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5 Reasons to Externalize Your Internal Referral Program—Now!



Internal referral bonus programs have been a part of corporate hiring culture for decades. During my tenure as a Salesforce hiring manager, I continuously relied on referral bonus programs. There is definitely a high-value proposition that stems from collaborative talent acquisition concepts.

If properly implemented, an internal referral program can propel companies past their competitors. History shows referral programs reduce time to hire metrics and generate efficiency within recruiting organizations.

As competition for top talent increases, companies have started leveraging external bonuses. However, recent attempts to do so have been ad hoc and lack proper marketing, such as one-off postings on company job boards. The industry has yet to experience drastic change pertaining to internal referral programs, and major job board or aggregators have failed to tackle such an important component of the talent acquisition arena.

Time for a change

The time has come for business professionals to restructure internal referral programs. They should ask themselves: is the referral program still relevant and distinct, or is it ready for change?

Internal referral programs for many companies often simply “exist to exist” and lack continuous improvement, even with the inclusion of a generous referral bonus.

For example, an article from Quartz shows that while Google has improved their system of referrals over time, the success has nothing to do with money. In fact, even when Google raised their referral bonuses by $2,000, there was no increase in successful referrals!

This example just goes to show that referrals are not always about the money. Once you hit that sweet spot with the right referral amount, other factors come into play—like employees wanting to look out for their peers.

Companies should be nurturing referral programs in an effective way and treating them as a critical organizational process. This includes moving towards an externalized referral program.

Here are five reasons why companies should consider
externalizing their internal referral programs:

1. Peers know peers (internally and externally)

A popular trend is for peers to form communities, or what you could call “clusters,” of talent. These clusters of talent are well connected, both personally and professionally. Those within these pods intimately understand their peers’ skills and are very qualified to refer a candidate. Peercisely taps into those clusters by allowing users to recommend candidates directly from these well-connected peer groups. Professionals are eager to recommend their peers even without the need for a referral bonus in some situations.

peercisely network effect

2. Opportunity to rebrand your company

Human resource professionals argue that only internal employees should play a part in referral programs. This archaic idea holds the misconception that only internal employees can speak for and protect a company's brand.

However, in reality, a company should be improving branding through other marketing and sales channels, and maybe even through putting more effort into writing job descriptions to get the best candidates. Externalizing an employee referral program can also be used as a branding opportunity. This especially holds true for smaller companies in desperate need of talent in such a competitive landscape.

Companies tend to confuse brand awareness strategy with internal referral programs, which can often lead to missed opportunities to make a positive impact on branding.

3. Saturated internal referral programs

It’s true that internal referral programs have proven over time to be great vehicles for talent acquisition, contributing to less time to hire, more brand awareness, better economies of scale, and other key metrics.

However, although often successful, these programs tend to become over-saturated within companies. Current employee reputations could be risked or you could end up with bad or dishonest referrals, according to the Jobvite article, When Employee Referral Programs Turn Dangerous.

On the other hand, externalizing a referral program would open up a huge talent channel for companies to tap into. In fact, with peer-connected external referral programs like peercisely, quality referrals will just fall into the laps of recruiting and hiring managers.

4. Expand social sourcing with a personal touch

Using social media information is the latest trend in externalizing internal referral programs. Through this model, employers try to leverage or tap into their internal user employee's social networks. While this could be considered a valid option, it has been largely unsuccessful thus far and seems counterproductive.

The point of a great referral program is to reduce the stack of resumes and bring in the top talent to companies. So, instead of the one-too-many sharing model approach, why not leverage an external platform—one that allows access into people's social networks and personal connections?

Peercisely allows referrers to use their own personal networks to refer those who they personally know that would be a great fit for a position. Through an easy to use interface, anyone can refer peers through a one-to-one interaction. A text message, email, direct Facebook message, or even a personal referral link that can be sent via any social channel is the key. This is way more effective that encouraging employees to spam social channels with links to jobs. This personal touch becomes a win-win, as employers are handed qualified candidate choices while job seekers get a better chance at the job of their dreams.

Here is a brief tutorial on how to refer a friend for a role on the peercisely iPhone app. Contribute to charities and earn referral bonuses simply by referring your peers!

In the example of Google’s referral program, it was discovered that even if they hired candidates from referrals at a rate 10 times that of other methods, Google would still need to get a yearly rate of 300,000 referrals to meet their desired hire quota. This seems like a lot, but by externalizing referral programs like peercisely does, those numbers could be driven up to that amount—or maybe even more.

5. Extended motivators

When referral programs are kept internal, employees are often concerned about their reputation. But externalizing referral bonus programs yields extra motivators and unlocks an unlimited talent pool. Externalizing and democratizing referrals will cause usage to organically increase, which means everyone wins. Peers help peers find their dream jobs while being rewarded, both monetarily and personally, for doing so.

Taking Caution with Referrals

It should also be noted that while referral programs are extremely valuable, they could also turn dangerous if handled poorly. This Jobvite article contains a great summary of my aforementioned comment. However, a great aspect of Peercisely is its included algorithm that rates the quality of social referrers over time. Through this method, those with poor quality referral scores are weeded out and the high quality referrals are brought to the forefront for employers.

In closing I’d like to point out that while internal referral programs are most familiar to companies and may bring some good results, the process could ultimately be dangerous to companies and can be widely improved by focusing on external referrals through a service like peercisely. External referral programs are the best choice for companies because they allow peers to refer those whose skills they know well, decrease the headache of the over-saturated internal process, and ultimately make a more positive impact on the company as a whole.

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