Why Hasn’t Employee Referral Automation Caught on? #SHRMTalent

I spoke at SHRM Talent this week. One of the best corporate recruiting conferences around. Many people don’t believe me when I tell them, but the content, speakers, and audience are really engaging.

TA Tech companies and vendors haven’t caught on yet to the new SHRM Talent. Most corporate TA pros I spoke to might not have million dollar budgets to spend, but every one of them had decisions making over tens and hundreds of thousands of TA budget dollars!

It’s becoming one of the favorite conferences because the audience of corporate TA pros and leaders are very open to wanting to learn and get better. Their questions are genuine and the truly want to learn how to improve recruiting and talent attraction in their organizations.

One topic that I bring up during my sessions as the most under-utilized TA technologies on the planet is employee referral automation. Jobvite created the space, others followed, like RolePoint, Zao, Gooodjob, etc. Still, main stream corporate TA tech in mass aren’t using employee referral automation. It’s one of the great mysteries in the TA space for me!

When you ask corporate TA pros and leaders what their top source for talent is, employee referrals will always come in the top 3. When you ask what is the highest quality of hires by source, employee referrals are almost always number one! When you ask how much money have you invested in increasing employee referrals, it’s almost always $0!

So, help me out, what am I missing?!

The SHRM Talent audience told me I wasn’t missing anything, they just simply didn’t know this technology was available to them! Jobvite was in the expo hall, but mainly they were selling ATS, not employee referral automation (huge miss, but I know ATS margins are bigger than employee referral automation!). 97% of my audience weren’t using this tech, but almost all had an interest in learning more.

It’s really a zero-budget buy for most companies! If you use this type of technology you can basically get rid of your referral bonus program and your numbers will still go up on employee referrals. So, there’s the money you need to buy the tech that will put your employee referral program on steroids!

Truly, the bonuses per referral are not needed! You will have to actually begin recognizing those who do refer in your company, but almost all employees will refer people to your organization without a monetary gain! Also, increasing bonuses does little to actually increase the number of referrals you get.

So, why isn’t the vast majority using this tech?

First, they aren’t being sold this technology. Most corporate TA pros and leaders buy because of what is being sold to them, not necessarily what they need.

Second, I’m guessing the companies that sell this tech are for the most part fairly weak at marketing because it seems like a pretty easy sell to the groups I have in front of me!

Third, most corporate TA pros and leaders just have no idea this tech is even on the market for them, and if they do, they believe it’s too expensive to purchase.

They’ll spend a million dollars on LinkedIn and Indeed, but not $50,000 on technology that gives them more hires of their highest quality source?! There’s a major disconnect here on both sides of the market, which means there’s a giant opportunity for a company with a great brand with great tech that can make it simple for corporate TA leaders.



5 thoughts on “Why Hasn’t Employee Referral Automation Caught on? #SHRMTalent

  1. Great points in here, Tim! Lever’s recent data shows that 1 in 16 referred candidates are hired, making them almost 10x more efficient than candidates who apply (https://www.lever.co/blog/recruiting-benchmarks-2016-see-how-you-stack-up). Couldn’t agree more that this is worthy of investment, particularly for companies that are already investing in other candidate sourcing tools. Those other tools provide a good volume of candidates, while referrals generate a very high quality of candidates.

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