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Finding suitable candidates is usually an expensive, lengthy and burdensome process. To tackle the issues with hiring, many organizations have come up with employee referral programs that enable their current employees to refer prospective candidates to the organization in exchange for benefits.
According to Research by Oxford Academy, referred employees are usually of higher quality and tend to stay longer in the organization than employees got from the general public. This ascertains the fact that employee referral programs are excellent hiring techniques.
This article will enlighten you on all you need to know about a successful employee referral program.
What are Employee Referrals
Employee referrals are recruitment methods in which a hiring manager utilizes existing employees’ social networks to find candidates. This enables hiring managers to source for individuals that are good cultural fits for their organizations.
These days, many organizations struggle to source qualified employees. The Human Resources team regularly sifts through several resumes to search for the most suitable candidates. Even when they eventually find a suitable candidate, such a person might leave the organization earlier than expected. This is a time-consuming and expensive endeavor that organizations regularly partake in to remain relevant in the competitive market.
However, following the path of employee referral programs is a different ballgame. Candidates already have pre-informed knowledge about the company since they are familiar with an individual already working in the organization. Due to their familiarity with your existing staff, these referred candidates are more likely to reflect the potential of your existing staff.
Importance of Having an Employee Referral Program
Opting to set up a referral program is entirely logical. This is because your existing staff is the best channel to promote your organization to prospective candidates. Since they know everything about your organization, they will likely give detailed information to their clique of friends.
Individuals are more likely to apply for a position in an organization that was earlier praised by someone they are familiar with.
Furthermore, utilizing employee referrals is a less-expensive recruiting method when compared to others. Over time, they snowball. For instance, referred candidates refer your organization to other potential candidates, enabling you to have a prospective endless talent pool. Therefore, employee referral programs have the highest returns on investment (ROI) of all talent sourcing strategies.
According to Kalido, about 69% of organizations have a set-up employee referral program, and 26% of hires are generated through this program, making this program the top source of employment.
The Cost of an Employee Referral Program
It has been established that running an employee referral program is cost-effective for several reasons:
- It is a mouth-to-mouth means of advertisement which promotes your organization to prospective candidates without hassle. You only have to create the program, enlighten your employees about the referral process, inform them of their benefits for every successful hire, then watch them get started on it.
- You get to bypass the expenses meant to be spent on external advertisement. You can decide to pay bonuses only after a successful hire. On the flip side, you need to pay whether there are qualified candidates or not for recruitment agencies or career websites. It’s important to note that a referral bonus should only cost you about $2000, which is $5,500 cheaper than an agency’s charge.
- It takes fewer resources and less time to orient and train a referred employee.
Benefits of an Employee Referral Program
As stated earlier, running an employee referral program has several benefits. Some are:
Increase Quality of Hire
Organizations’ talent pools often expand by 10 times when you tap into your existing employees’ social networks. Many top firms get the best talents through this strategy.
Decreases Employees Turnover
Every organization desires low turnover and high employee retention. Usually, referred employees are more satisfied with their position, therefore, likely to work long-term with the company.
Enhanced Employer Branding
For an employee referral program, existing employees become brand advocates, promoting your organization in exchange for employee referral bonuses to their social circle.
Successful employee referral programs can help your organization save effort, money, and time during the hiring process. Thus, if your organization doesn’t have an employee referral program, it is time to create one and set it up to enjoy its short and long-term benefits.