Referrals are often the best way for companies to source trusted talent. At Power-4, we believe every company should have a referral program. Developing an internal network for referrals can assist your in-house talent acquisition team, and if you work with a professional sourcing firm, they can tap into that network as well.
It’s just plain tough to find exceptional people – individuals who have the skills, drive, creativity, personality and collaborative attitude to keep work running smoothly and lead your company into the future. Your training program can help employees improve or expand skills, but the intangibles come from within. You need to hire the right person, not just fill a position, and referrals can help you do that.
The Ultimate in Networking
An employee referral program, sometimes called an ERP, is a formalized effort to encourage current employees to contemplate the company’s hiring needs and specific openings, then think about who they know that would be an ideal fit to join the team. Program complexity varies by company, but at a minimum:
- The company alerts employees to opening, along with the job’s essential qualifications.
- Employees invite anyone they think would be a great fit to apply – a friend, relative or former co-worker, for example.
- If the applicant is hired, the referring employee receives a reward. That could be a simple thank you, but most companies offer incentives such as a cash bonus or extra time off to encourage maximum program participation.
- Some companies also encourage employees to proactively introduce people they know would be a great addition, even if there isn’t a specific opening at the moment.
According to Zippia, companies across the board (large or small, regardless of industry) acquire between 22% and 25% of new hires through referrals. That’s good, but here’s the opportunity: only 4% of companies obtain 30% or more new hires via referrals.
Since internal referrals commonly result in higher quality hires, it makes sense to do everything you can to create and promote a company referral program. The company, recruiting teams (internal and outsourced), current employees and candidates all benefit.
Advocacy
Nothing says “this is a great place to work” better than an employee who tells a friend, “You should come work here.” As employers struggle to hire and retain the very best people, they know one of the key factors is workplace quality. More than money, top employees want to work where they can spread their wings, individually and with colleagues, and be appreciated for their efforts.
Whether you have 10 employees or 1,000, engaging them in the hiring process exponentially increases your network. Employees can reach out to passive and active candidates they know personally to help make connections the company couldn’t otherwise access. Happy employees can promote the value of your company to candidates and promote the candidate’s value to the company.
Faster time-to-hire
The longer it takes to fill important positions, the greater the negative impact on the company in lost productivity and higher hiring costs. Employee shortages can damage morale, too. Referred candidates can go straight to interview with only minimal vetting required. They come recommended by a current employee you trust, someone who knows this applicant has strong skills and will be a good cultural fit. Referred applicants are hired 4x more often than traditional applicants.
Teambuilding
Giving employees the opportunity to play a significant role in hiring helps them feel like a valuable contributor to the company’s future, beyond their own daily work. If their referral is hired, that person immediately has someone on the inside they already know who can serve as their mentor. It’s easier for them to get comfortable and engage with other team members and the work at hand.
New hires who get off to a great start tend to stick around longer. In fact, nearly half referred hired stay with the company more than four years, whereas only a quarter of job board hires stay that long. No wonder Zippia says 88% of employers rate employee referral programs as the best source of applicants.
There are a lot of positive benefits to be had by developing a referral program. Your company needs all those benefits. The right talent is difficult to find, and in this economy companies need every advantage to survive and grow. The only way to avoid falling behind on talent acquisition is to establish an effective referral program and challenge your recruiting firm to use it as part of their work for you.