Trust Is Not An Administrative Issue

Imagine that you're hired as a consultant to a retail store, and the manager says to you "We're having a bit of trouble getting people to try our Spring collection of blouses and sweaters and slacks. We need you to put together some marketing programs to help move these babies."

"Sounds great," you say. "What kinds of feedback have you heard from customers, about the new Spring items?"

"Oh, they hate 'em," says the store manager. "The quality is bad and the colors are pretty awful, too. We fired the buyer who ordered this junk, and now we're stuck with it. So, anyway, how about those marketing ideas?"

It goes without saying that you'll have an uphill climb trying to sell a shoddy product, whatever your marketing approach.

My friend Laura is a professor at CU-Boulder, in the Business School. She's working on an enormous project, looking at customer-referral programs offered by marketers. She's looking at what makes customers refer their friends to their cell phone provider or their insurance company or another provider. Is it the monetary incentive to do so, or the opportunity to share something good with a friend, or both?

As she researched customer-referral programs, Laura talked to a number of HR people. The nearest model that we have for customer-referral programs is employee-referral programs, the ones that give employees of a company a cash reward for bringing their friends and acquaintances to work at the company as well.

Laura says that the feedback on employee-referral bonus programs, coming from the HR people who administer them, has been mixed. HR people say that the programs don't always work as well as they'd hope. Employees bring in people they've barely met, just in order to collect the employee-referral bonus.

This is a case of a junky Spring collection, if ever there was one.

The HR people who bemoan their not-so-effective employee referral bonus programs are barking up the wrong tree. The employee referral bonus program is a marketing program, targeted at the employees of an organization. The hope is that employees will bring their friends to work at the company and get a cash bonus for doing so.

But no marketing approach will help if the product is broken!

The reason that employees will cynically refer people they don't know or don't trust for jobs in their companies is that they don't worry about what happens to their reputations when the employee bombs out on the job. What person would refer his or her shiftless, no-account acquaintance to a job where he, himself or she, herself works?

Here's who: a person who doesn't give a hoot. That's not a person you want working for you, to begin with.

When we throw up our hands at the ineffectiveness of employee referral bonus programs, we should be rejoicing instead, because we've uncovered an opportunity to address a problem far more serious than high recruiting costs. We have a major Trust Gap in place when people don't hesitate to trade their reputations on the job for a $500 or $750 referral bonus check!
Trust is not an administrative issue, to be dealt with in the HR staff meeting between the rising dental-plan deductible and the unexplained decrease in the quality of resumes coming from Monster.com. Trust is fundamental.

If we don't have trust in both directions at work, between our leadership teams and our employees, then it's true, an employee referral program won't work. Nothing we do will work, unless we put our energy toward rebuilding the workplace culture so that managers can trust employees and vice versa. This is the reason HR exists, by the way.

The rest of what we do is trivial, compared to building and communicating and celebrating the culture that makes organizations thrive, the culture of trust and openness and fair dealing. It's not the employee referral bonus scheme that is broken, but the cultural infrastructure in which the employee referral bonus is trying to operate. It won't work - none of your HR interventions will work - in a broken culture.