It’s no secret that attracting top talent is as difficult as it’s ever been before. The rapid growth in technology that enables employees to connect and collaborate in real-time has been off the charts. It really doesn’t matter where employees reside. Teams can be made up of people from all 4 corners of the globe, which is making attracting talent that much more complicated. Further, we love personalization in all facets of our lives from how we manage our finances to socializing with friends and family to how we best achieve work objectives. The days where 100% of your employees spend many hours commuting into a physical office 5 days a week all year is over.
Then you have this concept of multi-generations in the workplace. I am the first one to criticize the practice of labelling people simply based on the year they were born — Baby Boomer, Gen X, Gen Y, Gen This and Gen That. I get it… it makes it easier for us to wrap our heads around the concept that people are different from one another and our preferences and interests matter more than ever. What it really comes down to is the fact that each and every employee in your organization is unique by virtue of being them. The point is that in order to achieve maximum employee engagement you need to find that happy medium between the interests of the organization and the interests of the employee. I know I know… easier said than done, but it’s reality and it’s extremely important to being able to engage and retain top talent that you worked so hard to attract.
I just rambled about the realities we are facing in Western societies relating to work. When it comes to the specific challenge of attracting top talent we have seen so many different ideas and strategies being tried in our organizations today. Many work and many don’t. The research is clear that leveraging employee referrals is very effective and results in high quality candidates. The general concept is that the employee knows the organization and can assess whether or not someone in their network would “fit” into the culture of the orgnaization. If you employ 500 employees and each employee has an average network size of 100 people then that’s potentially a 50,000 person network that you could tap into. Instead of “posting and praying”, spending boatloads of money on traditional advertising (e.g. LinkedIn, niche job boards, etc…) you could simply tap into this connected network. Social Talent published a really cool infographic on the value of an employee referral. Check it out here. Through research from Jobvite they stated that, on average, organizations recruit from employee referrals 40% of the time. I’ve heard higher numbers into the 50%+ range, but 40% is still a pretty big number.
Although I am a fan of employee referrals there are drawbacks, notably the creation of a “homogenous workforce”. What this means is that people tend to associate themselves with people like them with similar backgrounds, perspectives and experiences. A few potential risks are the lack of innovation, lack of workplace diversity and inclusion and inability to creatively solve problems. Further, if the program is not set up properly (i.e. it encourages wrong behaviours and actions) it could eventually lead to disengagement, disappointment and frustration among employees.
Let’s Think About a Scenario…
In late July TextNow, a Waterloo-based tech company, announced that it was offering employees $13,000 for each referral that is hired, and another $13,000 to the person who gets hired. That’s $26,000 for every single hire that is made through an employee referral. Yes you read that correctly. I encourage you to read the article, and I feel pretty confident that you will raise your eyebrows a few times. Several red flags popped up for me when I read it and here they are.
First, throwing money at the “talent shortage” problem without addressing the root cause of the problem is like throwing darts at a dart board in the dark. Of course every single Canadian tech company is competing with each other in Canada, and in the United States. TextNow COO Lindsay Gibson states in the article that “people don’t know who TextNow is, and start the recruitment process 10 steps behind”. This is a branding problem and nothing else. I can go on and on about employer branding and what it is and how to build and cultivate one but the point is that throwing close to $30k per recruit at this does not solve their branding problem. In fact, I would argue that irresponsibly throwing money around like this would negatively impact their brand. All successful Canadian tech companies started with zero brand recognition — case in point: Hootsuite, Shopify, Achievers, Unbounce, Bench Accounting, Wave Accounting, and the list goes on. They worked hard to get where they are today, and they did this by creating awesome workplaces that their employees love, involving their employees in telling their stores, leveraging a diverse marketing strategy and being stubbornly consistent about it.
Second, over the long-term money never EVER improves how an employee feels about the organization they work for. Money has the opposite effect. If an employee does not feel that they are being compensated fairly then it causes them to potentially feel undervalued, demotivated, disengaged, and so forth. The whole point of an employee referral is that the employee genuinely wants to refer — they love their organization so much that they want others to experience what they have. Personally, if I was disengaged from the organization I was working for I would likely not refer anyone in my network to them, regardless of how much money they were offering. This is why I love measuring the “employee net promoter score” just like Marketers measure the net promoter score of their customers. However, I do believe that in the short run TextNow will see a significant upward swing in the number of referrals employees make, but over time, it will likely decrease.
Third, what are they hiding? In my experience organizations that irresponsibly throw money around like this are hiding something, and that thing usually has something to do with how they operate on a day-to-day basis. All you have to do is look at the key drivers of employee engagement and evaluate TextNow against those drivers — leadership, rewards and recognition, direct manager, learning and growth opportunities and so forth.
Fourth, solving the talent problems takes time and commitment. In the article they referenced Facebook and LinkedIn campaigns that they rolled out. Here’s the thing about campaigns. You can’t launch a campaign, sit back and watch the millions flock to you. It doesn’t work that way. Do you remember the massive popularity of the Old Spice videos from a few years ago? They were awesome… but… when they stopped engaging with their audience about them the interest and popularity waned. The same thing happens with organizations. You can’t simply turn on and off the switch when you feel like it.
Yes I’m Being cynical…
This is probably one of the more cynical posts I’ve written, but that’s because so much of what TextNow is doing is wrong. Of course I don’t know their full story and how they operate as a company. They could be the greatest organization ever and what I wrote is nothing but inaccurate b.s. If that’s the case then I will gladly take this post down. But I am simply reacting to what I read… that’s it. I can tell you this. Paying that kind of money for an employee referral as a stand-alone initiative is incredibly dumb. It does nothing to impact their culture, workplace, employee engagement, productivity, long-term sustainability or anything else that connects to and impacts their business. Do they really want to attract people who are only motivated by money? Likely not.