2014 MERITAGE TALENT SOLUTIONS EMPLOYEE REFERRAL TRENDS REPORT MERITAGE TALENT SOLUTIONS EMPLOYEE REFERRAL TRENDS REPORT

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT 2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT 2014 MERITAGE TALE...
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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

2014 MERITAGE TALENT SOLUTIONS’

EMPLOYEE REFERRAL TRENDS REPORT

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

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

SURVEY RESULTS

Companies with Formal Employee Referral Programs Does your company currently have a formal employee referral program?

Formal programs are most common in very large employers.

86%

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

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

Companies with no current formal program The smallest companies are the least likely to launch a formal program.

36%

65%

plan to launch a program in the next 18 months.

No plans to launch a program.

Less than 500 employees.

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

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

PRIMARY REFERRAL PROGRAM TRENDS IDENTIFIED 5

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

TREND # 1 Social Referrals - Driven by the implementation of 3rd party Referral Technology

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

Tools Used to Manage Program 70% 60%

Currently have program Planning to launch program

50% 40%

64% 55% 50%

30%

27%

20%

18%

10% 0%

Spreadsheets

Referral Functionality in ATS

14% 3rd Party Referral Solution

3% Other

18%

0%

Not Decided

What are Social Referrals? Social referrals can take two forms.

1 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.

2 Second, a social referral can be generated by a 3rd 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.

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

Tools Used to Manage Program 70% 60%

Currently have program Planning to launch program

50% 40%

64% 55% 50%

30%

27%

20%

18%

10% 0%

Spreadsheets

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 3rd party solutions. Are those solutions missing some customer requirements?

14%

Referral Functionality in ATS

3%

3rd Party Referral Solution

18%

Referral Functionality in ATS

0%

Other

vs.

18% Not Decided

27%

3rd

Party Referral Solution

Movement is away from using the referral functionality in the ATS and towards 3rd party referral solutions, with 27% of companies planning to launch a program using 3rd party vs. only 18% using their ATS solution.

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

Tools Used to Manage Program 70% 60%

Currently have program Planning to launch program

50% 40%

64% 55% 50%

30%

27%

20%

18%

10% 0%

Spreadsheets

Referral Functionality in ATS

3%

14% 3rd Party Referral Solution

Other

0%

18% 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 3rd party solutions?

Kenexa, JobVite and Taleo have referral functionality that is most commonly used by their customers.

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

3rd Party Referral Tools Companies planning to launch referral programs are more likely to use 3rd Party Referral Tools.

As 3rd 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.

27% 27%

14% Planning to launch program

Currently have program

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 3rd Party Referral Tools:

Other solutions in the space:

All of the 3rd party referral tools are based on social referral functionality.

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

SATISFACTION WITH CURRENT REFERRAL TOOLS

How Satisfied Are You With Your Current Referral Tools? 63% Very Satisfied

of respondents who are Very Satisfied use a 3rd party solution. Very Dissatisfied

Neither Satisfied or Dissatisfied

Partially Satisfied

Partially Dissatisfied

83%

of respondents who are Partially Satisfied use ATS Solution, 11

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

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

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

Individuals Beyond Employees Included in Program 70% 80%

Alumni

22% 48%

Customer

100%

48% 60%

Social Media Connections

Vendor

Other

Currently have program

of respondents with programs already include nonemployees in their programs.

17% An additional 17% plan to expand their programs to include non-employees.

35% 40% 26% 20%

45%

of respondents planning to launch programs with include non-employees in their programs.

Planning to launch program

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

PROGRAM STRUCTURE BENCHMARKING Our survey also revealed interesting data about program structures, including management models, goals, rewards and results.

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

GOALS OF REFERRAL PROGRAMS

Increasing the Quality of the Candidate pool is the top goal for companies. Currently have program Planning to launch program 100%

93%

90% 80% 70%

67%

61%

60% 50%

36%

40% 30%

58%

49% 27%

27%

32% 18%

20%

9%

10% 0%

Increase Quality

Increase Quantity

Decrease Time to Hire

Increase Retention

Increase Diversity

Other

2%

2%

Don’t Know

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

REFERRALPROGRAM MANAGEMENT

Referral Program Structure Currently have program Planning to launch program 80% 70%

Centralized program management is the most common management structure.

76% 64%

60% 50% 40% 30% 20% 10% 0%

9%

Centralized

Most companies with programs use between

1 and 3 FTEs In HR to manage the program.

0%

Decentralized

16%

27% 9%

Hybrid

Not yet decided

Other departments, including accounting and payroll, also have resources dedicated to program management in approximately

50%

of companies with programs. 16

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

Referral Program Incentives Cash awards to employees for referral hires are the most common incentives employed.

Average Cash Incentive Paid for Referral Hires 73%

26%

Less than $1000

18%

69%

$ Currently have program $ Planning to launch program

9%

Between $1000 and $4999

2%

0%

$5000 or greater

4%

59%

of companies offer or plan to offer cash incentives for referral hires.

Non-Cash Incentives Offered for Referral Hires

25%

of companies offer or plan to offer non-cash incentives for referral hires.

18%

Don’t know

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.

54%

35%

27%

Prize Drawings

Others

Company Logo Items

15% Vacation Days

Other incentives include coupons for movies, dinner, coffee; music cards, and awards points. 17

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

PROGRAM RESULTS

Referrals Continue to be a Primary Source of Hire for Employers with Referral Programs % of External Hires that are Referrals

47%

0 - 25% 27%

26 – 50% 51 – 75%

4%

76 – 100%

4%

Don’t know

7%

8%

of companies with referral programs report that more than half of their external hires come from their referral program.

25%

of companies report meeting or exceeding their referral program hiring goals.

25%

of companies don’t actually have hiring goals for their program

38%

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

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

Expanding program to include non-employees

Improved marketing of program to employees and other participants

Improved measurement and metrics

Standardization of program across the company

A complete overhaul of the current program and technology

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

Key Takeaways The #1 trend in referral programs is towards social referrals. Many 3rd 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

2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

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%

Regional

U.S. only

Global

Other

Location

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2014 MERITAGE TALENT SOLUTIONS’ EMPLOYEE REFERRAL TRENDS REPORT

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 [email protected]etalent.com to discuss your consulting and advisory needs.

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