If you are plagued by recruiting issues and looking for a hiring solution that can generate the best results with the least possibility of failure at the lowest possible cost, then your best bet is to go with an employee referral program. In this day and age, when social networks have become so important in everyday life, employee referrals have assumed even greater significance, as they are based on employees leveraging their social and professional networks to refer good quality candidates. As social networks grow, referrals are also bound to grow as new tools make it easy for connections of connections to find and refer candidates for particular job postings.
In order to gauge the true impact and relevance of employee referrals, it is necessary to assess the larger role played by the referral program in both improving organizational climate and productivity and controlling employee attrition. A referral program is not merely a recruiting tool, but an important driver of team dynamics within an organization. Referral hires tend to become productive much faster than hires from other sources and are also able to adjust better to organizational culture.
The need for an employee referral program becomes clear when an organization is unable to meet its talent needs via traditional recruiting methods. Placement agencies, job boards, career sites, and the rest can converge over time, coming up with similar databases. There are often repeated candidates from multiple sources.
These are typically time-consuming sources of hiring, with an average closing time of 45-60 days, and they tend to be very costly as well. They also carry a high rate of failure: three out every seven candidates sourced from these channels choose not to accept an offer or simply do not show up for work.
These drawbacks of traditional recruiting sources have motivated organizations to turn toward employee referrals to solve their urgent talent needs. There are several benefits associated with implementing an employee referral program both in the short term and in the long term.
Short-term recruiting benefits include:
1. Faster and Better Hiring: Referrals from employees tend to be of superior quality, compared to other sources. Because employees often brief their referrals on the organization and the open position, recruiters do not need to spend time convincing referrals to consider the role, which speeds up hiring. Most of ZALP’s clients have reported a 50 percent drop in the time needed to fill open positions since they started using the company’s employee referral software.
2. Lower Recruiting Costs: The cost of hiring a referral is much lower than the cost of hiring from other sources; referral bonuses are generally pegged at a certain percentage of what the organization would normally pay an outside agency for hiring the same candidate.
3. Stronger Sourcing Pipeline: Not all employee referrals can be hired immediately; those that are not hired make for a great reserve of potential candidates who can be tapped for future roles.
Long-term benefits of referral programs include:
1. Value Addition to Employer Brand: A big advantage of implementing an employee referral program is the positive value-add to the employer brand in the long term. When employees speak positively about their existing organization — both on social media and to referral candidates — they build positive perceptions of their employer. A good employer brand can be a great recruiting aid: it acts as a motivating factor for many good candidates to seek employment with the organization, bringing down the need for active sourcing.
2. Higher Retention Rate: Employee referrals tend to stay longer with the organization than non-referral hires, reducing the amount of recruiting the organization will have to do in the long term. Lower attrition rates mean happier employees referring more people to the organization, who are again likely to stay with the organization for long periods of time.
3. Higher and More Efficient Productivity: Referred candidates also become productive much faster, because they receive mentoring and guidance from the existing employee who referred them. Non-referrals, on the other hand, take a longer time to assimilate to the organizational culture and processes; hence, they turn productive much later than referral hires.
4. Global Mobility: For global corporations with talent needs across countries, employee referrals add tremendous business and recruiting value: employees from one region find it easy to refer someone they know in the region or someone who is looking to relocate to the region that is hiring. As global teams increasingly work together across time zones, organizations find that opening up positions for employee referrals across the globe can help close positions much faster and much more cost effectively.