Companies continuously look for effective recruiting sources in a time characterized by talent shortage and demographic changes. Small businesses especially find themselves with increased difficulties in identifying cost-effective sources of hire. Hiring the right people is time-consuming and costly enough. Don’t let bad hires cost you even more.
Employee referral is one of the most useful ways to find the best candidates for an organization. This has been identified in many studies that employee referral is the most successful source of hiring new teams. There are several reasons to make your employees the frontline recruiters, however, we have bifurcated the best reasons for employee referral. We conducted a survey and called almost 30 HR Managers to interview them and understand how much they recommend employee referral and why. Below are the majorly identified reasons why employee referral turned out to be a huge success.
1. Low-Cost Hiring
As per a recent study, almost 40% of the referrals get shortlisted and joins the company. Most of the blue-chip companies revealed that 70% cost per hire gets reduced with employee referral programs. This significant dip in the hiring cost has encouraged employee referral to the next level.
2. Pre-Training Exercise
Whenever an employee referral program is conducted, employees share extensive inside information with their friends about the Company, Roles and Responsibilities, KRAs, Job Description and what not. This is how the first filtration process is already done by frontiers and this pre-training exercise results in a high success rate of an employee referral.
3. Shorter Recruiting Process
Almost 65% of recruiters confirmed that the recruitment process becomes shorter than any other source of hire. It consumes lesser time and efforts to identify and shortlist the best cream. They don’t need to go on drives to consultants or for campus recruitments or conduct a recruitment campaign. Everything just happens on an employee referral email and on few telephonic calls.
4. Quality of Hiring
With an employee referral program, you can expect the unmatched quality of hiring as the candidate referred to the company is already pre-screened by the referrer. Most of the referred candidates are already working with some company and are not curiously looking for employment until they find the best match. So you always get top talent and not the one who is desperate to join whatever comes to them.
5. Trust Factor
During an employee referral program, you can expect an element of trust as the employee will not just refer anyone. He is well aware that if he refers to a sad candidate, he is going to hear it from his HR team. As they say, “Show me your friends and I’ll tell you who you are!” Employees know that his friends or referrals will reflect his choice of friends. Friends will also guarantee that the reputation of the referrer shall not be denied.
6. The Emotional Touch
While identifying a perfect fit for a referring position, during the pre-screening and assessment process, your employee will establish an emotional connection with the referral. The candidate will immediately create a bond with the company and establish loyalty to his/her future employer.
7. Rewards Motivates
When the new employee completes his 3 months of employment, the employee referral amount along with the recognition keeps the employees motivated and connected to the organization. For example, if a consultancy firm charges a fee of 20 percent of the employee’s first-year salary, that turns out to be $20,000 for a single $100,000 candidate. On the other hand, if you give $2,000 as an employee referral bonus for successfully joining, that saves $18,000 compared to hiring through a consultant. This also ensures that the employees stay loyal and connected to the organization for years.
8. Feels Like a Family
Everyone likes to find a friend in his/her coworker. You can imagine the moment of joy when a friend becomes a coworker? Employee referral gives employees an opportunity to work with their close friends which ensures team building and a vigorous work environment. When there are fair competition and fewer politics, the work environment becomes more productive as all of them work for the same goal.
An average employee will always have around 150 working professionals connected on a social media network. If there are 100 employees, that makes it around 15,000 possible candidates.
Employee referrals always secure the highest applicant to hire conversion rate. Even if only 7% apply but this accounts for 40% of total hires.
Applicants hired through an employee referral program joins quicker than applicants found through job boards and career sites.
Most hired position using employee referrals is a salesperson.
In our survey of 30 HR managers, 24 of them confirmed that the recruitment process was shorter, and 18 of them agreed that it was less too expensive to recruit via employee referrals.
As counted, the benefits of employee referral are great. Research shows that getting a referral is a faster and cheaper way to hire, generally provides a better hire and lower down the turnover rate of a company. A great employee referral program can turn your entire workforce into recruiters and save you a lot of time, energy and money to get the right sourcing.