Sudarsan Ravi

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The ONLY Employee Referral Metric You Should Measure

The ONLY Employee Referral Metric You Should Measure

Time to Hire? No.

Cost to Hire? No.

Employee network immediacy? Okay. That’s not even a real metric. I have been breaking my head around this question for a while now.


I was in a twangout recently where we asked a simple question.



The answer was all encompassing of referrals, their dwindling quality and the need for a right incentive strategy around them. However, we never really got down to talking about metrics. That was disappointing. It then struck me that the same metrics of cost per hire, quality per hire and time to fill the position are referenced when we look at different sourcing channels. In fact, if you re-read my question, it had the same inherent bias of looking at different sourcing channels with the same lens.


That does not sound right given that employee referrals are a very different sourcing channel. For starters, the sourcing of candidates is not done by recruiters at all. They are essentially crowdsourced.


And what is the true cost of crowdsourcing? Nil. Zip. Nada.

Hmmm. So what would the right metrics be for a referral program? Does it make sense to track several different metrics?


As product managers, we are often encouraged to think of a defining metric for our product. It is called the keystone metric. The one metric that you need to focus on. For example, the folks at Twitter care about trying to get you to follow atleast60+ people before you are even exposed to your home timeline. They take elaborate steps to make sure they automatically recommend people based on your interests, help you find friends and then recommend you upload your contacts. In that specific order. They have figured out that if you follow atleast 50 people, you are more likely than not going to be an avid twitter user. That is probably the ONE metric that Jack Dorsey cares about (or should care about).


It was fascinating for me to think like that. Focus on one metric that defines everything else. The keystone metric also has to help align and help you achieve your business objectives. In the case of employee referrals, it is fair to say that the ultimate business objective is hiring great talent. But can the number of hires be your only defining metric? Definitely not.


If you put too much pressure on your recruiters for converting referrals to hires, they are definitely not going to prioritize for candidate experience. That poor experience can potentially end up embarrassing an employee. Neither are they going to care about reverting to candidates that are no longer being evaluated or corresponding with employees on their hires. Slowly and steadily, the confidence in the employee referral program tends to erode.


Similarly, a metric like cost per hire does not really cause more referrals or better sourcing. It is a by-product of sourcing. While we track it to see how we wish to alter our sourcing mix, the reality is that the wealth in this channel is actually distributed within the employee pool. Technically, it is akin to an employee engagement activity. Distributing wealth within is and should be correctly encouraged.


Let us look at some of the other metrics at play for increasing referrals?


Employee participation is a key metric. Yes. One of the more important metrics that we should track. How many employees participated in the referral program this month/quarter/year?


Everything in the referral channel is a function of employee participation. The number of employees participating will give us a clear sense of the awareness of the referral program and employee perception of the workplace. Remember, if the culture is not right, they won’t come, participate or bring their friends in either. 


Employee participation also gives you a key sense of who your evangelists within the organization are. Remember to treat them special. They are custodians of your culture and help spread positivity. They can also help tap into their networks as and when you have a need making the channel “on demand” crowdsourcing. 


Employee engagement is another interesting metric from a referral standpoint. How many repeat referrals do you get from a single employee? What percentage of your employees that participated in the referral program referred again in the same quarter/year?


While the employee participation metric helps you measure your communication/awareness strategy, the engagement metric tells you plainly if you are building the right referral program or not. If the percentage of repeat referrals is very low, it is time for some serious introspection. Are you not prioritizing the referral channel? Is there a concern around processing? Are you not communicating status at periodic intervals? Or even more damning, is the candidate experience broken?


This one statistic forces you to analyse multiple points in your employee referral candidate funnel. Measuring them systematically and fixing them can help you reap multiple benefits.


The third metric that is key is the branding impact. How many candidates viewed positions at my organization because of my employee efforts? In today’s world where everybody is social, page views by active/passive candidates are a great by product.


A low number of views per employee gives you clarity that your employees are not sharing the positions socially. This can potentially happen if you have a social component in your recruiting product for referrals. A low social metric could also be a function of trust that employees have in sharing their social networks on a work related app. This can and should be handled through communications both in the product and via emails.


A high metric is a great indicator of your employees advocating positions liberally on social, their networks being strong and helps you reach a large amount of passive talent.


The fourth metric to look at is candidate application conversions. Of all the people who viewed my job description, how many people ended up applying or referring another friend? This gives you an indicator of the effectiveness of job descriptions that are there and how your talent brand is perceived. Given that your employees’ social postings may have just caused curiosity, I would not encourage taking this very seriously.


We have looked at multiple metrics. Each metric gives you an understanding of the different parts of the sourcing and recruiting process. So, which is the key metric to follow? Unfortunately, none of the above.


An important criteria for picking that one metric is that it should help you achieve a positive increase in your referral percentage year on year. It should align your entire teams, both recruiting and hiring managers. As a HR leader, would you not want that? Recruiting is often known as a support function and more often than not, a very thankless job. Would it not be wonderful that you focus on just one metric and that takes care of everything mentioned above.


After a lot of thought, the key metric to a successful referral program is “Time for initial response”. How quickly do you respond to a candidate referred by an employee?


The key to success is delivering a delightful experience. Amazon and every online shopper has focussed on delivering a delightful experience. Why? Everybody loves being delighted. Delight results in word of mouth. Delight results in repeat business. Delight results in Joy. Besides, who doesn’t like delighting people?


Time of first response is directly proportional to delight. Speed is of essence in delight. Imagine Bob, your senior product engineer sends in Sharon’s resume for a position. Within a day, you speak with Sharon, assess her suitability for the process and tell her if you are going to run her through the process or not? Regardless of the outcome, Sharon is going to thank Bob for sending her profile in. Bob is going to feel special for helping Sharon out and guess what, he believes his input is of value. I know it seems debatable if Sharon gets rejected right away. But hey, a big part of delivering delight is communicating promptly. Actually, strike that. It is over communicating.


The key to making Bob feel special is giving Sharon a thumbs up/down within a day. The sooner the better. Bob knows that you value his input and will start to give you good candidates. Sharon knows she has skipped a rather long line and would appreciate Bob and your organization. Delighting Bob also makes him feel wonderful on where he works at. He speaks about it internally with his colleagues at lunch and you have just turned an employee to an evangelist. He is going to be happy to take an extra step to find that star performer and recommend them if he knows you will treat them right.


Building an inclusive culture is very important for sustaining an employee referral channel. And being prompt and respectful is the most important step to achieving that. Too many times, recruiting teams believe they are on a pedestal and ignore employee satisfaction and delight. They then struggle to get employees participating or giving any kind of meaningful quality.


Invest the time in delighting employees, communicating promptly and sharing feedback. This goes a long way in building the right foundations for a delightful program. With the right foundations in place, it is a matter of time before you automate sourcing with the power of your workforce. So what are you waiting for?


What do you think? Have you setup a special process for your referral candidates? What is your time per hire? I would love to hear your thoughts, comments and questions in the section below.

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