why employee referral is best source of hire

Why Employee Referrals are the Best Source of Hire?

Every organization wants to hire the best talent out there and therefore spends great time and money on advertising jobs on multiple boards to source maximum applicants for a role. But do you know that there is one source which doesn’t require any significant advertising budget and yet returns better quality talent than other sources? Yes, that one source is called Employee Referral. What are the myriad benefits of hiring through employee referrals? Let’s examine.

What are employee referrals?

Employee referrals are the candidates sourced through an internal recruitment drive where current employees of an organization provide potential candidates for a vacancy using their social network. Recruiters sources candidates using their current employees, and in return offers them monetary or other rewards. An employee referral program is used to perform this entire activity.

The Importance of Employee Referrals

The growing talent war has forced organizations to try out innovative ways of sourcing. Today’s job market has given more power to candidates where they can choose and pick roles as per their eligibility and future aspirations. In a talent driven market, recruitment must change, and that involves making it a more personalized and long-term process. Recruiters do not have a magic wand to identify the best talent for any given role, but they certainly can use all the help that is provided. Employee referrals is a way of including the existing employees in an organization to identify and recruit quality talent. For many reasons, employee referrals have proven to be one of the best ways of sourcing.

Employee Referrals Advantages

There are numerous direct and indirect benefits of employee referrals. Here we list the top 5 which make it the best approach to recruitment.

Employee Referrals Increases Retention

Employee referrals are usually more reliable because they already have an idea of the company’s vision, work culture through your employee. Thus, they know what to expect and won’t be left scratching their heads once hired. Being familiar with the environment, the new employee won’t take much time to absorb and adapt to it and would stay longer than other employees.

Employee Referrals Improve Quality of Hire

The quality of talent is always high when hired through an internal recruitment method such as employee referral. The biggest reason is that your employee has already done the initial screening by considering if he is right fit for the job. No employee would put their reputation at stake just for the sake of a small monetary reward. Therefore, they will only be referring candidates once they are sure about their suitability and eligibility of the role. A poor referral reflects badly on the employee also, putting a question over their judgment skills. Most employees are wise enough to understand this and therefore provide only high quality candidates as a referral.

(Also Read: Purpose of Having a Dedicated Employee Referral Program)

Employee Referrals Reduce Cost to Hire

With no expensive advertising on multiple job boards, it is a given that employee referrals will cost you less than other sourcing channels. Plus, as a recruiter you will be saving a lot of productivity in screening the candidates as that’s already been done by the employee. This will also impact the hiring cycle positively, shortening it, which ultimately brings down the hiring costs further.

(Also Read: Top 5 Recruitment Metrics That Matter)

Hire more specialized candidates with employee referrals

When it comes to finding candidates with specific skills, nothing works like employee referrals. Employees have personal communication with their network and that’s how their knowledge about the candidate’s professional skills and capabilities is far greater than that of a normal recruiter. Sometimes, an ATS or any other screening system may miss those specific skills while screening, or the candidate themselves may not put it prominently in their CV. However, since the employee has a personal connection they would surely know about it and would recommend them for that position. Therefore, employee referrals are very helpful while sourcing for hard to fill positions.

 Employee referral Statistics

The data on employee referrals is the biggest reason why they are called the best source of hire. There are plenty of researches that have proved the superiority of employee referrals over other sourcing channels.

 

When we have strong evidences supporting the employee referrals as a recruitment method, it makes sense to invest in it and may be use employee referral software to get optimum results.

 

You Need a Dedicated Employee Referral Software

Purpose of Having a Dedicated Employee Referral Program

Employee Referral is one of the most reliable sources of hiring as the candidates hired through referrals stay longer and generally perform better than their colleagues. Therefore, any smart recruiter would try to maximize the number of candidates he could gain through employee referrals.  However, the big challenge that HRs face is getting employees to refer candidates. Can referral software change that?  Let’s examine.

Role of employee referrals in recruitment

There is no arguing to the fact that employee referral is the solution to every recruiter’s woes. Search about employee referrals and you will chance upon not one but many researches and surveys that confirm the superiority of employee referrals as a source of hiring over all other sources. Let us have a look at some statistics in this context, all of them available in the public domain.

 

Why Interview Sources Matter in Hiring: Exploring Glassdoor Interviews Data

This report based on a sample of more than 440,000 job interview reviews presents numerical evidence on how different sources of interviews impact the chances of a successful job match. The research concluded that employee referral is most likely to lead to an accepted job offer, with the probability of successful job match rising by a significant 2.6 to 6.6 percent.

However, referrals account for a meager 10 percent of reported job interviews whereas 42% of hired candidates applied online.

 

SilkRoad’s Sources of Hire Research 2017

Employee referral reigns as the best source of hiring. It is also the top internal source of hire with a 45% success rate which is a 5% increase from last year.

 

The Value of Hiring Through Employee Referrals in Developed Countries

Referred employees have lower recruiting cost, higher productivity and impact the entire workforce in a more positive manner as compared to employees hired from any other source.

 

LinkedIn Global Recruiting Trends 2016

 

Employee Referrals as a long lasting trend

32% companies reported employee referral as their top source of quality hires. Another 26% consider employee programs to be a long term trend. Owing to their long lasting impact, there is an increasing need to invest more time and resources in strengthening referral programs.

 

Utilizing employees for referrals

The worrying aspect of the report is that currently only 8% have realized the full potential of their employee referral program while an average of 39% talent leaders have high usage pattern. India finds itself at top, above USA in utilization of employees for job referrals as shown in the graph.

 

Employee Referrals –The Best Leveraged Talent Acquisition Strategy amid Recession

The comprehensive research points towards the utility of employee referral as a best in class strategy to hire new employee during the recessionary periods. The various benefits elicited in the report confirm the trends of other researches in this direction, i.e referrals are gold for recruiters. They are number one source of hiring quality candidates, lead to greater retention and also the “most productive” source for diversity hires, against the common perception that referrals have a negative diversity impact. Yet, employee referrals are only 6.9% of the total job applicants.

Why do employee referrals not work?

Despite being a mine of quality talent, why employee referrals lag behind other sources when it comes to the number of job applications? Clearly, recruiters are either lacking in tools or application of best practices when it comes to attracting more employees towards providing quality referral candidates for a vacant position.

  • First of all, recruiters have to effectively communicate with their employees of job openings.  It’s quite common to find employees having little or no awareness regarding the current openings in the organization due to absence of any form of active engagement between employees and the HRs.  To be honest, employees cannot be blamed for low referral generation if they are not kept actively engaged on an ongoing basis. This problem can be solved to a great extent if we automate the entire process using a referral tool.
  • Secondly, there is not enough motivation for employees to refer a candidate. To find a suitable match for a particular role, an employee has to leave their daily work schedule and dedicate time specially for reaching out to their network, get back responses and then hand over the CVs to recruiters either manually or through emails. Motivation can be in many forms and not necessarily monetary. In fact, recruiters at Google found that increasing bonus compensation had little effect on referral generation. Increasing employee engagement is the path to success, which can be achieved with greater effectiveness through devising and deploying gamification strategies and increasing communication and transparency between employee, referred candidate and the HR.  Providing regular status updates to employees on their referred candidate and speeding up the interview schedule are just two simple ways of ensuring that everyone has a pleasant experience.
  • Another problem that limits the number of referrals is a long and cumbersome process, which creates a disinterest amongst the employees for taking up the task of referring their friends or professional networks. The manual process which requires employees to draft messages and contact members of their network and then forward CVs to recruiters is a long and archaic one. Most employees simply don’t have that kind of time at hand.

Why implement an employee referral program?

All of the above discussed bottlenecks can be overcome through deployment of a dedicated employee referral tool/software.

Benefits of employee referral programs in speeding up your referral hiring process

Such a recruiting technology can help HRs in spreading the word about a vacancy quickly, manage the responses without losing their mind and also schedule interviews as soon as they receive an application.

Importance of employee referral program in driving employee engagement

Many of these referral solutions come embedded with advanced gamification and other engagement tactics like leaderboards which can provide the much needed motivation to employees for making their next referral. Even keeping a track of the status of the referred candidate in real time is possible for both the employee and the recruiter using these solutions.

(Also Read: How to Increase Employee Engagement)

Use an employee referral program for easy social media sharing

Tapping into the social networks of employees is the key to building next generation referral programs. While manually it can be difficult to persuade every employee to share a particular job listing in their social network, this objective can be achieved easily by providing a sharing mechanism like a button or widget in the automated emails sent by these tools. The software is essentially making the sharing easy by helping the employee instantly post the job to social media without even typing a word. This serves two fold objectives. Even if none of employee’s friends apply to the job, it can be further shared by their connections on their own social media profiles and software can track the referral back to the original publisher and reward them.

Mobile Integration is also an advantage of employee referral program

One of the biggest advantages of these solutions is that they can be used on any computing device ranging from a desktop to smartphones. With the mobile integration capability, the software makes it possible to share jobs and track referrals on mobile computing devices as well.

All these benefits make a strong case for using an automated referral solution for maximizing the success of your next employee referral program.  What do you say?

(Also Read: How to Convince Your Management to Invest in HR Technology?)