 1), and referrals emerged as the most cost-effective source of hires (see Figure 2).

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Social Networking with a Purpose: Building Your Referral Machine

Figure 2. Cost-to-hire ratings

Referral ROI: Referrals by the Numbers 88 percent of organizations with formal employee referral programs indicated that more referrals would be valuable to their organizations. As shown in Figure 3, respondents indicated that referrals are valuable to their organization because they provide a lower cost per hire (53 percent) and higher quality per hire (49 percent) than other recruitment methods.

Figure 3. Value of referrals

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Social Networking with a Purpose: Building Your Referral Machine

To understand the financial impact of increasing referrals, see Figure 4, which demonstrates what would happen if a fictional company, XYZ Enterprises, were to use an intelligent social network to increase its referrals from 10 to 15 percent of all hires.

Figure 4. Referral hire budget impact for fictional company, XYZ Enterprises

Despite their potential for significant savings (as evidenced by the example in Figure 4), referrals are not a channel that recruiters feel they can just “turn on”—because to do so, they would have to overcome several existing obstacles.

Three Common Obstacles to Referrals: Communication, Motivation, and Ease Let’s continue to look at the employee referral program of XYZ Enterprises. The company has 15,000 employees and made 1,500 hires last year. Some 150 of these hires, or 10 percent, came directly from employee referrals. The company was pleased at how much time and money these 150 referrals saved and cheerfully paid the associated referral bonuses. Now consider this: if these 150 referrals came from 150 individuals, that would mean that only 1 percent of the XYZ Enterprises workforce had successfully referred an employee. The other 99 percent of the workforce didn’t participate. Furthermore, this well-established company had made no effort to garner referrals from its 30,000 alumni. In short, this company is failing to leverage the connections of 44,850 well-connected people who are highly familiar with its offerings and culture. If XYZ Enterprises is already offering generous referral bonuses, what more can it do to garner referrals? It can focus on eliminating obstacles to communication, motivation, and ease.

Communication: How Do You Keep Open Jobs on the Referral Radar? Neither employees nor alumni can refer friends and colleagues to job openings they don’t know exist. Relatively few of your people will habitually check the job page of your career Website. Current employees might hear about which departments are hiring, but alumni have no such access. Meanwhile, both continue to meet and network with hundreds or perhaps thousands of highly qualified potential employees and clients for your organization. If you don’t stay connected with employees and alumni, and if you don’t proactively push out open jobs to them, your referral program won’t stay at the forefront of their minds. At the same time, maintaining updated lists of employees, alumni, jobs, and referrers is cumbersome, so these referral pools—a rich recruitment source—often go untapped.

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Social Networking with a Purpose: Building Your Referral Machine

Motivation: How Do You Make Them Care? Research shows that the primary reasons people refer jobs or candidates are 1) to help a friend, or 2) to help their team or organization. Thus, employee referral programs that send openings to employees relevant to their backgrounds and networks achieve a much higher level of participation than those that merely blast out all open or hard-to-fill jobs to all employees. Unfortunately, the vast majority of employee referral programs fall into the latter category. Targeting job-opening announcements requires far too much manual work on the part of recruiters.

Ease: How Do You Eliminate Manual Effort? You’ve been publishing your job openings on your Website. You’ve let your employees and alumni know about your generous referral bonuses. You send out weekly messages. But your referral rates are still low. Why? Chances are, potential participants see your referral process as time-consuming and cumbersome. The typical referral program requires busy employees and alumni to •

Routinely look through lists of open jobs



Scour their address books for friends and former colleagues who would be a good fit



Make the initial contacts



Follow up with their friends throughout the referral process



Fill out forms with HR to qualify for their referral bonus



Repeat this process every time they want to make a referral

Some companies have tried to ease this process by e-mailing lists of weekly job openings to employees. But employees must still ponder qualified colleagues, and they typically think of only those who are top of mind. Given the opportunity to refer a colleague for an HR opening in Des Moines, Iowa, a busy IT manager in New York will probably click Delete and move on. Worst of all, she may decide to ignore such e-mails in the future. Make the referral process easy—even fun—and participation will increase.

Get More Referrals by Unlocking the Promise of Social Networking The promise of social networking lies not in doing the same (inefficient) things at a lower cost, but in benefiting from the many personal and professional relationships people have built over the years. Overall, 58 percent of the HR professionals surveyed indicated that social media was a current part of their recruitment strategy. Of these, Facebook was the most commonly used site (76 percent), followed by LinkedIn (63 percent), Twitter (42 percent), and corporate blogs (35 percent). Respondents who use social media for recruitment cited various goals associated with its use and track different forms of ROI for their recruitment efforts. Most often, respondents indicated that quality candidates (46 percent) were the most important return from investing recruitment efforts into social media sites. (See Figure 5 for more social media results.)

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Social Networking with a Purpose: Building Your Referral Machine

Figure 5. Social media ROI

Tips for Implementing a Referral Strategy Recruiting boils down to one key principle: Good people know and trust other good people. Job opportunities that come by way of personal connections have the greatest chance of inspiring people to act. When your employees’ trusted contacts pass along your job openings to their trusted contacts, your recruiting reach grows exponentially. Imagine being able to sit back and wait for the right candidate to come to your recruiters, rather than having your recruiters to post, search, and make cold calls. To make this reality, you need a strategy and a technology solution that can scale up the volume of your referrals while still leveraging the trust of social connections. Such a solution allows you to repeat one-to-one communications across countless networks until the right candidate emerges. Your referral solution needs to meet four key success criteria: •

Maintain online communication with employees and alumni. An intelligent social networking solution will do more than connect your people—it will also mine their networks and proactively suggest connections to drive referrals. This type of architecture automates the referral process: •

Your employees and alumni join your network and share their business contacts.



Each time your recruiters send out a job opening, the solution automatically routes it to the people who are likely to know candidates for the job. Recipients are less likely to feel bombarded and to delete these e-mails on sight.



Recipients receive an e-mail with a few relevant jobs.



When recipients log in with their social sign-on, their networks suggest appropriate candidates for the open positions. They don’t have to stop and think, “Who do I know?”



With a single click, recipients can pass the jobs to the suggested candidates. They can also choose to forward jobs to their LinkedIn or Facebook contacts, or to their Twitter followers.

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Social Networking with a Purpose: Building Your Referral Machine



When the right candidate receives the e-mail, he or she can easily follow a link to your company’s career page and apply for the job, or refer the job to someone in their own network, and the referral chain continues.



Support motivation efforts. As your company begins to offer bonuses for referrals, you must track and pay accurately—or risk losing credibility. An intelligent referral solution will track bonus eligibility throughout the referral process—even when job openings “go viral” by being passed along down the chain. Suppose your company is willing to split bonuses among several people in the referral chain. The solution will automatically track how many people passed the job along and determine how much reward everyone should receive. There is no extra effort for your recruiters or accountants.



Make the process easy and rewarding. If the referral process requires inordinate amounts of time, effort, and thought, people will avoid it—or push it to their to-do lists, never to be revisited. By using an intelligent social networking solution to automate the referral process, you allow your employees and alumni to participate by simply clicking a button. It takes just seconds for them to pass along a job to a contact recommended by the system. When your process is this easy, participation will increase.



Reinforce your employment brand. As you e-mail job openings to employees and alumni, you have an opportunity to reinforce your corporate brand. Too many referral programs, however, revolve around ad hoc e-mail efforts that make inconsistent use of corporate logos and other graphics. An intelligent social networking solution can automatically send out branded e-mails—and drive applicants to branded Web pages. Even after your job openings go viral, all candidates will enjoy an applicant experience that looks and feels like your company.

Conclusion While most HR recruitment budgets and teams have not changed over the past year, recruiters face growing challenges in finding the right talent for their organizations. They need innovative solutions that leverage the latest technology and social networks to help them meet their changing needs. Referrals receive strong endorsements from HR professionals as a cost-effective talent source that provides high-quality and diverse hires. 74 percent of respondents indicated that their employees are effective recruiters. In addition, respondents provided positive reviews of referrals. For these reasons, HR professionals should continue to support and leverage their employee referral programs. With candidates and companies moving their recruiting efforts to the social Web, your organization’s HR team needs to be there, too. If you don’t have a successful social referral strategy, you’re letting the value of social networking slip through your fingers. With such a strategy in place, you let your brand equity feed a referral machine that yields top-quality talent.

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Social Networking with a Purpose:

Copyright © 2013, Oracle and/or its affiliates. All rights reserved.

Building Your Referral Machine January 2013 Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A. Worldwide Inquiries:

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