Editors Note:
Ron Bower is a good friend of employeescreenIQ and a recognized leader in the HR Industry. Although this article has nothing to do with employment screening, we felt that this article was a must-read for our visitors. Enjoy! NF

This story was originally published by ERE in the Journal of Corporate Recruiting Leadership and can be viewed in its entirety at by clicking on the hyperlink above.

Most recruiting leaders would acknowledge, at least intuitively, that hires sourced through an employee referral will stay longer, perform better, and cost less.

That’s the easy part. We know it’s the right thing to do. The difficult part is creating an environment where a strong employee-referral strategy delivers sustainable bottom-line business results.

AmTrust Bank has put significant time and effort during the last two years into driving a noticeable change in its sourcing strategy. As we near the halfway point of fiscal 2008, 75% of our external hires are from employee referrals, 2% are from search firms, and we have stopped all newspaper advertising in our largest hiring market. This compares to fiscal 2005, when we sourced 28% of our external hires via employee referrals, 21% through search firms, and 11% from newspaper advertising.

During this same time period, we have realized noticeable improvement in retention and have reduced overall recruiting expenses by 25%, including a 70% reduction in search firm expenses.

Our approach was a focused one: build upon an engaged workforce, leverage strong leadership support, build awareness, educate employees, and effectively execute on the referrals received.

Evolving From a Referral Program to the Way We Do Business

Two years ago, we did not start out with a specific employee-referral goal in mind, especially one as lofty as what has evolved. Initially, our strategy was to improve the quality of hire and reduce overall recruiting expenses. In mid 2007, as we reviewed the business impact of our sourcing strategy with our president (feeling pretty happy about nearing a 50% employee-referral rate), we agreed that our goal for fiscal 2008 would be 70%. To get there, we knew, we would have to move beyond our awareness and education approach and quickly evolve to a point where we truly created a recruiting culture. This would no longer be a recruiting-department-driven effort; it would have to be a leadership- and employee-driven effort. The talent sourcing team would have to create a strong, sustainable infrastructure, and the organization would have to make it happen. Leadership behavior would need to change. Recruiter behavior, and especially how recruiters spend their day, would have to change. Every employee would need to become a recruiter. Sourcing hires through employee referrals would no longer be a program; it would have to become the way we do business.

Building Upon an Engaged Workforce

As an organization, we are focused on creating a reputation for being the place to work. Engaged employees perform better and are more likely to tell their story and capture the attention of their friends and professional acquaintances. Recent engagement surveys confirmed that our employees felt strongly about working at, and staying with, the bank. This created an environment where we believed we could make employee referrals the backbone of our recruiting strategy. If we could help employees understand the business case for referrals, appropriately encourage them with cash incentives, and educate them on the best way to network and tell their story, we could further strengthen the performance of the bank.

Our strategy was also built on a belief that we would be more successful if we reinforced the "tell your story" approach instead of expecting employees to articulate a pre-scripted corporate message. Building upon one of the bank's core values of "Love What You Do," we have created success with our employee-referral tagline of "Share the Passion!"

Making Employee Referrals a Company Priority

The goal of hiring 70% of external hires through employee referrals was announced companywide after being approved by the board of directors as part of the 2008 Business Plan. Additionally, each line of business director is accountable for helping to reach the goal, and commitments are incorporated in personal performance goals. Leaders cascaded this expectation to their organization and set specific expectations for employee participation. One director initiated a challenge and offered time off for the first team that reached 100% participation. Most divisions set an expectation of at least one employee referral per employee for the fiscal year. Talent Central (human resources) set an expectation of two referrals per employee, and Talent Sourcing set an expectation of four referrals per employee (outside of the sourcing efforts for their own assigned openings). Senior leaders champion the process by leading by example and publicly recognizing employees who have referred candidates. The strong and visible support from our president and his leadership team has been instrumental to our success.

Through a strong ongoing partnership with Employee Communications and Corporate Marketing, we branded our employee-referral focus through the name "Linx." We determined that the name would be the constant, and that the means for reaching our employees would have to change frequently to keep their attention.

Linx is prominently featured on the bank’s intranet to ensure ongoing top-of-mind employee awareness. A Linx home page includes a convenient online referral form, hot job listings, best practices, prize details, and Linx All-Stars (recognizing top employee referrers). Weekly there is a featured intranet article designed to educate, challenge, and excite employees about the impact of employee referrals. Linx-branded posters and screen savers have been used intermittently as additional means to stay in front of our employees.

The message about the importance of employee referrals begins with candidates during the recruiting process, as recruiters ask for referrals for other open positions in the organization. Reinforcement of Linx occurs during new-hire orientation when new hires receive their employee-referral wallet cards for use when approaching a potential candidate.

We regularly hand out movie tickets and gift cards to new employees who refer someone on their first day. An email is sent to all new employees at the end of their first week, reinforcing the importance of referrals, reviewing the process, and continuing to encourage participation.

Creating an Effective Referral Infrastructure

In order to effectively execute on the strategy, AmTrust created a Linx Advocate position to focus on employee-referral efforts and serve as a central point of contact for candidates and employees.

One of the primary responsibilities of the Employee Referral Advocate is to provide a positive, high-touch experience for Linx candidates and referring employees. Each referred candidate is contacted within three business days to schedule an interview with an AmTrust recruiter. Throughout the referral process, the referring employee is kept up-to-date via phone and email regarding the interview process and the final selection. When a referred candidate is hired, the Linx Advocate contacts the employee to share the good news and explain when he/she can expect the Linx bonus payment.

The Linx Advocate is also the star of a series of entertaining intranet-based video clips promoting employee-referral participation. These videos are simple, creative, low budget,YouTube-like clips taken on location at a variety of sites connected with some of the employee prizes.

Most referral bonuses are $500, with hard-to-fill positions paying between $1,000 and $5,000. Bonus payouts are determined by sourcing difficulty and are adjusted on a campaign basis to meet company staffing demands. Payments are made to eligible employees within 30 days of their referred candidate being hired.

To recognize and encourage referrals from those who are not eligible (recruiters, senior leadership, and hiring managers) for referral bonuses, AmTrust recently initiated a practice of making donations to the charity of the employee's choice in lieu of a bonus payout.

In addition to the bonus payout, each month Linx offers a variety of prizes to employees for participating, including items such as movie tickets, gift cards, weekend trips, tickets to professional sporting events, and MP3 players. Any eligible employee who submits a referral is entered in the monthly drawing. These monthly prizes have encouraged participation and clearly add to the excitement and fun!

This year, Linx will offer the first-ever $5,000 grand prize. All eligible employees who have referred a candidate who was hired during the fiscal year will be entered in a drawing to win her/his choice of a $5,000 gift card to one of two different retail stores or a $5,000 travel voucher to a local travel agency.

Linx activity reports are provided to the senior leadership team to allow them to assess their departmental progress in meeting divisional and corporate employee-referral goals. We track and report source-of-hire data by recruiter, by region, and for the company on a weekly basis. Included in the weekly reporting is a view of the number of open requisitions that need to be filled via employee referral to meet/maintain the corporate goal. Monthly we provide line of business level detail on source of hire, employee participation, and successful hires within each business unit.

To further increase awareness of and participation in Linx, events such as pizza parties and ice cream socials are held to recognize individual and department success. "Bring a Friend Open Houses" encourage employees to bring referrals who are interested in learning more about the bank.

Linx on the Street. During these campaigns, a local Linx representative visits AmTrust locations to ask employees for an employee-referral card. Employees who have an employee-referral card with them are awarded a $25 gift card.

Throughout our awareness and education efforts, we reinforce the message that employee referrals go beyond friends, family, and current business associates. We challenge employees to look for great service providers while shopping and dining and to share referral cards with top talent everywhere they go. We encourage employees to build their online social networks as a means of reconnecting, staying in touch, sharing current job openings, and obtaining referrals.

Making a Meaningful Impact on the Bottom Line

Since the inception of Linx in 2006, we have continued to drive down the overall cost of recruiting for the organization. Overall annual recruiting expenses are down by over $1 million, a reduction of over 25%, including a reduction in agency fees of 70%. Additionally, we have stopped paying for database access to job boards and no longer use newspaper advertising in our largest market.

The Bank’s Customer Contact Center has historically experienced high turnover, making it a major focus of our recruitment and retention efforts. Using the power of Linx, we actively encourage department employees’ participation in recruiting candidates that, like them, are right for the job. The result: turnover decreased from 64% to 45% during fiscal year 2007.The turnover rate among those sourced through employee referrals was 29%, compared to a turnover rate for all other sources of 71%. Overall company turnover decreased 18% in 2007.

In order to address our business need for bilingual staff, especially in our call center, we turned to Linx to drive success. Using a targeted campaign among our existing call-center staff, and existing bilingual staff, we set out to attract qualified, high-performing bilingual employees to AmTrust. During fiscal 2007, 23 of our 26 bilingual hires were employee referrals.

As we continue to grow our mortgage business, our employee-referral efforts have allowed us to fill 97% of our open mortgage positions with employee referrals this fiscal year. As an example, when eight new positions were recently created to meet increased business needs in the bank’s mortgage call center, the recruiter and Linx Advocate joined forces to jump-start employee referrals. A blast email was sent to all mortgage division employees requesting referrals for the new positions and offering two free movie passes to the first 20 employees to respond. Employee response was overwhelming, and a referral open house was quickly planned to provide top candidates with the opportunity to immediately meet and interview with hiring managers. The quality of referred candidates was so impressive that the mortgage leadership team decided to hire 10 people instead of eight, all of whom were employee referrals.

All of us in recruiting leadership roles must continue to look for ways to create meaningful business results for our organization. One of the ways that we have been able to do this at AmTrust has been with our focus on employee referrals. If you are looking to increase your business impact, we would recommend focusing on a few key areas: build and articulate a business case (this will generate the leadership support you need), align your resources to provide focus and execution, keep your message fresh using multiple communication channels, and have some fun! The business results will offer.

Ron Bower
Vice President and Director of Talent Sourcing, AmTrust Bank rbower@amtrust.com

Ron Bower, a graduate of Ohio University, joined AmTrust Bank in 2005 and has more than 25 years of banking experience. After 10 years in a variety of retail banking, bank operations, and technology management positions, he has focused the last 15 years of his career on human resources. AmTrust Bank was founded in 1889, currently has over 2,700 employees, and is one of the fastest-growing financial institutions in America, AmTrust has grown from a local savings and loan with one office to a nationally recognized leader in retail banking, mortgage, and residential construction lending with branch offices in Florida, Ohio, and Arizona.

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