Q&A: Exploring Effective Referral Strategies with Kunal Banerjee

Q: Could you provide a brief overview of your professional experience and current role?

Q: What do you consider to be the most effective hiring funnel for a hiring manager to attract the right candidates, considering options like referral programs, social media, and college recruitment?

Q: What hiring sources have the highest and lowest attrition rates, and have you encountered any surprising trends in these rates?

In our hiring process, we observe different attrition rates across various sources. For instance, if I have five roles to fill, each requiring around eight interviews, the proportion of referrals is usually lower compared to outbound and inbound applications. However, even with fewer referrals, we prioritize them due to their typically lower attrition rates.

We ensure that all referrals undergo the same rigorous screening process as other candidates. It's important that a referral aligns with our specific needs and isn't just recommended for the sake of it.

Q: What are your thoughts on dynamic referral programs where the referral bonus is distributed over time based on the tenure of the referred employee, and how do you think such programs impact the hiring culture?

The concept of a dynamic referral program, as you described, is quite intriguing and something I'm considering discussing with my management. This approach has potential benefits and drawbacks.

Positive Aspect: The division of the referral bonus over time can increase the'stickiness' of the referred employee in the organization. By tying the referral bonus to the tenure of the referred individual, it encourages longer stays, thereby potentially reducing attrition rates.

Potential Downside: There's a risk that the referrer might pressure the referred employee to stay longer, especially if the referrer stands to receive a part of the bonus after a certain period, like six months or a year. This situation could create an uncomfortable dynamic if the referred individual wants to leave.

Overall, this dynamic approach could be beneficial in creating more commitment from both the referrer and the referred employee, leading to better retention. However, it's important to balance this with the potential for unintended pressure or expectations within the workplace.

Q: How can we balance the challenges of a dynamic referral program by incorporating variables like shorter bonus timelines or linking bonuses to performance and cultural fit? What other factors could be considered to improve this system?

In discussing the balance of a dynamic referral program with additional variables, I believe that introducing overly complex criteria, like assessing cultural fit or performance for bonus allocation, might actually discourage employees from referring candidates. If an employee refers someone and is later informed that the referral doesn't align culturally, resulting in a reduced bonus, this could lead to dissatisfaction and negative word-of-mouth among the staff.

Such a scenario could deter employees from participating in the referral process in the future, as the primary motivation for many is a clear and straightforward financial reward. I suggest that a simpler approach might be more effective. For instance, providing a part of the referral bonus upfront and the rest after the referred candidate has been with the company for a few months could maintain employee motivation. This method ensures some level of commitment from the referred individual while keeping the referral process attractive and uncomplicated for the employees.

Q: Is a referral program better than having no referral program, given that many companies struggle to attract good candidates without one?

Referrals are often the best source mix for talent acquisition, particularly effective at senior leadership levels due to their high-quality networks. While at junior levels, referrals can come from casual conversations, like at a gym or over drinks, they are still valuable. This approach is beneficial across various experience levels, providing a mix of candidates who can be a great fit for an organization.

Q: In your experience with hiring, could you share one exceptionally positive story and one notably challenging experience you've had with referral hiring, and how these experiences impacted you?

Certainly, I have had two notable experiences with referral hiring. On the positive side, there was a candidate I placed at a company named GoTo (Logmein). He became a great brand ambassador for us, actively engaging with people in his gym and elsewhere. His interactions led to the referral of another individual, who, after a series of face-to-face meetings and follow-ups, joined our company. This new hire was very satisfied with the work, challenges, and compensation, and even participated in hackathons representing our organization internationally.

On the challenging side, while working at another organization, we encountered a situation with a highly skilled front-end developer based in Mumbai. Despite clearing all interview rounds and being on notice, he withdrew just a week before joining, citing another offer. This situation was particularly difficult, as our management had decided to hire only within Bangalore due to logistical challenges during COVID times. This sudden change in the candidate's decision created a significant disruption in our hiring process.

Q: How frequently do situations arise where a candidate, after months of a successful hiring process and being a good cultural fit, decides not to join at the last moment?

In my recent experience, such situations where a candidate decides not to join at the last moment have occurred about 2 to 3 times, particularly with referral profiles. To mitigate this, I always ensure to communicate our budget range clearly to candidates, both in terms of the mid- and max-range we can offer. I also make it a point to set the right expectations from the beginning, explaining our budget limitations and stating that we won't be able to negotiate beyond a certain point.

This approach helps in reducing surprise factors during the offer negotiation phase and ensures that both the candidate and their referrals are fully aware of the compensation and budget benchmarking we follow.

Q: What are your thoughts on internal versus external referral programs in organizations, particularly in startups? Do companies offer incentives for external referrals, like when recruiters from different companies refer candidates to each other?

In the hiring industry, external referrals are often overlooked, but some organizations do acknowledge and reward them with non-monetary incentives like iPads, vouchers, or gadgets for consistently referring high-quality candidates. However, implementing and effectively tracking these programs, especially in contexts like India, can be challenging due to the need for active and reliable communication channels.

Additionally, fostering a strong community network through referral programs can be beneficial. In my experience with the talent tech community, offering referral bonuses for specific roles has proven helpful in building a tight-knit community. This encourages members to refer competent candidates, enhancing the overall quality of hires. While the success of such programs is variable and not widely practiced, they often rely more on goodwill than formal rewards, contributing to a supportive and collaborative community environment.

Q: Considering the growing HR community, what innovative experiments could be conducted with referral programs to enhance hiring practices in organizations?

For effective referral programs in hiring, especially at the community level, it's important to engage the entire community, not just a few individuals. If, for example, we're both part of a community and you refer someone to my company, it's beneficial to involve more members of our community in this process. This can be achieved by inviting a larger segment of the community to participate and showing appreciation for referrals.

One way to do this is by offering company merchandise or swag to those who make successful referrals. This not only rewards the individual who made the referral but also encourages others in the community to participate. Additionally, creating social media posts acknowledging those who help find the right talent can further motivate community members. This approach not only recognizes individual contributions but also fosters a sense of belonging and contribution within the community, leading to a more robust and effective referral program.

Q: How significant is the role of technology infrastructure in facilitating a hiring process that primarily relies on referrals and networks, especially for filling experienced or mid-level roles?

To effectively implement a referral-based hiring strategy for experienced or mid-level roles, talent acquisition (TA) and HR professionals should actively create a strong community network. This involves organizing events and discussions on topics like modern talent acquisition strategies. These events, including group discussions, interviews, and hospitality, allow TA and HR professionals to interact and exchange insights.

Moreover, using technology platforms like LinkedIn for live sessions can assist in gathering crucial contact information, such as email IDs, essential for building a community database. With participants' consent, this database becomes a tool to further expand the community. Starting small and gradually enlarging the community is key. Communities like TSOW Springworks, for instance, initially focused on a narrow scope but eventually grew to encompass professionals from diverse fields such as marketing, sales, and even founders and co-founders of companies. This strategy not only builds a robust network but also enhances the efficiency and community involvement in the referral process for hiring.

Q: What's the ideal percentage of referral hires to ensure a balanced and diverse workforce?

To optimize referral hiring, the approach should be tailored to the size and needs of the organization.

1. Small Startups (5–6 employees): Referrals can constitute up to 100% of hires. This approach helps build a strong, initial team with trusted members.

2. Medium-sized companies (10–15 employees): Maintain 50–75% of hires through referrals This balances the need for trusted team members with the introduction of new perspectives.

3. Larger organizations (around 200 employees): 2-3 referral hires are ideal. These hires should not only fit the technological requirements but also align with the company's cultural values.

4. Very large companies (around 5000 employees): Maintain 20–25% of hires through referrals. This percentage should include a focus on diversity to ensure a varied and inclusive workforce.

In all cases, emphasis should be placed on diversity, particularly gender diversity, to ensure a balanced and inclusive work environment.

Q: How should an organization handle a situation where a senior executive refers a junior candidate who is culturally aligned but lacks the required skills post-interview?

In a scenario where a senior executive refers a junior candidate who is a good cultural fit but lacks certain skills post-interview, the recommended approach is to conduct a debriefing session with the interview panel, excluding the referring executive. During this session, the panel should assess the extent of the skill gap and consider the potential for the candidate to learn and grow within the organization. If the candidate is culturally aligned and shows promise for skill development, it may be beneficial to proceed with the hire. The focus should be on whether the candidate can scale up their technical abilities.

The decision should be based on the collective feedback from the panel and a thorough discussion with stakeholders. Ultimately, the choice to hire should depend on the outcome of the debriefing and the potential for the candidate to contribute positively to the organization.

Q: How do you weigh cultural fit against technical skills in referrals, and does the referrer's credibility affect how seriously a referral is considered?

In our approach, we prioritize non-biased evaluation of candidates, regardless of the referral source. We engage with each candidate and assess them on various parameters, including cultural fit, technical knowledge, and experience. For instance, in recruitment, we may not be experts in technical aspects, but we rely on questions from hiring managers to gauge a candidate's technical proficiency. If a candidate's responses don't align with our requirements, we consider it a mismatch.

We also pay close attention to experience levels. For example, if a role requires 1–5 years of experience and a candidate with 8–10 years is referred, we assess whether their experience is a fit. Overqualified candidates might feel underutilized or soon seek advancement, disrupting team dynamics. Thus, our focus is on technical skills, cultural fit, and appropriate experience levels to ensure a harmonious and productive work environment.

Q: In Indian corporate hiring, how common is it to reject candidates based on cultural fit, and how seriously do companies that conduct cultural fit assessments weigh this factor in their hiring decisions?

In Indian corporate hiring, rejections based solely on cultural fit are relatively rare, even during HR rounds. Often, candidates are put on hold to evaluate more applicants before making a final decision. The emphasis on cultural fit varies depending on the role; for technical positions like data science or machine learning, skill and capability are prioritized.

However, the question of whether a candidate would be a good team fit is always considered. Globally, when HR puts a candidate on hold or suggests rejection due to cultural misfits, hiring managers must decide if they're willing to overlook these concerns. This approach reflects a balanced consideration of both skills and cultural alignment in hiring decisions.