There are many new trends to watch out for when it comes to recruitment. Some will stick around, while others will fade into the concealed world of cold calling. But certain flows and practices never go out of style. And referrals are among them! How so? Well, there are countless benefits of an employee referral program, and we could talk about them for days. But for now, let’s knuckle down to the top 5 reasons to implement this structured system that brings in the best hires.
Employee referral program [brief definition]
Companies always aim to figure out new ways to source and hire candidates. They pair up with external recruiters, post to job boards, create and optimize career pages, and use every trick in the book to spot and entice potential candidates. And so far, employee referral programs seem to be the most effective solution. In fact, they can cut the time to fill by nearly 40%, raise the likelihood of getting a good match by 2.6–6.6%, and are favored by 82% of employees.
But what do they entail, and how does it work? In simple words, employee referrals represent a carefully crafted system where staff members recommend their friends or former colleagues for open positions. Recommended candidates have the necessary skill sets, and their backgrounds are aligned with the job specifications. Also, they usually possess the traits and soft skills that are leveled with the company’s needs and culture. Finally, their goals and interests are in line with what the new employer offers and advocates for.
How to set it up successfully?
So, now that you know the basic meaning of an employee referral program and you’ve seen a few astonishing stats, you’re probably considering trying it out. So, how will you set the stage and ask your employees for referrals? Here’s a simple guide to get you started on the right track:
- Know your precise hiring needs and share the information with employees,
- Establish the right flow, timeframe, budget, and everything that’s essential when it comes to recruiting and referring candidates,
- Think of a rewarding system for your successful referrers and include financial incentives and non-monetary bonuses into the equation,
- Learn which tools can help your team take part in the hiring princess and make referring easy and painless for them.
Communication is the key here. So be ready to answer all employees’ questions – and more. For example, will you always turn to them for recommendations, or will you only ping when there’s a hard-to-fill role involved? Also, make sure never to change any requirements or duties without sharing these pieces of info with your referrers.
Employee referral program advantages and disadvantages
So what is the purpose of an employee referral program if not to make your recruitment process easy-peasy and drive excellent results? In the US, referrals account for 30 to 50% of all new hires. So, many companies have recognized the potential these recruitment strategies have. Also, studies show that they’re the most effective in firms with less than 100 employees.
Now, while potential slips and drawbacks can’t exceed the perks of this hiring tactic, there still are a few negatives to mention.
The main problem is that some recommendations could be biased, resulting in a less diverse workforce or welcoming team members who don’t really have all that it takes because their referrers were focused solely on their qualities.
Also, if the referred candidate decides to leave the company, they could trigger a resignation from the person that recommended them.
Pro tip: To overcome these downsides of internal referral programs, you should try a more far-reaching approach. The best solution is the simplest one – recruitment affiliate software. That way, you’d get to enjoy all these fantastic benefits of having an employee referral program, but your recommendations would come from countless industry experts and professional recruiters. That way, there’s no room for biases, hard feelings, or double losses in case someone chooses to go for a new career opportunity.
5 remarkable benefits of an employee referral program
So what are the advantages of employee referrals you simply have to know of? Here are the top five:
- Referrals save money and cut the time to hire significantly while keeping things simple and candidates pleased with a smooth hiring process,
- The quality of hire improves in terms of both hard and soft skills, leading to countless perks in the long run, including better performances, a positive impact on the company’s culture, and more,
- Retention rates will be increased as well since the new hires got a better image of what the company really is like – and the other way around,
- Employee engagement will also grow, and everyone will get an opportunity to take part in strengthening the team (+ they’d earn a few extra dollars),
- The employer brand will see a massive change as well, and more qualified job seekers will become interested in connecting with your business.
So, these are the main elements that will be upgraded instantly. And with your recruitment tactics all souped-up, the future will be bright and rewarding.
Quick, cost-effective, and painless hiring
Being able to save a lot of time and money is the key point to add to the list of benefits of having an employee referral program. How so? Well, it’s simple. Once you cut the time and energy required to hire a new employee, you also spend less cash. Unlike pricey recruitment agencies, your employees will gladly advertise roles for free. So, an outside team of recruiters could charge up to 30% of an employee’s yearly pay. While on the other hand, recommendations require a fee that amounts to 2-3% of a new hire’s annual salary.
A positive experience is the ultimate marketing and recruitment strategy. So, even though you will be offering bonuses and prizes to your referrers, the costs will still be way lower, while the outcomes will be more certain. And those are excellent reasons to ditch traditional recruiting methods and just breeze through the steps of your hiring process without cold messages, ghosting, screenings, etc.
Improved quality of hire
Enhanced quality of hire has a massive positive effect on a business and its future efforts. Better hiring decisions influence employees’ satisfaction, motivation, and productivity. They also impact the time they’ll spend with the company. So, when greeting a newly hired employee who has joined the squad thanks to a recommendation, you already have several upper hands. Firstly, the chances of them getting misinformed about the position and required knowledge are slim to none. They have a pretty accurate image of the crew they’d work with since they have insider info. Finally, they are almost always a great match in culture-vise. Once again, you can thank a reliable referrer for this. Because they’re the ones who have an out-and-out understanding of your candidate persona and are four times more likely to bring in the perfect new teammate.
Better retention rates
According to studies, 45% of people hired through referrals will stay with the company for more than four years. As for the other recruiting techniques, the equation is quite different. In fact, those who came through job boards or were recommended by internal or external recruiters usually stick around for about two years. So, if you’re looking for a tested way to boost your retention rates, be sure to speak to your team and spot potential referrers among them.
Increased employee engagement
Engaging employees is paramount. And it can be done in multiple ways. Now, when it comes to referrals, monetary rewards will help. In fact, 70% of companies offer a cash prize ranging from $1,000 to $5,000 for a successful recommendation. But money’s not the only motivator here. Employees will get some extra recognition by being invited to take part in the recruitment and hiring processes. They’ll personally help the company grow and thrive. And also, they’ll be helping their peers land new career opportunities and reach another milestone more easily.
Strong employer brand
Becoming an employer of choice doesn’t sound too shabby, right? Well, getting closer to this goal is one of the amazing benefits of having an employee referral program. Word of mouth spreads fast, and it will help your brand grow. Firstly, you’ll see a new spike in traffic. And your advocates, visitors, candidates, and engaged employees will put you on the map. Then, add some changes to your design and help your audience get everything they want to know effortlessly, and you’ve got yourself the true formula for success.
Keep these key benefits of an employee referral program in mind & set up your tactic ASAP
Now that we have covered all the noteworthy advantages and disadvantages of employee referrals, the verdict is clear. You can see how setting up these programs results in more positive changes and favorable outcomes. But still, there’s a more effective way to turbo-charge your hiring efforts. So set up an internal system of recommendations, but make sure to expand your search. Go for a simple tool that will gather sourcing specialists around your hiring needs – and nail your targets in no time! External referrals will transform your recruitment agenda into a massive success.