Which KPIs should you use to measure the success of your employee referral programme?

As far as recruiting trends go, employee referral programmes are top of the list and becoming increasingly popular. This sourcing and recruiting method carries great potential for many companies. Sometimes though, potential doesn’t necessarily yield results. So why is that? This relatively new talent acquisition channel isn’t always leveraged to the fullest or in the right way.

Measuring the success of a referral programme must be integral to the company’s strategy. These days, only few organisations invest in tools to digitalise their referral processes, which is a shame, because these tools can reduce the bureaucracy involved in any referral programme and, more importantly, measure programme success.

KPIs are crucial to assessing your employee referral programme

European IT giant adesso is a particularly eloquent example of how performance tracking data can be leveraged to improve referral programmes.

In a year, employee referrals have become the most powerful talent acquisition channel for adesso in Germany. By combining their digital referral platform [CTA cooptation] with quantifiable objectives, the company’s recruiting teams have succeeded in:

• Planning initiatives and investments more efficiently
• Measuring ROI
• Monitoring performance and adapting strategies based on results

Defining referral programme objectives in advance

So, what makes an employee referral programme a success (or a failure)? How do you measure success? Which metrics are particularly relevant? What conclusions can be drawn from analysing them?

First of all, bear in mind that the data you collect isn’t worth anything if you don’t tie it into your objectives. So before you do anything else, define the objectives of your referral programme. For example, the main purpose of your programme might be:

• A set number of applications and/or hires
• An improvement in the quality of applications received
• A decrease in time-to-hire
• A decrease in the budget allocated to sourcing/and recruiting
• Etc.

In any case, these indicators will necessarily be related to your employees (participation) and/or to candidates (response).

Referral programmes: 3 key employee KPIs to monitor

If your employees aren’t engaged, referrals won’t get off the ground and your programme will be doomed. This is why it is important to keep an eye on how engaged your teams are and track the following: signups, activity, and recommendations.

Signups indicate interest in the programme

What does this mean in practice? The signup rate indicates the percentage of employees who have signed up to the referral programme against the number of employees in the target group (all employees, employees in specific company departments, employees located in specific offices, etc.).

How to interpret this indicator? A rate that’s too low can mean several things:

1. Employees haven’t received enough information about the programme.
2. Employees were informed through a specific channel, but that channel is hardly ever used.
3. The benefits aren’t sufficient for employees to sign up and invest time on top of their professional role and responsibilities.
4. Employees simply don’t want to refer anyone. Why could this be? Lack of involvement can also reveal who in your workforce has become disengaged, and therefore provide you with an opportunity to improve your relationship with them.

You need to manage to identify the reason(s) for this disengagement and act on it in order to find the right solution. This generally involves adapting your communication and/or your programme to better suit your employees and their needs.

User activity indicates the adequacy of the programme and its rules

What does this mean in practice? The activity rate is the percentage of active participants out of all participants who signed up to the programme. “Active” can mean that participants are viewing and/or sharing vacancies and other content, checking their points, etc.

How to interpret this indicator? If the rate is high, this means that participants have access to relevant content and that the system is easy to use. If the rate is low, maybe your communication strategy on the programme lacked pedagogy at some point.

Recommendation rates indicate your employees’ motivation

What does this mean in practice? This rate designates the number of job vacancies shared by a participating employee on their social media networks over a given period of time (month or year, for example).

How to interpret this indicator? The more your employees share content, the better you can conclude that the programme is a source of motivation for your workforce. It’s particularly interesting to analyse this rate across different company departments. For example, if you realise that the team that needs to fill most of the vacant positions isn’t sharing any vacancies, it might be worth looking into adapting your communication approach with that specific department.

Referral programmes: 3 key candidate KPIs to monitor

If you’re experiencing positive results with your employee engagement, you’re already halfway there. What you need to do now is check that the vacancies and content your employees are sharing are duly received on the other end by the members of their network. Which referral KPIs relate to the candidate experience?

Click rates indicate interest in your content

What does this mean in practice? This rate signifies the number of times the shared vacancy was clicked on. In other words, this rate is the number of clicks received on a post sharing a job vacancy.

How to interpret this indicator? This metric will give you a rough idea of how strong your employer brand is. Job vacancies with a hard-hitting brand identity yield higher click rates. Your click rate can also improve with relevant content and attractive visual designs. Precise monitoring of this indicator and conducting a few tests will help you identify opportunities for improvement.

Applications show how well your channels are performing

What does this mean in practice? Your application rate indicates the number of applications received against the number of job vacancies shared. Say 20 vacancies were shared and led to 10 applications. Your application rate would be 50%.

How to interpret this indicator? This rate can be calculated for each channel your vacancies get published to: LinkedIn, Facebook, direct messaging, etc. This is a great way of comparing your channels and drawing insights regarding which channels are the most effective. It also allows you to compare referrals as a sourcing channel to other more conventional channels like job boards, active sourcing, etc. That way, you’ll see how successful (or unsuccessful) employee referrals, as a channel, are for your company.

Hiring rates indicate the impact of referrals on the number of hires

What does this mean in practice? This indicator is the most important for your employee referral programme. It calculates the number of hires you made against the number of applications received through a referral.

How to interpret this indicator? First and foremost, hire rates are a good indicator of the quality of referred candidates compared to the quality of applications received through other channels. You can also compare the total number of hires resulting from referrals to your annual or quarterly recruiting goals. This indicator is particularly useful in proving the effectiveness of your referral programme and can inform decisions to expand its use.

24% of hires at adesso came about as a result of the company’s referral programme. The insights generated by the data monitoring helped the group adapt their programme in order to turn it into the most efficient recruiting channel across the company. And the proof is in the numbers: applications have increased by over 80%. - Benjamin Nitze, Senior HR Manager at adesso SE

Each of your referral programme tracking metrics can be optimised

Monitoring KPIs is one thing, but you can take things further by improving on your results. But how? For example, how can your employees engage more actively with your referral programme? What can you do to encourage candidates to click more? What can you do to increase your chances that they’ll apply?

Any recruiting team that masters each of your KPIs will know which levers to pull in order to increase performance. Which begs the question: What specific measures can be taken to improve each specific KPI?

Each KPI is an opportunity for optimising your referral strategy