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Help wanted: Referral systems can be useful

J.E. Johnson and G.J. Lascano Published on 31 December 2013

When dairy farmers are asked how they recruit new employees, the response is usually the same: “We don’t need to recruit.” Owners report that the current economic situation has meant no shortage of people looking for work.

In fact, many owners have a stack of applications, most of which will never receive a call back. This is not because there aren’t qualified applicants, and not because the owners don’t care, but simply because there aren’t enough jobs nor time to deal with each.

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When owners are asked how they find good employees, however, the response is different. Some say they don’t know, and some say current employees usually make suggestions, but most say there is no clear process. Most also recognize that finding good employees is going to be a critical factor in whether or not their dairies stay afloat.

According to much of the research, those owners are right. An organization’s ability to be successful is dependent as much on its personnel as it is on its product or service, and the first step to hiring high-quality employees is knowing how to find them.

Methods of recruitment vary considerably and finding the best ones for your business situation is crucial. In addition to accepting applications from walk-ins, some of the most common methods include job postings at the dairy or in the community, networking through religious or club affiliations, flyers and advertisements in trade magazines or newspapers.

Employment selection methods and their effectiveness

Another strategy, as mentioned earlier, is using a referral system.

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When we asked dairy owners in a recent survey about how they found their new employees, in addition to asking them what they did, we also asked how effective the strategy was. Although all utilized an application of some sort, only about 25 percent considered the practice effective.

Others suggested that it was less about hiring and more about training, although again only about half found training to be effective. On the other hand, owners found the use of referrals effective most if not all of the time.

Dairy farms aren’t the only ones finding referral systems useful. Large organizations like GE Medical and Mastercard find that incorporating employee referral systems contributes to reduced cost of hiring, less time to fill a position, stronger performance, and perhaps most importantly, a lower percentage of new hires that don’t work out. But what makes these programs so successful?

1. Applicants have more realistic expectations about what the job entails.

2. There is no paperwork, and employees are rewarded with small gifts just for making a referral.

3. If a referral is hired, the employee receives an additional bonus.

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4. All employees are eligible to make referrals, right from day one.

Although there were concerns that employees would make any referral just for the initial rewards, those fears turned out to be unfounded. Employees, especially new ones, want to be seen as contributors.

Particularly in a difficult economy, no one wants a bad referral to reflect poorly on them, and as a result, employees are more likely to help ensure that their referral is successful. Moreover, referred employees typically have more pre-hire knowledge, helping make their transitions smoother.

Asking for employee referrals is a great way to encourage input, to demonstrate the organization’s willingness to listen to suggestions and finally to instill a sense of accountability in employees.

Creating a referral strategy
This does not, however, mean that the answer is simply to rely on word of mouth and gut instincts.

Just as production of high-quality milk relies on adherence to strict protocols, providing clear guidelines for how a referral system should work – and more importantly, what a good hire looks like – can mean the difference between a referral system that works and one that doesn’t.

Consider the following steps for creating an effective referral system:

1. Be specific – Maybe you already have them, or maybe you don’t. Regardless, odds are that you’ve at least thought about writing job descriptions before. The truth is that without them you’re putting yourself at risk for both legal and financial trouble.

Job descriptions, which outline the knowledge, skills, abilities and other qualities needed, are the basis for every other personnel management effort you make on your dairy.

They make it clear to everyone how performance is measured, they help you identify what additional training or development might be needed, and in this case, they ensure that anyone involved in looking for new employees for your dairy knows exactly what you’re looking for.

Job descriptions should be listed in the employee handbook, and when a position comes open, the job description should be spelled out. Penn State Extension offers dairy managers tools for getting started with job descriptions and some examples.

2. Be open – Maybe your employees are eager for a promotion, or maybe they know of a great person to fill a spot. Bottom line is: If your employees don’t know what positions are open, or are going to become open, they can’t help you.

Find a place to post open or potential job openings and descriptions, and make a point to mention it in team meetings. Remind your herdsman or other managers to get the word out.

3. Be clear – In order for any management system to work, everyone needs to understand the process. Employees need to be clear on why you’re using referrals, what you expect of them and how they will be rewarded.

A key point is that a reward doesn’t need to be monetary, and it doesn’t need to be big, but it should be consistent with the culture of your dairy. Small tokens of appreciation and public acknowledgment of contributions can often have a considerable impact.

4. Be consistent – If you promise a gift card for a referral, provide a gift card and do it promptly. If you reward one employee, reward the next as well. You can set a time limit, or give parameters, but be consistent and do what you say you’ll do. Your employees will know you’re sincere, they will trust you, and they will be comfortable offering you quality suggestions.

So does this mean you should scrap the application process? Or stop advertising open positions? No, probably not. Like any other method you use to solve a problem, there rarely if ever is only one correct solution.

A referral system should be part of a clearly outlined process for bringing new people onto the farm. Anyone you consider seriously for a position, from milker up through herd manager, should go through that process.

Applications are an important tool for collecting relevant information about potential employees’ knowledge, skills, abilities, experiences and goals in addition to information about legal eligibility to work for you. Recruitment and initial evaluation of candidates is an important first step in any hiring process.

Bottom line: Incorporating a referral component into your hiring process puts you in a position where you can choose carefully between several qualified referrals rather than leafing through a box of stale applications or hiring the next person to walk through your door. Just as importantly, it encourages your employees to help you. PD

J.E. Johnson has a Ph.D. in industrial-organizational psychology from Penn State University and is currently a grant coordinator at Clemson University in South Carolina. G.J. Lascano has a Ph.D. in animal science with specialization in dairy ruminant nutrition from Penn State University and is an assistant professor of ruminant nutrition at Clemson University.

References omitted due to space but are available upon request. Click here to email an editor.

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