Imagine you’re going to work. You walk through the front door of your office building and find yourself surrounded by coworkers you cherish. They work hard, they’re driven, and they’ve all been at the firm for several years. They’re your friends, colleagues, college classmates, and maybe even some relatives.
They all have one thing in common: They were referred to your company by you.
It sounds like a fantasy, but it’s the basic aim of a solid employee referral program. Who wouldn’t want to work with the people they know and love?
But more than that, referred candidates also tend to be the best candidates. According to LinkedIn Talent Solutions, “Employee referrals produce the highest ROI of any sourcing method.” Here are a few stats to illustrate that point:
- According to the same LinkedIn report, 46 percent of referred hires stay on the job for at least one year. Only 33 percent of career site hires and 22 percent of job board hires stay for that long. What’s more, 45 percent of referred hires stay for at least two years!
- 1 in 10 referred candidates are hired, whereas only 1 in 100 general applicants are hired.
- According to Jobvite, 67 percent of employers say referrals shorten the hiring process, and 51 percent say sourcing via referral is less expensive.
If you want to enjoy all the benefits of referral hires, you must first build an easy-to-navigate employee referral program that works.
Keep Everyone in the Loop
The most important component of a successful referral program is communicating expectations to referrers and referrals alike. Keeping employees and candidates updated on the progress of the search and the status of referrals is vital. If you’re not setting the right expectations and communicating critical information, candidates and employees could become disengaged, costing you valuable hires.
Expectations and guidelines must be set for the program to succeed, but what those expectations and guidelines are will depend on the needs of your business, your employees, and your candidates.
Some questions your referrers need answered include:
- How quickly will the company respond to my referral?
- Is there a referral bonus? If so, what criteria must I meet to get the bonus?
- How are bonuses paid out?
Questions referrals need answered include:
- How quickly will the company respond to my application?
- Do I meet the qualifications of the position?
- Will I get an interview?
- How long will the interview process take?
- When will I know if I got the job? Will I hear back if I don’t get it?
To build long-lasting relationships with employees and candidates, communicate important information in a timely manner. Your people and your candidates want answers, so give them what they want! It never hurts to be transparent with your workforce (or your potential workforce).
Given that referrals only make up about 15 percent of all hires, you may wonder if building a referral program is worth it. The fact is, referrals are 5 times more effective than the average hiring method. Referrals may be a small group of candidates in the market, but the conversion rate from referral to hire is much higher than for candidates sourced via other methods. In other words, referred candidates have the most potential to make great, long-term employees. Why wouldn’t you invest in a strong referral program?
A version of this article originally appeared on IQTalent Partners.
Chris Murdock is the cofounder and senior partner of IQTalent Partners.