Employee referral is a smart and almost magical technique for your business’ hiring or talent recruitment funnel. As far as creative recruitment strategies go, asking current employees if they know of someone might not sound revolutionary at first glance.
However, this approach can actually boost your access to high-quality candidates and speed up your hiring processes. It also improves employee engagement and increases employee retention. Every business should consider this recruitment strategy. Here are four reasons why.
What is An Employee Referral Program Exactly?
An employee referral program is a recruitment technique that engages employees in attracting new talent. Your program includes channels that employees can use to recommend friends, family, and industry acquaintances for vacant positions at your company. It is a great way to bolster 'external' hiring practices, such as job boards and recruitment agents.
In short, it formalizes the 'I might know a guy' approach to hiring.
Four Reasons To Use Referrals For Recruitment
Here are four good reasons to include employee referral as a part of your business’ talent attraction strategy:
1. It Gets Employees More Involved in The Business
Employee engagement is a powerful thing. When your employees feel like they are part of a team and understand how they contribute to the success of your business, they are far more likely to be productive. This has been proven time and again. Likewise, when they feel that you value their opinions on important things like recruitment, it can make them more invested in your company.
The great thing is that an employee is very unlikely to recommend an unsuitable candidate who wouldn’t get the job done. They know that the candidate they refer for the position will be a reflection of them.
According to the SCARF model in neuroscience, 'relatedness' is one of the five key "domains" that influence our behavior in social situations. This refers to how safe we feel with others and how we view our relative importance to other members of our group. Thus, by asking them to look to their own networks for candidates, you can also boost their sense of pride and belonging in your organization. Having individuals they relate to can help employees feel safe and important in the workplace.
2. Employees Stick Around For Longer
Reducing labor turnover is a big focus for any innovative company. After all, the cost of unwanted employee churn can be crippling. When you have to hire over and over again to fill the same positions, you spend money on advertising, onboarding, etc. Not to mention the impact on productivity during handovers, initial adaptation phases for new employees, etc.
Replacing an employee who receives a salary can cost your business approximately six to nine months of that salary. For high-ranking positions this cost can be higher, costing two times the employees annual pay.
This is another significant benefit of referral programs. Studies have found that candidates referred by company employees stay in their positions for far longer. There are various reasons for this, but one of the most important is cultural fit. When a current employee considers whether someone is suitable for a position, they do so knowing what the culture is like. This makes them very well-positioned to know if someone will 'fit in' or not.
3. It is A Very Cost-Effective Hiring Method
Job boards, agency commissions, and recruiting fees add up. Although a referral program won't cut out all of these costs, it can reduce the money spent to fill vacancies at your company. Your interview or HR team can also cut down on the time spent on candidate screening.
Your employees have a good understanding of a position’s requirements, making it more likely that they will recommend suitable candidates.
TOP TIP: Referrals do not only have to come from your current employees. Remember to leverage the reach of your alumni community as well. There is nothing quite like an endorsement from someone who has moved on from your business but would still recommend it as a good place to work. This is why it is so vital to stay in touch with (and engage!) your corporate alumni.
4. It Fast Tracks the Hiring Process
The more people are helping you look for candidates, the quicker the process goes. As such, it helps to have your entire team on board when you do so!
Employee referrals can make all the difference when it comes to attracting top talent. By involving your current staff in the process you can get them more involved in the business. It also reduces employee churn, and cost per hire. Not to mention the benefits it has for speeding up recruitment as it can fast-track the hiring process considerably.
Are you ready to get access to a steady source of skilled job seekers? Hiring exceptional talent is the first step to building a great workforce. Let us help you promote, attract, and assess your talent. Contact us to learn more today!