Is Your Employee Referral System Being Trumped by Your Culture?

Four Common Cultural Issues & 15 Ways to Fix Them to Save Your Employee Referral System

By Pat Schaeffer, co-founder
Talent Strategy Partners

I once referred a friend to my employer and my friend got hired. I got a $1500 referral bonus, grossed up so that I got the full amount after taxes. What’s not to like about that?

Lots, apparently. An industry colleague recently told me that many companies are concerned that employees aren’t making referrals because of cultural issues. As he said, “Who wants to refer their friends to a company where they are having issues?”

Going back to my experience, I had referred my friend into a culture that I loved – supportive boss, smart and friendly colleagues, and a high value placed on collaborating to get results. I spent the $1500 bonus treating my newly-hired friend, myself, and the rest of our team to lunch in a chichi restaurant we could otherwise not have afforded – a gesture so in keeping with our culture I didn’t even think twice about it.

Culture eats strategy for breakfast

It’s an old adage, but it’s true. And culture can just as easily trump an employee referral program (ERP). All the catchy names, monetary rewards, tchotchkes, and award ceremonies in the world won’t save your ERP if your company is a place people don’t enjoy working.

In our 12 years of experience working with a wide variety of clients, we’ve compiled a list, in order of magnitude, of the worst offenses and what you can do about them. It’s not an all-inclusive list; it contains just examples of what we’ve seen. Cultural issues that create an unpleasant work environment are as many and varied as there are companies. You need to get to the bottom of yours through employee research; for example, surveys, focus groups, and/or exit interviews.

If you identify this cultural issue…
Poor management. Top-performing individual contributors are often promoted to management roles without any preparation. They don’t know how to delegate – and if they do delegate, they micromanage. They don’t communicate openly; meaning they don’t ask questions or listen, because, as the boss, they think they have to be the smartest person in the room. And they don’t facilitate the flow of information. They don’t devote time to developing others, probably because they’re so busy doing everything themselves (they don’t delegate effectively, remember?) they don’t have time to think about other people.

You can…

• Develop a model that lays out key manager competencies – that is, behavioral skills – that are clearly defined and clarified using behavioral examples. Important competencies are delegating, communicating, coaching, and developing others.
• Assess managers on the manager competencies. Multi-rater assessments provide the most balanced feedback and can be used to identify both individual and collective development needs.
• Provide development opportunities such as action learning-oriented classroom training, on-the-job activities, and self-directed learning.
• Help each manager create a development action plan to take advantage of the opportunities you provide.
• Get managers who cannot or will not develop the competencies out of managerial roles. Provided they had been top-performing individual contributors, create a face-saving place for them as highly-paid technical or professional leaders with no responsibility for people other than to transfer their skills to up-and-comers. Otherwise, give them a severance package.

If you identify this cultural issue…
Lack of career development opportunity. Some people are quite happy staying in a job they like and do well. But most people crave opportunities to do something bigger and more challenging. A lack of these opportunities can become a major source of employee dissatisfaction.

You can…

• Develop a robust succession planning process that identifies people with potential to move up in the organization.
• Develop career paths that provide roadmaps to prepare succession candidates for positions of greater responsibility and/or rotational programs.

If you identify this cultural issue…
Employees don’t feel valued. Everyone wants to know that their employer appreciates what they’re doing. When people don’t get “pats on the back” and/or they don’t understand how their work contributes to the organization’s performance, morale suffers.

You can…

• Make sure managers recognize and reward good performance. It’s not necessary to reward with money; a simple “thank you” goes a long way.
• Celebrate employee accomplishments, both individual and team. Public recognition may be even more important than private recognition. It provides examples of good performance for everyone.
• Have managers sit with each direct report to discuss the relevance of the employee’s job, key contributions and deliverables to the overall business plan and goals of the organization. People feel valued when they understand how they fit into the big picture.
• Do not tolerate marginal performers. These are people who deliver barely-acceptable results and everyone else has to pick up their slack. If you allow marginal performance it says that you really don’t value good performance.

If you identify this cultural issue…
Too much red tape. Rules can be essential for ensuring product/service quality and consistency or for complying with regulations. But too much bureaucracy can get in the way of people getting their jobs done, create frustration, and reduce employee satisfaction.

You can…

• Continually review your policies. If you can’t find the benefit – and especially if you find a detriment – of a particular policy, get rid of it.
• Help people understand the “why” behind essential policies.
• Encourage employees to look for ways to improve procedures and processes.
• Give people as much autonomy as possible to make decisions. Push decision making as far down in the organization as you can.

HR Tech Can Help

One final issue is technological, not cultural. Your employee referral site has to be user-friendly, provide ready access to data, and make paying rewards fast and easy. If employees have to jump through hoops of fire in order to refer a friend, if your recruiting staff can’t easily access referral data, or if your system is so sluggish that feedback and reward payments to referring employees are delayed, your ERP is going to suffer.

So what?

Why should you care if your ERP is working?

• Conventional wisdom is that people referred by employees make the best hires; the people closest to your best employees are also likely to be good employees. (Source: Oracle White Paper 2013, The Shortest Path to Better Hires: Best Practices for Employee Referral Programs)
• 82% of employers rated employee referrals above all other sources for generating the best return on investment. (Source: 2006 Direct Employers Association Recruiting Trends Survey)
• 88% of employers rated employee referrals above all other sources for generated quality of new hires. (Source: ibid)

In my mind, these make a great business case for investing time and money in your ERP.

One last thought

Fixing your cultural issues will not just improve the effectiveness of your ERP. It will have the broader effect of improving your organization’s overall effectiveness and performance.

By Pat Schaeffer, co-founder
Talent Strategy Partners
215-275-7430
www.tsphr.com

Talent Strategy Partners – talent management consultants focused especially on leadership

development and performance management practices designed to reinforce the culture that will enable strategy execution and business success.

Pat focuses on ensuring that all employees understand the organization’s goals and, through their results and behaviors, make significant contributions to achieving those goals. She is also a group facilitator with formal training and extensive experience — from helping executive teams articulate the organization’s visions and goals to training employees about how they can contribute to the organization’s success.

With over 25 years of experience, Pat has consulted as well as worked in corporate HR. She served as North American director of compensation at Campbell Soup Company. Her consulting career began as a compensation analyst with Sibson & Company. Before founding Talent Strategy Partners, she was a principal in the Performance and Rewards practice at Mercer HR Consulting in Philadelphia.