Like gold, talented human capital is both precious and scarce. It is precious because it can generate greater than market returns on investment. And it is scarce because there is never enough to satisfy organizational needs. As the demand for highly specialized technical, managerial, and professional skills increases, human capital will likely become even more precious and scarce. Recruiting will have to work even harder to keep up with the talent market, as companies no longer compete just with other peers, but also other industries, to obtain human capital.
Or recruiting can work smarter. Trying to spot human capital directly is like trying to spot a large deposit of gold. You rarely find a lode exposed openly. Instead, you look for gold-bearing veins and outcrops of minerals known to host gold deposits. Similarly, to find a deposit of human capital, it is worthwhile to look for social capital, which consists of the network and community resources that accompany human capital. Research has demonstrated that high human capital is accompanied by high social capital, and the latter is often much more observable to business organizations looking for talent gold.
What you know influences who you know
One of the most cost-effective ways to access social capital, and ultimately human capital, is through employee referrals. High human capital individuals tend to associate with one another, creating a network of trust, reciprocity, and information sharing. Consequently, employees obtained by referral tend to have higher retention rates and levels of engagement within the organization. They are more likely to be a good cultural fit, and have the highly specific skill set needed by the company. An employee referral can also serve as an initial vetting of a candidate, one facilitated by trust and organizational citizenship, thereby accelerating the hiring process.
3 ways to build an effective employee referral program
Effective employee referral programs have been characterized as the recruiting function empowering employees to be employment brand ambassadors for the company. In turn, brand ambassadors make available their professional networks, referring their colleagues for whom they can vouch. HR thought leader John Sullivan has detailed numerous best practice strategies to communicate an attractive employer brand and obtain high-quality referrals. We will highlight four of those that we have found particularly effective among our customers.
- Identify and prioritize high-value roles
Companies will almost always have more openings than can be handled by employee referral programs. Likewise, potential brand ambassadors are likely to have limited attention space to devote to supplying HR with referrals. Recruiting can maximize the chances for success by identifying high-value roles, and prioritizing those that are particularly high demand or challenging to fill. More than just an HR exercise, prioritization reduces the HR administrative burden of handling referrals for jobs that can be addressed through normal recruiting operations, and allow recruiting to focus on acquiring the best human capital for the most strategic roles.
- Use social media to communicate your employer brand and find talent
Professional social networks such as LinkedIn are nearly ubiquitous, available at no cost either to companies and talent, and tend to be regularly monitored by both parties. For employers, they are a good means to communicate the employer brand separate from the company brand, and provide a first touch with talent. Likewise, employees regularly access social networks during the workday to collaborate and build social capital. Companies are realizing it is beneficial to give employees the latitude to do so, as it helps identify passive candidates and give visibility to top talent on the outside. The most effective recruiting functions tend to include mechanisms to convert such potential leads into referrals.
- Make your referral program attractive to all participants
It may seem like a frivolity to attach a name, headline, and logo to an employee referral program. Yet doing so signals to both current and potential employees that the organization takes referrals very seriously, and gives brand ambassadors powerful collateral with which to approach their trusted colleagues and friends. Brand recognition at the program level also frames recruiting process so that value is established early, as all participants contribute their best efforts, and own their share in the success of the program. Recruiting operations should be simple from the perspective of the candidate and the employee making the referral, and technology easy to use. Likewise, simplicity ought to follow naturally from a clear value proposition to employees who take the time to make referrals.
Executing on the cloud
Flexibility and usability are critical to executing a well-designed employee referral program. An example of a cloud-based solution fulfilling both is Cornerstone OnDemand, which enables organisations build and modify their own employee referral programs within their existing applicant tracking systems. A benefit to recruiters is access to an existing talent pool, which reduces costs such as agency fees and external advertising. Existing employees are able to use social networking sites such as Linkedin and Facebook to post and share jobs across their entire networks. Social networking can also be enabled in Cornerstone OnDemand external sites, allowing external applicants to refer positions to their contacts. In either case, a Career Site can be set up to accept a Linkedin Resume/CV to apply for a position.
A capital plan
You have taken a lot of effort to acquire the talent that you have. Such talent represents a accumulation of human capital gold that is both precious and scarce. And this human capital is also accompanied by social capital which can be invaluable to recruiters in locating additional sources of human capital to help the company grow in productivity and value. Rather than pursuing wildcat prospecting for human capital gold, recruiting should learn to read their employees’ social capital, and create solid programs for golden employees who help their employers discover even more gold.