So, you’re looking for a tested way to hire the most skilled industry professionals & nail your targets? You might have tried job boards, recruitment agencies, Quora, Reddit, or even sorcery to source them. It’s time for truth tea – here is why employee referrals are the best way to hire (and retain) top talent.
What is an employee referral program?
Before we go about the perks and benefits of an employee referral program, let’s define the term. In simple words, this fail-proof recruitment tactic consists of sourcing and hiring suitable candidates through the employees’ networks. Here’s how it works: a company recognizes and outlines a hiring need. Reliable staff members learn about it and recommend the people with hard + soft skills that match the role and its key requirements. Finally, once the perfect match is found, they get a job offer, while the person who recommended them gets a bonus.
Brief guide: How to set up an employee referral program?
Designing and managing an internal referral system should be quite simple. And while there’s no one specific remedy or a pattern that fits every single employer, certain tricks and steps are always required (to succeed, hire, and reduce costs):
- Evaluate your precise requirements and ensure that your job description is aligned with them,
- Inform your employees about the role and keep them posted throughout the entire process,
- Create a fair (and beneficial) rewarding system,
- Find out who your top referrers are and offer them bonuses and incentives that truly work for them,
- Explore, mix, and use various tools and techniques.
Here’s a pro tip to get the best out of your referrals: consider using recruitment affiliate software. That way, you can nail your targets faster. A tool like this can help you expand your pool of referrers and candidates, but it can also serve as an instrument that will structure your internal referral program.
What are the advantages and disadvantages of employee referrals?
Every recruitment tactic has its pros and cons. Even the most effective one has a few downsides you should know of. So, here are a few disadvantages of referrals:
- Some unconscious bias might occur during the process because referrers could endorse people they’re close to,
- The environment might become less heterogeneous if the same employees keep recommending new hires,
- Certain satisfaction and retention issues can happen in case a referred hire chooses to leave; it could trigger a referrer’s negative attitude toward a company as well.
Still, the pros you’d be getting are far more significant. Especially if you go the extra mile and come up with ways to deal with these potential drawbacks. So, why are referrals better than other hiring strategies? Have a sneak peek at these stats & keep reading the ultimate perks you’ll get.
Are referrals effective? [Employee referral statistics 2022]
Do employee referrals work? Well, it’s best to have a look at the facts & stats. Surveys and studies show that this recruitment tactic drives the best results:
- Referred candidates are 4x more likely to receive a job offer,
- 45% of those who get hired will stay for four years or longer,
- 88% of employers say that referrals are the best way to hire new people.
Also, more than 80% of businesses that rely on employees’ recommendations to recruit new staff report that it helps them with return on investment. And these days, 71% of US employers count on their referrers to bring in the most qualified peers and strengthen their companies.
What is the advantage of using an employee referral program? [5 Key points]
There are more than a few buzzworthy benefits of hiring through employees’ recommendations. Apart from the cash you will save up and the amount of time you’ll dodge wasting on lengthy and uncertain processes, you’ll enjoy several more advantages. And yes – each and every single recruitment metric you track will show the progress pretty soon! It starts with the time & cost of hire, and it secures long-term success!
💡 How referrals save money & time
According to research, hiring through an employee referral program cuts the whole process for at least 13 days. On the other hand, a more traditional approach to recruiting usually leads to processes that take around 40 days.
Also, referrals save money. Companies that use them report an average cut of $1,000 in hiring costs. First of all, they unlock a vast pool of potential candidates who possess the skills a company needs. And the reduced time to hire also helps businesses retain a few extra dollars. Not to mention the amount of cash that stays in the firm due to reduced turnover rates.
Here’s a piece of advice 👉 Only 6% of employees take part in a referral program for massive financial bonuses. So it’s best to come up with a rewarding system that grants multiple types of incentives. And the key one must be recognition. Keep in mind that an average referral bonus ranges from $1,000 to $5,000.
💡 A reliable employee’s recommendation = better retention rates
Getting more qualified candidates is the ultimate aim for many. And it all starts by knowing exactly who you want (and need) on your team. Then, you must pay some extra attention to your website and career pages, plus it’s best to perk up your social presence a bit. And finally, it’s absolutely necessary to make your processes nice, smooth, and simple. That way, you will attract the most skilled talents. Add referrals to the equation – you’ve already smashed the target!
But what about keeping these new hires engaged and pleased to stay with the company? Well, that’s precisely why referrals are the best hires. According to research, referred candidates usually stick around for 38 months with their employers. In other words, that’s nearly 70% longer than those who came through recruitment agencies. Now, why are referred hires the best match? It’s simple – employees know their company and its needs, culture, and values better than anyone. So, they will refer a former colleague or friend that has what takes & prefers an environment like that. No overselling, no miss-hires, and no drama.
💡 Improved employee & candidate experience
Motivating employees and taking their motivation seriously is essential. And sure, there is more than one proven way to do it. But when it comes to encouraging them to take part in the recruitment process and refer peers, financial rewards will certainly help. However, money’s not the only motivation they crave. Employees will gain some extra confidence by participating in the company’s growth. Finally, they’ll be helping their friends land new (and better) jobs. In fact, more than 30% of referrers do it to lend a hand to peers.
Besides, you will take a huge step forward in terms of employer brand and improved candidate experience. First, a spike in traffic comes, and then more qualified job seekers find out about your firm and what makes it an excellent choice for them.
Learn why employee referrals are the best way to hire & start using them!
These were the key points that have helped you grasp why employee referrals are the best source of hire. So, aside from saving you a whole lot of time and trouble and helping you reduce recruitment costs, hiring through recommendations impacts your business in the long run. It boosts your retention rates and motivates your team to take part in the company’s growth. So, be sure to give this strategy a try.
And if you need a tool that will revamp your recruitment, give affiliate software a shot.