A couple of weeks before any speaking engagement, I distribute a 10-question survey to the meeting participants so I am well prepared to cover their most pressing concerns. One of the questions I ask is: "What is your best source for new employees?" Some of the possible answers are: "billboards, internal promotion, the Internet, job fairs, newspapers, referrals, schools, signage, and walk-ins."
I've been conducting these surveys for years, and the 541 hiring managers and franchisees surveyed to date report that employee referrals generate the best candidates. These results are right in line with the innumerable surveys that show employee referrals are the only recruiting tool that consistently delivers high-quality workers who stay on board longer in every industry across the board. In fact, world-class organizations such as Southwest Airlines, Microsoft, and Disney reportedly attain from 50 percent to 70 percent of their annual new hires exclusively through employee referrals.
The experience of most employers, however, is like that of a chain of convenience stores I worked with two years ago. Turnover was running at 270 percent, and the average new hire lasted fewer than 60 days. When we broke down the data we found that although they were only a small percentage of the workforce, the employee-referred hires stayed on the job at least three times longer, for the following reasons:
The best way to generate employee referrals is to set up an Employee Referral Reward System (ERRS), because it will deliver a fantastic ROI compared with other recruiting tools. One recent survey reported the cost per hire for a non-exempt position as $2,100 through print ads, $1,000 by means of a job fair, and $392 through an ERRS. Your numbers and the tools you use may vary, but an ERRS will still deliver the best ROI, especially when you factor in applicant quality and longevity.
An ERRS also will improve morale and productivity because the referring employee has a vested interest in seeing the employee they referred succeed, and the referred employee doesn't want to let a friend down. The best systems or programs I've seen have four things in common:
Whether or not you set up an ERRS right now, you can still make employee referrals work for you. Just make it a point every month or two to ask your best people: "Do you know anyone in your (school, church, class, or neighborhood) who might be interested in working with us as a (job title)?" Whether you keep it simple like this or set up a full-blown ERRS, it's the proven, best way to build your dream team.
Mel Kleiman, CSP, president of Humetrics, is an internationally recognized consultant, keynote speaker, and trainer on strategies for hiring and retaining the best hourly employees. Humetrics, founded in 1986, is a leading developer of recruiting, selection, and retention system training processes and tools. He also is the author of five books, including the best-selling Hire Tough, Manage Easy. Visit his daily blog at www.melkleiman.com or contact him at 713-771-4401 or firstname.lastname@example.org.
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