Beyond Employee Referrals: The rise of the community referral program

Why investing in a community referral program can be an important aspect of a robust hiring strategy

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Many folks believe that employee referrals are “not good for diversity”. This is sometimes true if “top of mind” referrals that come from a very small subset of the company are the only referrals coming in. But considering the Pinterest approach or listening to Freada Klein, it’s easy to see that a more diverse pipeline of candidates can be generated through referrals. In fact, this study from Lightspeed Ventures found that referrals are the #2 source of hires from underrepresented groups at startups.

Let’s dive in with something that intuitively seems obvious.

If you want more diverse referrals, look beyond employee referrals.

Companies are starting to look beyond just their employees and into their talent communities for good referrals. A community referral program is similar to an employee referral program, but for members of a broader community. Data from suggests that 8% of companies that previously only had an employee referral program have expanded their programs to include community referrals as well, including companies like Mulesoft (100K external bonus), Hubspot, Asana, Atlassian, and more.

And here’s the best part — most companies already get community referrals, whether they realize it or not.

Every company has a community. This includes alumni, friends, family, investors, advisors, customers, social media followers, and so on.

These community members already occasionally refer people — especially when they think that person might be a good fit for a role or team.

In fact, 40% of what are assumed to be employee referrals actually originate somewhere within a company’s community.

BUT — most companies are likely missing out on a ton of great referrals from their community if they don’t have a formal community referral program. This can be due to many reason, including:

  1. Community members are rarely aware of the openings at the company, which means that the company is likely to get less relevant referrals.
  2. What community members think about the company embodies the employer brand. Those in the community may not know what to say when a friend asks them about the company.
  3. Hiring is all about timing. At any given point in time, there’s someone in the world considering a career change that is an exact match for what the company needs. But the company and potential hires can be like two ships crossing in the night. Community members can shine the light, but only if they know that the company is looking.

Here are some other advantages of investing in a community referral program:

  1. Diversity: If seeking candidates that don’t look like existing employees, it can be helpful to ask someone that isn’t an employee but still cares about the company.
  2. Talent community: Someone who makes a referral to the company may be more likely to consider a position there in the future.
  3. Employer brand: Alumni, friends, and family within the employer community can help strengthen the employer brand.

Considering the research in support of a these programs and the potential positive impacts community referrals can have on hiring efforts, starting or investing in a community referral program can be an important aspect of a robust growth or hiring strategy.

Does your company have a community referral strategy in place?

Get first in line for more from the PeopleTech Partners community of top HR & People leaders on this and other key topics and trends impacting the future of work here.

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