Hiring managers and HR professionals know that employees who join an organization through a referral program are both a strong culture fit and more likely to remain with the company.
To find these employees, many companies offer cash bonuses to those who refer candidates that ultimately get hired. At General Motors, where I am the director of global talent acquisition, we have done this in different parts of the world with some success. In Israel, for example, we provide a cash incentive for referrals, and approximately 15% of our candidates come from that referral program.
Cash incentives don’t necessarily guarantee higher referral rates, however. Recently, several companies, including Google, discovered that money didn’t motivate their employees to refer friends and colleagues.
The days of “cash bonus equals referrals” are not necessarily over, but I don’t see it as a binary equation.
In 2020, 9% of our US candidates came from employee referrals. In 2021, we grew that number to 16%—and we achieved that without offering any cash incentives.
At a time when finding talent is a significant challenge for many companies, we discovered a way to tap into our greatest asset—our employees—and learned how an employee-centered approach can help in the competitive talent market.
Here’s how we are doing it.
Focus on the Employee Value Proposition
At GM, we spend a lot of time defining our employer brand. Our mission and culture help to attract and retain employees.
Joining an organization that is significantly transforming itself and an entire industry is key to GM’s employee value proposition. Looking at the timing of our announcement of a fully electric future, and then at our employee engagement numbers, there is a definite correlated spike.
Not only are our employees engaged, but our new hires also report feeling a sense of purpose working here. For example, we recently hired Shaluinn Fullove as Chief People Officer for BrightDrop, a new business from GM whose purpose is to redesign the commercial delivery and logistics industry for an all-electric future. One of the company’s first initiatives is to partner with FedEx to create a fleet of electric vehicles. Shaluinn told me whenever she sees a FedEx truck, she gets excited. She tells her daughter, “That truck, which now has an internal combustion engine, is going to become an electric vehicle. BrightDrop is the reason that is going to happen.”
Without a lot of marketing around our referral program, our new hires recommend GM as a place of employment to their friends simply because they are passionate about what we do.
Another factor driving engagement is how our leadership managed the return to the office as the pandemic subsided. In April 2021, GM’s CEO Mary Barra and other leaders introduced “work appropriately,” which gives employees the flexibility to work wherever and however they see fit. Rather than mandating that all employees return to the office or conform to a hybrid schedule, “work appropriately” allows employees to establish their own schedules and work locations—and the company provides all the necessary tools and resources to accommodate them. Our employees felt that the leadership team showed empathy throughout the pandemic, especially in terms of flexibility, which had a positive effect on engagement.
Of course, the employee value proposition looks a little different for each person. For example, somebody going into their first job is joining the organization not just for a role but for a career. Someone coming from a traditional automotive company will now be part of a transformational organization. Someone coming from a tech company will get to work on a product and see their product come to life. We are able to provide opportunities for a diverse range of experiences.
“Hum, Sing, or Shout” to Get the Word Out
Being vocal about hiring contributed to the uptick in our referrals. At different points we’ve had to, as LinkedIn calls it, “hum, sing, or shout” to let people know we are hiring. We partnered with internal architects on our communications team to get the message to our employees that we are also hiring a lot in 2022. Our social media accounts and platforms like LinkedIn send notifications to our current employees about open positions, and we also ask employees to regularly visit our career site.
As a recruiter, I used to be limited by geographical constraints. Thanks to remote work, the talent pool has opened up significantly. We can go into spaces where we wouldn’t have otherwise gone to recruit and find talent from more diverse sources—from startups to the top IT companies.
Flip the Recruitment and Referral Processes
We’re making a big investment in technology by updating our recruitment tech stack. The future is candidate relationship management-based recruitment, where we’ll proactively recruit the people we want, even before we have a position open.
Data and technology can help us identify our talent needs for the future, but ideally we will merge our candidate relationship management process with our referral process in order to create a talent community that we can invest in. For example, we can stay in touch with someone who is perhaps not looking to make a move right now but who may be in the future.
For employee referrals, this eliminates the gap between “I know of a person, but I have to constantly watch for a position to open up for them” versus “These are 10 people I know. They do work similar to ours, and now we just need to match them to a position.” We have the technology to tell us exactly the roles for which those 10 people are a fit and then we can start contacting them.
Involve Employees in the Success of the Candidates
We used to talk about customer experience; now we focus on candidate experience. The job application process can be life-changing for many people, so the most important element of recruiting talent is to establish trust. Remember, the candidate is speaking to a set of strangers and absorbing a lot of information about an organization all at once.
While the recruiter’s role is very important in the hiring process, the referrer’s role is also key. If I have a friend who I trust in the organization, I can ask, "What’s it really like to work there? What is the culture like?" This makes a huge difference in the candidate’s decision-making process.
Gallup's Q12 survey includes 12 statements designed to determine how engaged someone is in their job. One of the statements is “I have a best friend at work.” If I have referred three or four of my friends into the organization, I am now committed to their success. I've asked them to come to GM, and I need to show that I walk the talk.
That personal connection and accountability are worth more than any incentive.