Role of Employee Referrals – Industry Perspective

The growth of any organization depends on the quality of its people and this holds true across industries and verticals. People form the core of any organization making acquisition of good quality talent one of the most challenging tasks faced by any organization big or small. This is one big reason why employee referrals have rapidly gained in popularity and usage. Employee referrals provide organizations a highly cost effective means of connecting with and hiring high quality manpower.

While studies related to employee referral programs have mostly focused on its use and application in the Information Technology industry, its usage is in fact not limited to any one particular industry or vertical but spread out across almost all industries. The article further covers how employee referral programs have benefited organizations in industries such as healthcare, retail, consulting and ecommerce and played an important role in their success.

The healthcare industry has always suffered from a shortage of skilled staff limiting growth of the industry as a whole. Referral programs have proven to be a highly effective means of hiring in this highly competitive industry. Seventy-eight percent of respondents who participated in The Bernard Hodes Group Healthcare Talent Metrics ranked employee referrals as one of the top five highest-yielding sources of Registered Nurse hires. Also, The Employee Referral Index Report 2013 shows that referrals were the leading external source of hires for the healthcare industry.

A mobile workforce that is typically not tied to the desk presents one of the biggest challenges in successfully implementing an employee referral program in healthcare organizations. Fortunately, with the integration of mobile capabilities within the referral technology, healthcare employees can access the referral platform from any device anywhere and at any time.   Healthcare organizations have also come out with mobile referral websites as well as technology to make it extremely easy and convenient for healthcare employees to share job postings as well as upload resumes online from their smart phones to give a further push to their employee referral program.

The retail industry has always preferred hiring through employee referrals more than any other hiring source as referrals tend to be hired and trained much faster and get productive much more effectively. Nowadays, most retail organizations have taken to social media in a big way to build their presence and have also integrated social media capabilities into their referral platform to make it easy for employees to share jobs online as well as reach out to their online circle to spread the word. Talbots, a leading retail brand in the U.S., recently revamped its referral program to a completely automated and social media integrated program using Zalp.

A relatively new yet rapidly growing industry, the ecommerce or online retail industry has been quickest to capitalize on the advantages offered by employee referrals in terms of access to a global pool of high quality candidates without incurring huge costs. Ecommerce industry relies heavily on technology and internet savvy individuals who rely heavily on word of mouth references to purchase goods or services. Referral programs where employees act as the medium between potential candidates and employer work perfectly to attract the kind of talent they are looking for. Moreover, since ecommerce industry generally works on low margins, they typically do not have deep pockets to spend on recruitment and prefer to hire through referrals to keep recruiting expenses within control.

In the world of professional services like consulting and accounting, employee referrals, in fact, are the driving force behind the entire recruiting strategy for organizations. Businesses like Deloitte, for instance, use referral programs extensively to ensure that more than 40 percent of its annual hiring is through employee referrals and the aim is to take that percentage even higher. Accenture, one of the biggest names in the consulting and accounting industry, is one of the pioneers in the use of employee referrals to drive talent acquisition. Through the use of innovative techniques like gamification with referral cards, which allow employees to track online how well they are stacking up on referral scores vis-à-vis other employees, they have managed to keep employees excited about the program

Keith Halperin, a senior recruiting consultant, adds: “Throughout my career, I have been working with highly diverse clients, from established Fortune 500 firms through new 20-person start-ups. Employee referrals, once the “neglected step child” of Recruiting, are now increasingly discussed as being the most cost-effective means of recruiting quality candidates, while simultaneously increasing employees’ morale. Employee referrals can provide 40-55% of hires if designed, implemented, and managed in the right way. When created with the input and buy-in of the existing Recruiting staff, ERPs can result in dramatic improvements in Recruiting’s hires.”The above are just a few instances of how employee referrals are helping shape the recruiting strategy across industries. It is now used extensively irrespective of whether you are hiring a head of a company or factory level worker or even a highly skilled healthcare practitioner.”