When I ran agencies, there was one recruitment idea that changed the game. It was so incredibly obvious, and yet it took quite the tussle with members of the SLT to get it approved. It was around internal recruitment referrals.
“Not a new idea.” I hear you say. Whilst that might be the case, the radical moment of change came not from introducing internal referrals, but by changing the incentive for team members. You see, in the agency I ran, there was a long-standing incentive of £200 for team members to introduce their contacts for roles. At that ‘bonus’ level, we handed out probably two or three cheques a year. It wasn’t celebrated, no one was chomping at the bit to extol the virtues of a newly available position when they were down the pub with their mates, and external recruiters continued to coin in tens of thousands in fees. Delivering candidates of various levels of suitability, some excellent, some not so.
I fought to raise the incentive for internal referrals to £2,000. £500 on hiring the referral, and the remaining £1,500 if the candidate successfully passed the probationary period. What was surprising was the reticence of those at the top to get onboard. Despite black and white evidence on the P&L showing the fortune that was being dished out to external recruitment agencies, there was a strange aversion to rewarding current members of the team with a decent amount.
Eventually, the green light was given, and the results were astonishing.
Except it’s not really astonishing, is it? If you have great people, they are usually part of a likeminded network of equally good people. Junior designers usually know other junior designers, management usually know a vast network of others who are of equal seniority and skill. And £2,000 is a decent chuck of money – regardless whether you’re on £25k or £100k. £200? Not so much.
And so, the conversations started happening, and guess what? The candidates came rolling in.
Internal recruitment referrals are a brilliant way to short-circuit the costly external recruiter fees. And if you add a real sense of celebration and thanks when delivering those cheques in your monthly meetings, it inspires others on the team to start wracking their brains for a brilliant individual who might be in the market for a new role.
The quality of referrals was excellent – after all, those referring saw their recommendation as something that would reflect on them.
I was inspired to write this after another great Agency Hackers event between Sophia Austin and Rob Sandbach from IndieSpring, who said: “Previously, we were heavily reliant on recruiters, but it was costing us a lot of money. Post-Covid, we needed to get our costs down as much as possible, so we started offering a £2k net bonus for any referrals that we got through existing staff.”
The team took to it like a bee to honey, meaning Indiespring was able to hire like-minded candidates who slotted perfectly into the agency.
“We’ve probably saved about £25k,” says founder Rob Sandbach. “And that doesn’t account for the fact that, when someone refers, there’s unlikely to be a cultural problem. Whereas you’re never quite sure when you’re taking someone from the cold.”
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I’d love to hear about your current internal referral strategy. Would you try upping the incentive?
Andy.