Tawfiq Abu-Khajil Live on Shally's Alley

Hey, all right everybody, you are live on Shelly's Alley Friday, March 14th. I think, um, St. Patty's is coming up pretty soon. Yeah, well, that's gonna be, that's gonna be some fun, some green colored fountains and, and, uh, stuff like that. So, uh, welcome to the show. We have an interesting guest today, something that we haven't actually talked a lot about on the show. And Tawfiq is the co-founder of a company called Echo Referral. Is it just Echo or Echo Referral?

Uh, we, we usually go by Echo, but that don't mean—

Echo, Echo, Echo, Echo. Can you hear me now? Um, you know what, you know what I really hate about recruiting is it that, that like, hey, who do you know? I hate that question. Like, who do you know? What do you mean, who do I know? A lot of people. I mean, I know a lot of people. But when you ask somebody, who do you know, it's like the absolute worst way to get a referral because the brain doesn't work like, like that. Yeah, we need, we need some kind of point of reference. I, I always tell people, if you're gonna get referrals, which you should on all of your, uh, phone screens and in your calls, and you know, always get referrals. But I say just couch it or give them a little bit of like a, some kind of a brain trigger, like, hey, do you know anybody at MIT? Or do you know anybody that graduated from Georgia Tech and lives in Atlanta? Or do you know anybody? Like, give them something and then they'll have one person and then they'll like go from there. But when you just say, who do you know?

Doesn't work.

You'll get, I mean, you'll either get, well, I don't know anybody, or, which is not true, obviously, or I know a lot of people, which is, you know, not helpful. But anyway, as you can surmise from, um, my, my commentary, the topic du jour, um, is employee referrals and how you can use employee referrals better. Uh, Echo is, is a, is a referral company, but as you guys know, we don't, we don't talk product on the show. We talk about what we do, and what we want to talk about here is, you know, what are some of the— what are some of the best ways to transform employer referrals into, as Tawfiq says on the company website, into your superpower? Um, your LinkedIn profile highlights your role as a founder and president, and it says that you guys focus on transforming employee referrals into a superpower. But what does that really mean? And, and how many of the employees at Echo were referrals?

One sec, Shelly, I lost you there for a sec. What was that?

I said, what does it really mean to become— to have employee referrals be a superpower? What does that really mean? Most companies— the reason I'm asking is most companies have a referral rate of like, you know, 30 to 35, 40%, where, you know, at least a third of the people like working there enough to tell someone else about it. And so that's kind of the bit. But for it to become a superpower, you tell me it's got to be much more than that. And the follow-up question for that is, how many people at Echo are employee referrals?

Yeah, absolutely. Great question. Good to be here. Thanks for having me, Shelley. Um, I think you'll be surprised, not a lot of companies are actually doing 30 to 35%.

Um, that's just kind of the hype of what's supposed to be.

Yeah, that's, that's where it's supposed to be. 30-35 is actually like the, the, I think the top percentile bench, like benchmark.

Is that the superpower? So if I got to 35%, I already have a superpower?

Yes, yes, you do. And it depends on the industry. Um, I think Echo, we're focused on the front line, so think about like healthcare is our biggest segment, and then following that is hospitality, construction, and retail. Usually in those categories, the referral rate is below 20%, sometimes even below 10% if it's a large, very large organization.

Like the worst one is hospitality?

I wouldn't say there's a worst specific, worst one. Like we sometimes see healthcare, for example, organizations in healthcare doing like 2%, and sometimes we see organizations in hospitality doing like 10% versus 5%. So it really depends on the org.

Is it because they're not tracking and they just don't know? Or is it really like they just, you know, people don't refer people in those types of orgs?

Yeah, absolutely. I think the biggest reason is just people on the frontline don't know that their org has a referral program, or if they do, they don't know how to refer someone. I always tell like anyone I speak to, I always tell them, this is close to home. My dad is actually a frontline employee. He's an anesthesia technician. you know, in Austin. Um, and a lot of times I ask him like, hey, like, do you know if your org has a referral program? And he works at one of the largest healthcare orgs in the country, Ascension, which a lot of folks might have heard of. And he goes, no. I'm like, wait, what?

You don't have one, or he doesn't know if they have one?

He doesn't know of it. I know they have one. So I know like they have—

you know they have one, he just doesn't know. And he's the one that they want to reach.

Exactly right. A lot of folks in the front line, they just don't know. And I think that's where the biggest gap is. Usually in the corporate space and then tech space, like most of the kind of those organizations, referrals are doing pretty well 'cause, you know, one Slack message or one Microsoft Teams message to all employees pretty much informs everyone. But the challenge is how do you get to the frontline? And that's why most folks don't.

Right, and you gotta do that informing regularly, right?

Yeah, yeah.

Keep marketing it. Like anything else, you gotta market it internally.

Yeah, have you heard of the 3 Es?

Wheeze?

The 3 E's. The letter E's?

No. What are the 3 E's?

I always tell folks, hey, for successful referral program, you need the 3 E's. Like, that's it. Like, as simple as that. The 3 E's. That's one of them. All right. Um, well, close at least. It needs to be— I would say it needs to be enticing. So like, uh, a lot of times like orgs are paying you know, a cost per hire of like $3,500, especially in nursing, or $4,000, uh, especially in healthcare, sorry. And then they go, oh, like a referral bonus, uh, you're gonna get $200. And I'm like, what? Like, it's just not matching. Like, someone making, you know, $100K a year, even more, that $100 won't really move them, or $200 won't move them. So the amount needs to be enticing enough to move someone.

So what you're saying is money really matters in employee referrals? I've always heard that you know, organizations will kind of increase the money and there's not a whole lot of change until they get to a certain point. I don't know what that point is, but then they get to that point and then all of a sudden everybody's trying to— like, their job now is trying to get that bonus. And so they become, you know, full-time referrers, and then it motivates the wrong kind of thing. So you're saying it does matter? Is there, is there like a sweet spot range, a percentage of salary, or what? Like, how would you measure that?

You're gonna think I'm being political here 'cause most of my responses is gonna be depends on the industry and depends on the—

But is there a formula?

Yeah, there is a formula. There is a formula. I think most of the times you at least want your referral bonus to be very as close as you can to your normal cost per hire 'cause then that determines how hard that role is to hire for, but also determines how much that role is being paid for as well.

right?

Like how much the salaries are in that role. Work your way backwards from your cost per hire. That should give you a good number. So like if your cost per hire is, usually in healthcare it's $3,700, $3,800. If your referral bonus is around that $3,500 on average, now some roles might be higher, some might be lower. That's a good bonus. But if you go down to like $100 or $200, it does matter. It really, the numbers do matter. Show me your referral bonus amounts, I'll show you the engagement. But then you have the other two pillars, right? The other two E's. So enticing, the second one needs to be, it needs to be engaging. So most of on the frontline, they need to know about it. If you have high amounts but employees don't know about it.

Doesn't matter.

Then it doesn't matter. Like depending on how high it is.

You could have the best eggs in the world, but nobody's buying your chicken eggs if they don't really, yeah.

Exactly right. And then the third one's extremely simple. So easy, easy was probably a better alternative, but I—

Easy, engaging, and attractive.

Enticing.

Okay, got it. So listen, I'm going to— I don't know if you saw any of the past episodes, but I'm going to challenge you with something.

Yeah.

And I know I asked for the formula, so thank you for the formula. So the answer is it should be about the same as the cost for hire. But let me, let me challenge you with this. Most organizations, as a consultant, when I go in and I conduct some audits and diagnostics and stuff like that, Most organizations have not a clue what their cost per hire is. They think they know, and what they usually assign the cost per hire to is they basically say, what's our advertising spend divided by the number of hires? So we spent $1 million in advertising for jobs and we hired 100,000 people, so it's $10 per hire or whatever. It's a completely overly simplistic formula. It doesn't take into consideration the built-in costs of having an HR department, a career website, you know, membership subscriptions and all that stuff. So if you really did actually dig in to the cost per hire, it would probably— you'd need another zero. Yeah. So if my cost per hire is $40,000, Are you saying that my employee referral should be $40,000?

Potentially, 'cause if your cost per hire is $40,000—

It really is.

Yeah, if your cost per hire is $40,000, like for example, tech companies, especially small startups.

To be clear, that's not what we're spending on advertising.

Yeah, that's like—

That's the cost of having the overhead for, you know, the recruiter salaries, compensation, all the memberships, all the thing, you know, our ATS, all that stuff put together.

Uh, to a certain extent, because you wouldn't necessarily— so when you're calculating your cost per hire for a referral program or your referral bonuses, you wouldn't necessarily calculate the tools that you're going to use anyways to, to have that referral go through your process. You know what I mean?

You would though, because if it's an internal hire, right, based on the traditional calculation, an internal hire costs you zero. You know that's not true.

I see your point. Interesting. There are, you know, there are tech companies out there paying like $20,000, $30,000, uh, for a referral bonus. The highest I've seen in a referral bonus generally is in the two spaces, the, um, the cleared space. So like government contractors, etc., they're paying up to $50,000 for referral bonuses. And then the second one is the veterinary space. So something I was surprised of, but yeah, veterinary folks, very hard to find, like they call the doctors, the veterinary doctors and folks, you know, orgs are paying up to $20,000, $30,000 for those roles.

So interesting question, the cost, to not hire. In other words, the cost of vacancy.

Yes.

And I, I for a long time sat on the, uh, the U.S. board for the International Standards Organization, the ISO. The U.S. is ANSI, so ANSI representation. And, um, you know, we worked on a couple of standards. One of them is kind of calculating the standard of a vacancy, like how much does it cost you to backfill the job. The number that, that was arrived at industrially, globally, as a formula to estimate is 2x annual salary. So the moment that a position is vacated, um, you know, we used to pay Shelly $11 an hour, which is a lot more than I make right now, but we used to pay Shelly $11 an hour. And so that's about $22,000-$25,000 a year.

Yep.

The moment Shelly quits, we now have— it's already going to cost us $50 grand. Mm-hmm. Right, so that's kind of the estimated. So should it be based on that? And how much is too much before the thing that I was asking you before, before all of a sudden you're just deputizing your entire company to just go out there and be recruiters and don't even forget about your job 'cause you can make so much more money. If you're getting $40,000 per referral and you make 10 referrals this year, you're golden.

Yeah.

At one point, is it just too much?

You got a side hustle going on. You got a side hustle.

Not even, it's like better than your regular job.

Yeah, there's one of our clients, their healthcare customer, they have one of the most challenging roles to hire in healthcare for is a CRNA, right? Okay, that makes sense. Yeah, and usually that's the highest bonus amounts are for CRNAs. And one of our customers, they have a CRNA who they, for that CRNA, they referred 4 or 5 individuals and all of them got hired. And they're paying $20,000 for a bonus. So that person just made 100 grand probably that year just from referral bonuses. Now when you speak to those, the teams that they're, the customers say, hey, like, are you happy? Are you not happy? They're like, oh, we're loving it as long as he's bringing us CRNAs. And right, yeah, he's getting the bonuses.

He asked their manager and they're like, uh, yeah, they haven't showed up for work in a couple of years.

Like, I don't know about that CRNA, he's been on his computer the whole time, you know, sourcing, sourcing talent.

Yeah, so obviously there's a, there's a management, you know, issue there. But is there really like a— is it really like it's just, guys, don't raise the, the, the purse that much more because it's not gonna— either diminishing return, right? Is there a point at which you're like, it doesn't matter if you offer a million dollars?

Yeah, yeah, there is that tipping point. There is that tipping point for sure where it's like regardless of how much you raise it, they just— it just doesn't produce.

Yeah, but you're saying you have to have a reward and it has to be, let's just say significant enough for some sort of reflection of the cost to hire or something like that. Okay.

Yeah, something to think about too is like most orgs, they don't pay it at once. So they pay it like, hey, you get, you know, 20% of it when the person gets hired and then you pay, you get 50% of it at 6 months and then another 50% over a year. So you're also benefiting from the retention of the person. So it's not like you're, as soon as that person gets hired, you're down $20K.

The referrer also has a reason to stay.

Exactly, and both of them have the reason. So a lot of times like when you look at it from a numbers perspective, if you look at all the bonus amounts and you say, okay, these are the roles, these are the bonus amounts, oh, we're averaging $8,000 a year. But then when you look at the reality of it, so you look at like how much you actually paid and then how many folks left before they got the rest of the bonus, et cetera, sometimes that's less than half. Of what you see on the average on your end, right?

The other thing I was gonna say is if your cost per hire, let's say that your cost per hire is $4,500 as you were talking about before. We know that's not true. We know it's probably $45,000.

Yeah.

But the way you calculate it with advertising. So if your cost per hire is $4,500 and you pay $4,500 as an employee referral, you're just doubling your cost per hire and you just paid $8,000, but you're saying that's okay.

That's fine because what you're necessarily also doing is you're maximizing on the retention. So, which is a big component too. Really the retention piece of it is like if you're paying the same amount of cost per hire and you're like, okay, you're not benefiting anything from the recruitment cost perspective, you're still benefiting from the retention piece of it, right? Which that employee knows.

That's got a value to it. Yeah.

A lot of companies right now that I speak to, Shelly, is like what they're also trying to do is reduce third-party agencies and contractors.

So this goes towards that.

Yeah, so especially in healthcare, especially in hospitality, but the bigger one is in healthcare. Uh, like they're trying to reduce travel staff, travel nurses, uh, hospitality are trying to reduce third-party agencies, etc. So the cost of the alternative is much higher, right? So they're either paying $4,000 for a referral or they're going to pay $4,000 a week for that travel staff. So right? That's why sometimes you see a lot of organizations in the frontline, they have a high referral bonus because it's either that or they're paying like 4x that in a month.

Well, we know that the vacancy, like I said, if the position opens up because someone left, it's already double their salary right there. So every day that goes by, it's double their salary plus whatever that loss of business is and all that. So there was a case study on your LinkedIn post. I don't know if it was recent, but I read, um, I, you know, I was doing my sourcing too.

Yeah.

And you mentioned that one of your largest customers had their employee referral rate go from 6% to 22%. Yeah. And you were, you were saying that 6% is not that, that unusual. Um, but that is almost— well, it's definitely double. Yeah, more than double. Yeah, 7 months. Can you point to a couple of key factors that— I don't want you to you know, give away your company product or anything, but yeah, sort of point to what were the turning points that made that, you know, more than double?

Yeah, absolutely. I think the biggest one is just the awareness and the engagement on the frontline. So you're talking about the customer, they have around 55,000 employees, right? I bet you, you know, most of their employees probably didn't know they have a referral bonus program. Without doing a product demo again, maybe I'll just do this, a shameful plugin. What our tool allows organizations to do is send out a text campaign to their frontline workforce and then allow that workforce to refer someone through that same text message. So just text back, right? So if you think about it—

My point was without your technology, so technology independent, yeah, was essentially literally getting the word out. They tripled, they tripled their employee referral rate by just telling people.

Yes, telling people, making it easier for them. But also something we've worked, worked with them on is we've helped them print banners and posters and business cards, uh, that talk about, talks about the referral program and just place it everywhere in their facilities, their staffing rooms, right? Yeah, their elevators.

That goes back to letting people know. So, so companies have employee referral programs and then they just don't tell anybody about it? This is common?

They don't tell anyone about it or they just tell someone about it just like once via email. Like, you know, here's how it generally works. Every, you know, 6 months they realize they have a shortage and they're like, hey, what's happening with the referrals? Oh, we're not doing a good job there. Cool, let's send out an email telling folks about referral. You know, 80% of the workforce doesn't even read the email, 20% who do, they don't even know someone to refer and that's it, right? And they do that like once a year. You know, or twice a year, maybe once a quarter, and that's it. And they're like, hey, we're trying to tell people, but, you know, most folks on the front line, they don't read their emails, or if they do, they just ignore it. So it's really either they don't tell folks, they're not doing a good job telling folks, or they're using the wrong channels. So they're going for the wrong channels to try to tell those folks. Does that answer the question?

It does, yeah. So, I have to come clean. I've gotta admit I've been lying to you.

Why is that?

I actually know a lot about employee referrals. Not as much as you do.

Yeah.

But I do know a lot about that. In fact, at my previous job where I was global head of talent acquisition strategy and people analytics for a $2 billion unicorn, I was handed the reins completely to the employee referral program. And was given a charter to increase it. And I got to tell you, I learned, I learned a lot during the 2 years that I ran that and administered and trying to grow it. And I was successful doing it. Yeah, that's not why I'm sharing this. I'm sharing this because some of the things that I learned were just unexpected.

Yeah.

And so I'll give you— and this may already be part of what you guys talk about, So just say, yeah, yeah, we already do that. I'm not trying to, you know, one-up you at all. I'm just sharing, as I, you know, I used to do, um, I'll give you like 3 examples of employee referral programs. Way back when, in the times when I was at Cisco, we had an employee referral program that was essentially a friend at Cisco kind of thing. So it was all about like, we'll connect you if you're, if you're a referral, we'll connect you with someone at Cisco that will be your buddy. And, you know, they're not going to interview you or offer you a job, but they'll be like sort of your ambassador to Cisco. So that worked fairly well. And what it did was cement the relationship. So we were able to close the referrals long term, but it had a very long tail. And then I've been in another setting where the employer referral was just like a gigantic cash dump. You know, like, here's a big old check. And both of those, I guess, were ways to— I think there were ways to get people to pay attention to it because what you just said, most of the time, the only, the only time you hear about it is during orientation. Yeah, that's it. Oh, by the way, we have an employee referral. What was that? I didn't catch it. Don't worry about it. You know, Okay, by the way, it's $5,000. What was that? I didn't hear that. Um, but so here's what I learned. Offering— and, and this could have been just the setting— but offering money alone doesn't really do it. You're right about— and of course I know you're right about the— if you don't tell people that it's there, they don't— they don't— they're not aware of it. Um, but I felt like everybody was aware of it during their onboarding or an orientation. They're told about it. And I actually, I actually did a 30-minute employer referral orientation at every starting orientation class, you know, greeting new hires specifically to make sure that it wasn't just an off-the-cuff, here's a link to the employer. But like, we really went into it and talked about how, you know, how to, how to calibrate a candidate, what we're looking for in candidates and stuff like that. And that made a difference because I noticed the people that went to that orientation did refer, and others that did not go to the orientation and never kind of learned about it, yeah, they might have still been aware of it but didn't. But it wasn't— I, I found that was more about the connection than about the money.

Yeah.

Um, some of the positions had a $2,000 bonus and some had a $5,000 bonus, and people didn't care. Yeah, they worked, they, they were like, you whether it's this or that, happy to get the $5,000, but like, because it's a number that, you know, they're going for that number. Another thing that I learned is there's a tax implication.

Yep.

Talk to me about that.

Yeah, I mean, the referral bonuses are paid, your tax on your referral bonus is just very equally to what your tax on your W-2. So it's really just added on top of there. Now, I don't think employees will get disappointed. The thing is you just need to keep it transparent to them. So if you're saying—

We let them know.

Yeah, like if it's $3,000, hey, just heads up, it's $3,000. It's like a bonus, so it'll come on your W-2, so taxes will be deducted. Don't expect like a lump sum of $3,000 in your account.

Right. And like you were saying, if it's like half at 3 months and half at 6 months, it's half minus taxes and half minus—

Yeah, absolutely. And employees generally don't have an issue with that. As long as you keep it transparent. Oh, one of the—

you recommend or advise that the employer pay the tax?

Is this wrong?

So it's, you know, let's say it's $5,000, uh, plus estimated tax is 30%, so that you have— so you get the $5,000, or does it not really matter?

Uh, depends on your tax bracket.

I think it's like, if you're getting taxed lower down to the individual, you like to say depends a lot. So it's an individual thing, right? But you're, so you're saying it doesn't really, it's not necessary to pay for the tax of it.

Yeah, absolutely. I think, and the one thing I like that you mentioned, I've been really trying to focus on like a video on LinkedIn. So you see me posting all these videos of like 40-second videos giving tips, et cetera. I recorded a video the other day and one of the points I said, the employee referral program is, just a reflection of your culture, right? Like, if your employees are not enjoying the workplace, they don't like working there, if people don't like working here, they're not going to tell you, they're not going to refer, regardless of how much you offer them. If it's a gazillion bucks, they will not refer someone to work at the organization, uh, and vice versa.

Unless they want someone to suffer with them.

That's true. Unless they, unless they refer someone they didn't like from high school or someone they like to help them make their, you know, pass the day is better. Right. So that's it. But generally, like, if your employees love working at your organization, really the bonus amounts, as long as they're aware of the program, the bonus amounts, you know, as long as they're enticing enough too, shouldn't really affect if you double them or set your goal from $3,000. Right.

So just have something that's substantial in a way that's, yeah, that reflects the value of, right. So don't do $200, but you also don't need to do $200,000, right?

Yeah. And it's a, You know, I think TA leaders generally think about the referral bonus as like a transaction. I try to encourage them to think of it as like a thank you versus a transaction. So it's like just me telling the employee, hey, thank you for referring that person, right? Here's us just thanking you for that. And in return, we're giving you this bonus for you guys.

And that actually takes me to the other finding that I was surprised about. And it was a big learning. Which is we realized that trying to get employees to refer people to a specific job didn't really work. And so we shifted to explaining to them that this should be part of their regular course of business, talking to people and referring anyone. And so we changed the language in the employee referral program from refer someone for this job, like you had to send them a link to apply or whatever to— all they needed to do was provide us with the name, and then we would track that and we would, you know, pay out the referral. Because, and for any position, there just was a— there was a condition. If it was tech, $5K. It was non-tech, $2K. But that was it. Other than that, any non-tech, you know. And so what that did was it discouraged people from like going out there and recruiting for a job. 'No, to, you know, to refer someone for this.' Instead, they were, they were referring more people. And so it was a way to get them to, to get folks to actually provide referrals. And the way we verbalized that, the way we communicated that, was basically, 'We want to know about anyone that you would like to work with again.' Yeah, like, if it's someone you would like to work with work with again, tell us about it. And, you know, we— you never know, because you might refer someone that you would like to work with for a CFO position, and we already have a CFO. What if we don't someday? We don't. Yeah, you know, it could be years away. But so don't, don't wait to— don't only refer people for open jobs. Yeah, that's what we said. You refer people for anything that you think— if you think this is someone who should work here because you enjoyed working with them, or you would like to work with them, you respect them, you value them. We may not have an opening now, we may not even do that business, but refer them anyway.

Yeah.

And then the other side of that was we actually did market. So when they referred people, we marketed to those people and invited them to join our talent community and stuff like that. So we didn't just make a list. Yeah, and sit on the list.

Yeah, absolutely. I think that the referrals can be, uh, necessarily if someone refers someone, another individual, that means like, hey, this is a person for this job right now. A lot of times orgs miss out on the fact that these referrals can be your long-term candidates to help source from, right?

Um, it becomes, uh, another, um, segmentation in your talent pool. Yeah, that you, you know, and we would keep in touch with them a little bit differently.

I agree.

Before I ask you the other question, I just realized something. So tell me a little bit about resentment. And when someone refers— an employee refers a person for a job, and they, and they are outraged that we didn't think as highly of that candidate as they did, that the candidate maybe didn't even get an interview. Whether the candidate didn't get hired. Like, I referred, I referred Sabrina and you never even hired her. I'm not going to refer anybody else because the person that I thought was perfect for this job— tell me a little bit about what happens there. What's that dynamic and how to prevent that? Because what we don't want to do is have an employee refer someone good and then have that employee now turn sour about the relationship with their employer because we didn't hire the person. And we're not obligated to hire them, I get that. But how do you handle that? And, or maybe how to prevent that?

Yeah, I think the best way to prevent it is just to be, uh, is to keep it transparent to the referrer on why you didn't hire that person or you didn't interview them in the first place.

But can you just, you don't wanna disclose anything personal about nothing confidential.

So you, yeah, and this is a tricky part is you wanna balance it with how do I, how do I inform this employee why we didn't hire the referral so that they become better? At, you know, finding us the right folks, but at the same time not disclosing any confidential information for somebody.

It could be, you know, we had other people that had more qualifications in this area or whatever, right?

Yeah.

Okay.

And then the messaging to the referrer as well should be very similar to the messaging for the applicant. A lot of time, or the candidate, sorry, the candidate experience is very important. You know, creating that messaging for the candidate saying, hey, here's the feedback. You know, we love what we saw, but here's why, you know, we ended up moving to other candidates, etc. You have to have similar messaging to the referrer without disclosing confidential info. Again, is, hey, you know, appreciate the messaging needs to be very similar, like appreciate the referral. We have Sabrina here, we've added her to our talent community, we're gonna keep her in mind for future jobs. We, you know, we loved her, et cetera, but you know, for this job or for these next roles, we took different folks that had maybe more experience, et cetera, but hey, we're gonna keep Sabrina in mind. That way the person at least knows it's not like, Oh, the door is closed forever.

That's a good point, right? Oh, they didn't get that job. Yeah, but we didn't, you know, we're not rejecting this person. Yeah, it just, you know, competitively for this position, you know, I guess we're desperate for candidates. Yeah, um, but we were fortunate enough to have more than one candidate and we made the best decision for the company. Uh, so try to kind of diffuse that way. Yeah, but is it my responsibility to keep the referrer informed?

Depends.

On what?

Depends. I think one, it depends on the role. So a lot of times if you're not getting a lot of referrals for specific roles, like very hard to fill roles, very hard to fill roles, you want that white glove experience for both the referrer and the referee.

Okay.

Do you wanna give them that? I'm not saying you don't, you shouldn't give a great experience for like the high volume roles that get a lot of applicants, but I think—

But maybe do take the initiative to give an update to the referrer.

Yes. Now this is where technology comes into play is like, can you automate it using automation, AI, et cetera to really help you deliver those messages without you having to write, you know, specific messaging every single time for every single referrer, right? Is there a way where you can capture that information, you can, you know, clean it up, don't disclose confidential information, and then an AI assistant or an AI agent can help you inform the referrer, right? To do that on your behalf. And I think that's where the technology piece comes into play is how do you deliver that white glove experience for everyone without really capturing a lot of your time and spending a lot of your time to do so.

So what other gaps are there? Yeah, you have the, you know, you've got the, compensation, so you entice them, right? Then you have to make them aware of it, market it, um, and then make it easy, you know, have a place to email them or a link or something so that they don't have to jump through— so, so the employee doesn't— that's referring someone doesn't have to like go and fill out some ridiculous 25-page form or anything like that. Is there anything else that's typically missed with referral programs?

I think, and this is the last part, is just keeping the referrer informed about the referral as well as about their payouts. So a lot of times, like you mentioned, resentment. Sometimes even those who refer someone and that person gets hired, you will still get resentment from them if you don't inform them what's going on with the payouts, you don't inform them what's going on with their, with the referral. So let's say you refer someone today, you're like, oh They're hired, cool. And no one tells you anything about like, hey, Shelly, by the way, thank you. Like, you know, $2,000 is coming your way in 30 days and another $2,000 is coming your way in 4 months. We'll give you update on those, but appreciate your engagement. Got it. A lot of times organizations drop the ball on that component and then it creates resentment from that employee who's like, I gotta email someone to learn about like what's happening to my bonus. You know, where are we, 2001? Like, and they have to email the HR team, put a ticket, for the TA team and say, hey, like, what happened to my payouts? Like, are they coming? Are they not? And the team goes, oh, let us check our spreadsheet.

He was like, yeah, the check's in the mail.

Yeah, or that.

Did you lose it? We already mailed that to you.

Yeah, so that's— I think that's the component, is like, you create that loop, right? Like, you have someone making a referral, that person gets hired. How do you give that person who made the referral a great experience to go like, bam, Now we want you to refer more people. And this is a metric that I don't think a lot of boards are measuring, and I highly encourage it. It's called the repeat referral rate. So how many of your referrers are referring more than one person? That gives you an indication on whether their experience was good or not.

Tell me about, um, competitions. So one of the things that we did to keep this going with post you know, post-new hire orientation was to hold a— and again, I was responsible for this— to hold a contest where every month the person who referred the most people that month, um, it would get an additional— you know, it was— now in this case it wasn't a cash bonus. Yeah, it was an incentive of some sort. So "Um, I guess this is a two-part question. One, what do you think about holding these like most referral type of competitions? And two, what do you think about non-monetary rewards?" Yeah, absolutely.

I think first question, you wanna create those leaderboards or those gamification, uh, components, but maybe you've done them at, you know, back at, at your org, but I highly discourage you do them based on referrals submitted. You wanna do them based on referrals hired or at least referrals qualified. Okay, how many referrals do you submit to get to the hiring manager? That counts as a point.

It was hires.

Yeah, hires, right?

Essentially, these are the people who are gonna be getting the bonus.

Yeah, exactly. Like you're doing it based on referral hires, you definitely need that. Sometimes I encourage organizations as well to do it based on referrals qualified. So like, if a referral gets to the hiring manager, you get a point, right? Most number of points, you know, you're at the top. So that this way you're also rewarded for bringing in qualified candidates and not necessarily didn't get hired, right? But at least you're rewarded. So you see engagement for your employees because they're encouraged to do that, right? That's the first piece. And I think the second question is non-monetary rewards are, I would say like the cherry on top, right? So like if you say, hey, look, We have a strong referral program. We— it's enticing, it's engaging, employees are aware of it. We're keeping it transparent. The experience for them is really great. The experience of the referrer is really great. Now say, hey, we're gonna add a leaderboard on top and the top 3 on the leaderboard this quarter or this month or even this year win an Apple Watch Series 10, right? We know you're getting $3,000. But we all have a kid in us and we all wanna be on top of that leaderboard saying, "Yeah, I just went, I just gained $2,000 and an Apple Watch. I wanna be on top of that list." You can even offer stuff like, hey, a day in the spa or a lunch with a CEO, like a lunch with a CRO, like anything that's really rewarding that's non-monetary, like lunches with like high figures in the organization. That we've seen be really, really successful, but that's a cherry on top. Don't do that if everything else is messy.

Okay, so you're saying that is the extra cherry on top, extra incentive, not to replace the monetary reward with a cashless incentive? Yeah, from the beginning. What if— so you say not do that. Okay, interesting. What if it's, uh, it's an organizational issue where, um, this is going back to one of my large global clients that has such a diverse population globally that the cash amount, the cash remuneration, would be disproportionately— like, you know, $5,000 in the US, it's a good bit of money, but $5,000 in let's say, um, Sri Lanka might be someone's annual salary, you know, like. So in those kinds of cases, they— this comes from an organization where they actually did not have a cash reward, but it was an incentive in another way, which was you had a choice between an extra couple of vacation days, like add vacation time off, or, um, a donation was made in your name for a certain amount to a charitable organization that you determined. But this was a big enterprise, but it had to be on the list of approved charitable organizations. Now, this is a pretty big list. Uh, there's a website that provides that, so it was like a login, and you'd be like you know, here's freaking 10,000 of them, right?

Yeah.

Um, so, but that was because they, they don't mind paying it out, but they just didn't want to all of a sudden give somebody, you know, way too much disproportionate to the rest of the population. Is that fair, or should they just somehow adjust the referral program, or what?

Yeah, I don't know. I think those situations where what I've seen is most organizations, they do it based on like they have pockets of the referral program, they don't do cross-referrals, or if they do cross-referrals, they do it based, you get rewarded based on the person you're referring's location, right? So if I'm in, you know, Sri Lanka and I refer a friend of mine in the US that's a software engineer that's cleared who's like a purple squirrel, right? And that person gets hired, I will get that whatever that referral bonus for that role is 'cause I just helped you hire one of the most hardest roles in that location, right?

Whereas if I'm in, you know, um, certainly that's so much money in your country that you literally just retired and bought a villa.

Potentially. If you— if, look, if you can help, if you can help it, if you can help me hire that role, why not? Why not? Yeah, right. Um, but most orgs, what they do in this situation, they have like pockets of the referral program. So they have like, hey, we have the certain referral program, we have the US referral, appropriate tiers based on that. Yeah, right. Um, but I mean, look, if, if, uh, I was gonna say like maybe reward them with cryptocurrency, but not doing so well right now, so, uh, sorry, you might have a tax impact or whatever. Yeah.

Um, so is, is it true that you are the former honorary consul of Sri Lanka in Jordan?

Uh, that's my grandfather, it's not me.

Oh, that— oh, okay.

Yeah, we have the same name, so something in, uh, in Middle Eastern culture, we We get named after our grandfather, not after our father.

So you never— you were never a consul?

No. Yeah, no, no, no. That's, uh, that's my grandpa. He's passed away now. God bless his soul.

That's pretty cool though.

Yeah.

Yeah.

Is that why— is that why you said Sri Lanka?

That's why I picked Sri Lanka, because I saw that on one of your, uh, feeds somewhere. So, yeah, you know, figured— you ever lived there or anything like that?

No, I haven't. I've, uh, I was actually born and raised in Jordan, um, up until 18 years old, moved to the UK for college, and then moved to the US about 6, 7 years ago now. Um, just recently, recently been, uh, this— I recently just became a US citizen, maybe like last year or so.

Got it.

Fun.

Yeah. And the reason I picked Sri Lanka was because I was trying to think of something that connected to you but also had a very different cost of living.

Yeah.

Where Yeah, if I said New Zealand, $5,000 here and $5,000 there, you know, it may buy you a little bit more there, but it's not like it's a life-changing difference. Yeah, you know, it's completely disproportionate, out of control. Yeah, you know, but there I can think of other countries too where that's the case. So yeah, um, I wanted to ask you, kind of staying or moving away, I should say, not staying away, moving away from employee referrals specifically. Um, do you feel like there's a cheat code for talent acquisition that people don't know about but they should?

As a talent acquisition team or as a candidate?

In the, the job of talent acquisition?

Oh, like someone is a team or individual?

Yeah. And you, I, you alluded to maybe you're, you're a gamer, so I use cheat code as a— yeah, yeah. So is there some kind of cheat code that we need to know about?

I wouldn't necessarily say it's a cheat code. One thing I sometimes say, a lot of talent acquisition folks, um, they forget to and I love talent acquisition, I've been working with those teams for a while now, but they forget to remember that in the end you want, like, the business just wants to generate revenue. And if you can position whatever initiative you wanna take to help them do that, you're almost gonna get a green light in anything you wanna do. So I think in the past few years, like, or maybe throughout the years, like talent acquisition, HR has always been seen as an expense, but how can you turn that from like a, hey, I have the numbers, I have the figures, I'm data-driven, I know, you know, if I work with Shelly to help us with sourcing, what's that gonna mean ultimately on us from a revenue-wise as a company? And I can show you that to get your thumbs up on bringing Shelly on board as like a, you know, to help us with the sourcing side or bringing Echo on board to help us with the referral side.

So connect to the, essentially connect to the bottom line.

Yeah, like connect to the bottom line. And we always try to help our potential customer to do that is like, look, your CFO is just looking to either increase revenue or lower your expenses. And how do you do that? Like how, and you need the figures, you need the numbers. Like something you said, a lot of talent acquisition teams, they don't know how to calculate their cost per hire. That's just one part.

They do, but it's a very like different, very simple math. We spend this much on ads, we hire this many people. Well, there's a lot more that goes into it than just that.

That's just like one piece of the puzzle. A lot of times they don't have the, just the necessary data to help them build a business case just for anything, whether it's bringing in more headcount or bringing in more tools or bringing in AI, et cetera. And you're like, hey, I just need those 5 basic data points and I can help you build a the business case here for your CFO really and your CHRO and you're like, you don't have these numbers? Like what? Like you don't have your X percent rate or your conversion rates or your revenue per employee and all that stuff. And that's, I would say, is cheat code. If I was on the other side, if I was a talent acquisition leader, I would think of it from a sales perspective. Anything I want, I will just plug the numbers. I would have all my data and I would make the ask very thoroughly. Just, hey, here's what's— here's the impact of this on our revenue and our expenses, and this is why we need this. All right.

Okay. Yeah. Um, so fair turnabout, what's the most unexpected benefit of being in this industry? You've been here, and you've been in here for a few years. Uh, what's, what's, what's the absolute most unexpected benefit to you having been in this industry?

Is you, you get to know you get to expand your network with the people that are the ultimate decision makers for hiring. So imagine the impact you have on your career when you do that, right? You know all the VPs, directors, even the recruiters of talent acquisition, um, across multiple industries. I didn't say you'll never be out of a job, but at least you have a hell of a network to help you try to find a job if you ever need it.

And yeah, and you also like really get to— you learn a lot about, um, internals of— it's— I, I like to say it's kind of like getting a an MBA in hard knocks, right? You get, you get access and visibility and exposure to a lot of the MBA stuff that goes on without getting an MBA degree because you're, you know, listening in on those calls and being those in those conversations. Um, so yeah, I like that. That's a, that's a good answer.

Yeah, I think your network just like becomes really strong from a career's perspective. And then as you said, like, uh, a lot of times like you, you know, I'm sure you have friends who are applying to jobs, etc. You can always look at it from the lens of a, the talent acquisition team and say like, hey, I know they're not gonna like this, or they're gonna read this, they're gonna ignore this. So like suddenly you have this lens from the other side of the door that, you know, candidates don't have, and you can help your folks, you can help your friends out when they're applying to jobs, et cetera.

Okay. You dropped CFO a couple of times.

Yep.

What, what is the, what's the secret to speaking CFO?

Uh, I told you, like, you want to tie it to one, you want to tie it to like, is this— how is this exactly going to cut an expense we're already spending or we're about to spend?

Is it about cutting costs though?

Right now it is. I mean, especially with the current situation of the market, it definitely is. Especially with CFO, like, in the end they're looking at the like, is this going to help me cut, uh, like, what's the cost of inaction? Not the return of investment. So people, a lot of folks in TA technology as vendors, they always present like ROI, like, hey, here's the return of investment. Like, you, you know, you, you're gonna save, you're gonna save 5 hours per recruiter times, you know, times $40 per hour, you know, it's $100, etc. Don't do public math. And that's ROI. But the CFO looks at that and says, yeah, but we're already still hiring those recruiters. So you're not generating anything for me right now. It's an ROI based on nothing. We're not cutting anything. The secret to speaking CFO is doing cost of inaction. So hey, because those recruiters are—

not to act.

Yeah, because those recruiters are spending 5 hours doing this, they're not spending those 5 hours doing work that will help you increase your revenue or lower your expenses. And here's how. And this is why, especially in healthcare, when we speak to a lot of organizations, we say, hey, look, what's your cost of not getting the referrals? It's not your cost per hire, you know, it is your third-party travel staff. If you don't fill this role, you're paying 4x to bring someone in. And when CFO looks at that and says, oh, it just makes sense for us to increase our referrals, let's just, let's bring this in. Like, we're going to spend $3 million a week, we'd rather spend, you know, X amount on referrals. Let's do it.

Right, right. Okay. And again, it might not be about spending more, might be about saving.

Saving.

Yeah, yeah, or spending less, or, you know, it might be— might even be revenue generating. I think, you know, it's not necessarily easy to connect the dots from recruiting to revenue generating unless you're working on revenue generating positions. Yeah, but, um, you can get there even if it's a little bit of roundabout by going through the way of, you know, opportunity cost or, um, other ways to measure an increase in margins, which may not be a decrease in cost. Uh, it could be new opportunities, new markets, you know, stuff like that.

Yeah. So even like, hey, we're shortening our time to fill and we're reducing our turnover. Cool. For CHRO, that looks good. But for CFO, I was like, okay, what does that mean for the bottom line?

Right. What does reducing our time to fill mean to me? Yeah.

Yeah. And that's what you gotta—

I need money faster is what you're telling me.

Yeah. Well, I told you ultimately it's a business. Like ultimately it's every organization is a business, right?

Yeah. Yeah.

And you gotta tie that to it. And I think the people are the core of the business and sometimes there's things you cannot measure, right? Especially when you have a large workforce and these are the people that make your workforce. But sometimes you need to tie it, if you want something, you need to tie it to the ultimate bottom line, right? Got it. Ultimate bottom line.

Well, thank you so much for being on the show. We're getting close to the end here and I always wanna ask every guest this one question. I know you probably saw this one coming. But before you go, I'd like to ask you, who should be our next guest?

Can I plug in two folks?

Absolutely. I get two for one. Awesome.

Like it. Cool. So top person right now, or both equally, I'd say the first one is Alex Marcus. I don't know if you've heard of Alex, but he's the CEO at IRD, Integral Recruiting Design. He is an iSIMs wizard. He's been in this space for a while. He's been helping a lot of organizations just make the best out of the technology they already have. Alex is a good friend as well. He's helped us a lot just to get off the ground on the Echo side. Great person. We love Alex. And then the second person is our Ryan Christoy. Ryan Christoy. And I'll drop you— I can drop you the LinkedIn profiles of them after the I was gonna say the call, answering calls after the LinkedIn Live. So Ryan is the president of Enterprise of Recruitics, one of the leading recruitment marketing agencies right now, and just a great guy to speak with. He used to own his own, he used to own his own firm, which was acquired, and just vast knowledge of what's happening in this space right now.

Awesome, those are great referrals, appreciate it. Yeah, email or introduction would be awesome. Yeah, just because you're recommending them and doesn't mean they're going to accept my invitation, right? Yeah, but I'm definitely going to give that a try. So thank you so much for, for showing us a few really good takeaways around improving our, our employee referrals. And, uh, I feel great because I thought 35 was just, you know, a target that you should attain. I didn't realize that was like the super— now I have a superpower.

I mean, yeah, yeah, no, you have the superpower. Again, some industries you see it higher, some industries you see it lower, but, uh, especially if you're on the front line, you're doing 30 to 35, you're doing one hell of a good job. I'll say that.

Awesome. Good to know.

Yeah.

Thanks everybody. Thanks for joining. Come back next Friday and we're going to have a conversation on how to elevate your AIQ. Get it? AI IQ. We have a podcast author, a fellow podcaster if you will, Bob Pulver, who is an expert in responsible AI and, you know, human-centric, fair, innovative but fair AI applications. So come on back for that. And until then, thanks a lot for joining us and be kind to your