The ONLY Employee Referral Metric You Should Measure

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 at least 60+ 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 at least 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 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 you 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 media, 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 to 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.

 

The most important one is Offer to joining ratio: Offer to join ratios show the percentage of candidates who accepted your job offer. Let’s say you had offered 15 candidates in the last month. If eight of them had accepted your offer then your offer to joining ratio is 53%. Track this metric per job per hiring manager to understand 

 

1. What made the candidates accept your job offer?

2. Did engagement play a key role?

3. Whether the offer was attractive, or

4. You matched the right candidate for the right opening.

 

If they had rejected the offer, what triggered them?

 

1. Culture fit

2. A better offer

3. Position mismatch

4. Bad recruiting experience

 

Measuring this data tells you how effective your sourcing strategy is. And what you must do to further enhance or improve this ratio. 

 

The last and final metric is Time to fill. Hiring managers across industries, countries, and levels have a unified ask: ‘Can we hire this person as of yesterday?’ You can avoid this by forecasting your hiring needs or building a talent pipeline. Anticipate, analyse and forecast the kind of profile you are hunting for every month and set up a calendar. For eg., You need to hire 50 people in the voice process every month. 

 

Create dummy openings and float them across your key sourcing channels to get a steady stream of qualified candidates. Identify the best and keep them warm. Once the position opens, present them to the hiring manager and hit closure.  

 

However, if your pipeline isn’t reducing your average time to fill, it’s time that you realign your sourcing strategies, or change the way you qualify a candidate. 

  

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.

 

After a lot of thought, I think 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? Would love to know if you think otherwise. Let me know in the comments below.