 "Debabrat Mishra")
Is your referral programme working? If you go by industry surveys a handful of corporations seem to be having second thoughts already. A recent survey by human resources (HR) services firm TeamLease reveals that 49 per cent of the companies feel such programmes promote mediocrity and hinder innovative thinking.
Kiranmai Dutt Pendyala, corporate vice-president, HR, AMD Greater Asia and Europe, the Middle East and Africa, says referral programmes present a few key challenges. First, the phenomenon of "like begets like", which leads to mediocre or not-so-strong performers building their ilk in the organisation to strengthen their own position. Second, managers may play foul by bringing on board mediocre talent from their referral pool, which can be countered by having a cross-functional interview panel and rigorous screening, she points out. Third, there is a risk of nepotism or favouritism. "To make sure this does not happen, a scientific talent acquisition process provides checks and balances by weeding out mediocrity. For example, there can be hiring manager accountability for the performance of the hired candidate even after the candidate is chosen through the rigorous selection," Pendyala says.
But think before you decide to scrap your employee referral programme. A key reason why many referral programmes fail to deliver is that the organisation doesn't get behind it. If your HR staff and critical stakeholders don't appreciate why you are doing it and fail to engage your people, then it is doomed. But first, why would a company place its bets on "referred" employees?
Jagjit Singh, chief people officer, PwC India, says, "PwC's employee referral programme encourages our employees to refer external, experienced job seekers they think are best suited for various positions. In the last financial year, we closed around 33 per cent of our positions through referrals, our employees being one of the best sources of identifying qualified talent. There are various benefits attached to the firm as well, including increased alignment to the culture and growing stickiness to the organisation. It helps multiply the onboarding effort as the referee becomes another anchor besides the onboarding and buddy programme. To drive the success of this programme, we provide a cash incentive to the referee after the referral completes 90 days of service."
R Mahalakshmi, director, HR, Mondelez India, points out that the company has been using an employee referral programme called "iRefer" for the last four years. "Referrals constitute 40 per cent of our hires. The benefits we've seen from iRefer is a stronger sense of demonstrated pride in the company and the brands we represent. This reward is much higher, shall we say, than the monetary incentive that employees stand to gain as a token of appreciation."
Companies reward employees for referring hires in different ways. NIIT Technologies, which has a system known as the "Each One Get One" scheme, also uses it as a tool to promote gender diversity by providing higher cash incentives for referring women candidates. Travel company Expedia India, on the other hand, offers its employees about 150,000 travel miles or travel points, giving the referee the choice of covering miles or claiming reimbursement of the same figure in rupees.
So how should you deploy a referral programme that cuts costs and builds engagement - things it was supposed to do in the first place? Here are a few lessons from companies that seem to be doing it right.
Gangapriya Chakraverti, director, HR, Ford Motor Pvt Ltd, says. "The success of an employee referral programme depends on the culture, priorities and processes in an organisation. The referral programme is one of the key channels of talent sourcing at Ford, with close to 20 per cent of our new hires coming through the mechanism. Candidates referred by employees are put through the same assessment as any other candidate to ensure there is no dilution."
Chakraverti explains that to make a referral system successful, "one needs to eliminate individual bias and conflict of interest through robust processes while keeping employees informed of opportunities".
Richard Lobo, senior vice-president and head, HR, Infosys, says the company looks for individuals with good learnability and communication skills with a focus on technology and an entrepreneurial bent. "Employee referral is one of our key channels for lateral hiring. We believe that employees can make a good referral decision as they understand the aspirations of the candidate they refer as well as the requirements/culture of the company."
Infosys has enhanced the use of technology for employee referral in the last few years, he points out. "We have created a portal where employees can view requirements and directly submit the profiles of candidates. Since this process is completely online, employees can track the status of their referral in real time. We have also introduced special reward schemes to encourage more employee referrals; for example, we have monetary rewards defined for different job levels joining at offshore (in INR) and overseas (in USD) locations."
Faisal Nadeem Saiyed, HR director, Expedia India, says 30 to 40 per cent of the company's hires come through employee referrals. "But still, out of 100 resumes we get we tend to offer jobs to only three to five." The challenge, he believes, is to ensure employees refer genuine, high-quality talent and not just make referrals for the sake of it. "We have learnt through practice that it's very essential for us to do two things with our employees on a regular basis - one, communicate to them the roles, technology and opportunities which Expedia is working on, and secondly to ensure that our closure of employee referrals is very strict so that employees are at all points of time aware of where their references are."
Tata Chemicals Limited (TCL) covers all referral cases under its SHINE+ initiative since 2014. R Nanda, head of HR, TCL, says the company has not seen any disproportionately higher percentage of hires turning out to be mediocre when compared with the rest. "The reference system doesn't operate in isolation but as part of a bigger HR ecosystem. Hence, there is immense value in this combined process which includes our springboard, career pathing, succession planning etc." Besides, he points out, TCL uses SHINE+ as an internal job posting tool to promote job mobility and overall career development leading to better employee engagement.
Visibility of referral programmes in companies can be poor due to infrequent use or erratic postings, Nanda explains. "In SHINE+ we send out a weekly mailer on a fixed date to all users where the mail has been designed in such a way so as to be unique from the usual wave of mails a working professional gets. This is how we solved the problem of visibility, navigation and infrequent usage of the portal."
Mahalakshmi of Mondelez rejects any possibility of mediocrity being encouraged by it. "We feel strongly that the referral system helps us better the sourcing conversion ratio both in terms of closure time and quality of hire as the employees sharing recommendations engage in a preliminary screening while sharing the profile." She feels "the only area to watch out for has been to ensure that the 'conflict of interest' concerns are understood and handled in a discerning manner, in instances where the hiring manager refers likely hires".
Workplace culture as key motivator: Debabrat Mishra
EXPERT TAKE
nWho do you aspire to work with? Ask employees this question in your referral programme. This will help you crowd-source potential "aspirational" people for your organisation. In today's world, the biggest challenge is knowing who are the people who will raise the bar.
nHow can I reach them? You have to work hard in wooing and recruiting the people recommended by your people. Your employees might be able to help you connect with them through their networks, but don't make "familiarity" a criteria for the referral programme. A referral programme is not a substitute for your sourcing channels. It is a supplement.
nIncentivise the right behaviour. A referral incentive should ideally be non-monetary. Don't make it an outcome of cost saving. Let people have a sense of pride in enhancing the culture of the organisation and motivated to work with the best.
Debabrat Mishra
Director, Korn Ferry Hay Group
Director, Korn Ferry Hay Group
