We are creating a meaningful ‘referral culture’

Creating a robust and meaningful ‘referral culture’ is an area where your Co-founder, or a Talent Acquisition hire can immediately improve on, in your startup workplace.

Sure enough, it is often expected from employees that they will refer people whom they have enjoyed working with, and whom could fit into the open role and into the culture. In the very early days of building a startup, founders would often recruit within their circle of contacts, these contacts possess the drive and interest to work on what the founders have created. Beyond that kind of early recruitment, there are some mechanisms that will work to shape the future talent brought in by your current team members.

Current state 

We have 23.5% members currently, hired from referrals in total, this year. (2019’s year to date: January - May, referral metrics)

Across last year (2018), we had 18.75% members hired from referrals, in total.

All of our hiring managers are pretty open to ask their team for referrals, and they often meet referrals even if these referrals are currently not ready to explore the opportunity. We often meet with one passive referral weekly, on average, and we often ask referrals why are they open to even meet with us despite their reluctance to change jobs at this point of time. Being an early stage startup, we often are unable to provide top line bonuses or benefits and we understand that there are considerable risks in our environment that may be less present in a more stable job environment. I have actually met people whom we were not able to hire right away - but managed to offer, and hire a year later.

Almost all Talent Acquisition initiatives today are done on a contingent approach, but if you are aware that there may only be a small pool of candidates located in each country who may be suitable to join you, especially in a very niche technical discipline, then you can understand the benefit of meeting a referral whom you may not be able to recruit into your team right away.

Why do referrals join us?

The answer is often surprising. For some, the job scope was something that they have always been looking to do, for others, it was the stage of the startup - having our ‘firstborn’ product at the exact ‘zero to one’ stage of growth was really super exciting for many in the industry to want to participate in our growth efforts, as there are not that many subscription model product in this technical area, that are just being born today.

To add to our further amazement, some referrals even reach out to our team members to be referred. In the last months, we have had a referral come in from a candidate, who himself referred another candidate for a role that has not opened up - and another referral referred himself to the same team of an incoming hire - both of these wonderful people had heard about what we are trying to disrupt today and have personally interacted with our company a year ago, and never forgot about what we were trying to do. These seeds were planted by our excited Engineers representing our ‘firstborn’ product at expos and fairs. 

So when these referrals come to meet us, they are already ‘sold’ on the potential of our product. This makes my job so much easier as they are already raring to join at this time for this opportunity; and we no longer have to convince these candidates to join.

We really go out of our way to care for our referred candidates as well - I have provided relocation and general information, out of my personal holiday time, to referred candidates who eventually did not join us, and I am not the only one doing this - it has been done by all levels of our team.

It goes without saying that referred candidates who are strong candidates will be expedited. Even though we cannot claim to be the startup who does the fastest interview : offer acceptance in market, (We heard there is one early stage startup who can conclude a full process in 2 days!!!) by focusing on expediting strong referrals, we managed to give an offer to a referred candidate in 4 working days, after completing 5 interview stages.

Creating your own robust ‘referral culture’ that works at scale

There are many areas in your ‘referral culture’ to improve on, especially for a startup at scale. In the past I have researched and recommended these 10 areas, as shared below. I am grateful for the opportunity to have implemented these, and have seen many of them work well. I will share the specifics here and I am sharing the recommendations of what are the most important areas for you to work on, in order of priority:

#1 Prioritize your top referrers 

By tracking acceptance rates, it is easy for us to find out which referrals pass the benchmark - from the first interview, all the way to the offer stage. For referrers with less than 20% referrals who can pass the first interview, you could temporarily suspend them as you want to meet your commitments for #2.

#2 Commit to responding to referrals in 48 - 72 hours 

Lack of response is the number one killer for employees to even bother - we review each referred CV and decide on next steps in an expedited way; I still practice this today and commit to respond with an update within the same week. Additionally, I give updates to referrers on the interview feedback result, to help them to understand what we look for in a quality hire. 

When you show commitment, it sends a strong message to your team members that :

• The company takes referrals seriously
• Every referral will get a quality experience

This will make it more likely that your top employees will refer top talent to your company.

#3 Use the right ATS that allows for social referrals, and automates tracking

Without the right ATS capabilities, referrals can be a source of a lot of manual work for you. Everyone in the company should be able to locate and use a referral link. This link should enable their referrals to apply directly with the corresponding job description. The ATS should be able to track referral progress and key metrics.

#4 Not doing it for the money

The focus should be on doing it for the team, not for the monetary incentives. Educate your team about the critical role they play in changing the shape of the company with quality hires who are capable and innovative.

#5 An option to donate referral bonus to charity ; other interesting options 

This will ease the concerns of some team members who do not want to be seen as ‘financially motivated’ to refer candidates. This option also allows the People Operations team, and your direct hiring managers to participate in referrals. At scale, a program like this could tie into your CSR initiatives. Other interesting options:

Team bonus - We implemented a referral bonus that could only be spent on an activity involving the team member and his hired referral - the bonus was often big enough to warrant an activity that could be as simple as having dinner or a movie together, including inviting all other members of his referral’s new team.

‘Stuff’ bonus - For some levels of ‘junior’ referrals, most early stage startups could not offer a good monetary incentive, so we gave the referrals an option of special gifts (rotated, each month ‘special deals’) to choose from. This could vary from experiences (very appreciated by teams consisting of mainly millennials), to something they coveted, but have not bought. Popular among our young teams were : Dyson fans, an iPad, a gold bar, a bottle of perfume or alcohol, and paintball or daytrip experiences. 

#6 A personal thank you note to all team members who made more than 10 quality referrals in a year

This can be written by your country head or your founders, this sends a message that talent is our top priority.

#7 Top referrer in each regional country team will be awarded with a meal with our CEO / Founder

This provides a tangible career benefit to have a personal exposure with management, and sets a precedence for others to follow. This can be done on a quarterly cadence.

#8 Ask for 2 or 3 referrals from every new hire

Probably your new hire has already spoken to their personal contacts about the startup they are going to join. This effort helps to pipeline talent, and your good talent should already know other good talent. Some established companies immediately ask their new hires to provide names and referrals during their onboarding week.

#9 Offer all referred candidates vouchers, product demonstrations, ‘closed door’ introductions

Almost all companies reject 98% of all applicants. Yet, many of them could be potential customers (or refer potential customers). Collaborating on initiatives together with the marketing teams’ activities could help Talent Acquisition contribute to a part of customer acquisition initiatives.

#10 Offer stunning incentives to capture attention for hiring critical senior leadership positions 

Some established companies offer five figure sums as referral bonuses, for their tough to fill, “Director level and above”, roles. This initiative also creates good internal PR to remind your team about your referral program.

Being original doesn’t require being first. It just means being different and better. - Adam Grant, #originals

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Reading Resources

How Stripe created a referral culture without monetary reward

How to use Slack for recruiting