Many businesses pay high recruitment fees or go through lengthy internal recruitment processes, without realising that one of the most cost-effective means of candidate attraction is sitting right in front of them – their existing workforce.
A well designed and operated Employee Referral Program can bring qualified candidates directly to your door.
So how does it work? Well, basically, you let your employees know that if they use their personal networks to find candidates who they think will fit with the company culture and have the skills and qualifications to do the job, then you will reward them in some way for their efforts.
This reward can be financial, in the form of a bonus or finders fee, or it can be some other incentive in recognition that the company appreciates their going that extra mile.
With the rise in social media use, most people have built up large networks of contacts which are just waiting to be tapped into. Facebook, Twitter and LinkedIn are all great sources of potential candidates who may be actively looking for a new job.
By having your employees ‘put the word out’ when a new position needs to be filled, you are able to cast a wider net than any one recruiter could ever hope to match and, if your employees are educated on the qualities you are seeking, the referrals they bring to you have a good chance of being qualified leads.
There are a lot of good reasons for establishing an Employee Referral Program. Large organisations such as Google, Microsoft and Amazon have seen the benefits of ERPs for years and many companies in the USA are able to attract up to 50% of their candidates in this way.
Here are 4 of the top reasons why you should consider setting up a an employee referral program in your organisation:
Compared with traditional recruitment fees, the outlay for such a program is minimal. If you opt for financial incentives (and money is often the juiciest carrot), you are only looking at a few thousand dollars every now and then. If your incentives are non-financial, it’s even less than that.
In return, you have a small army of recruiters out there talking up your organisation and screening potential candidates on your behalf. Many of your employees network every day with people in similar roles to theirs at meetings, conferences and also in a social context. You have a multitude of eyes and ears already out there!
Having your brand talked about on social media is every company’s dream (providing it is positive, of course), so even if your employees fail to bring in any qualified leads, they are spreading your employer brand in the meantime. And because they are out there, they are also in a better position to counter any negative views that may be circulating about your company.
If you make it even easier for them by having regularly updated company news stories and blogs on your website, Facebook and Twitter, they will have something topical to get the conversation started.
If your employees are committed to the program, they will be actively trying to sell your company as an employer of choice and because they are on the inside, speaking from experience, they are more likely to be taken seriously than any recruitment messages you produce yourself.
Studies in the US have shown that well run ERPs attract a higher level of quality candidates, due to the fact that employees pre-screen them for skills and ‘fit’ with the company culture long before they get to the interview process.
This translates into a greater number of referrals being hired than those traditionally recruited. Statistics also show that, once hired, a greater percentage of referrals are retained than normal hires, precisely because they are a better ‘fit’.
A good ERP can also lead to higher employee retention rates amongst your current staff. This is because, in order to gain successful referrals, they need to learn more about your company’s goals and achievements and why it is such a great place to work (this information should be provided as part of their referrer’s education).
The result is that they develop a greater sense of loyalty and team spirit and this, when combined with the more tangible incentives they receive for their referrals, translates into a greater desire to stay with the company.
There are lots of good reasons why a good ERP can benefit your organisation, but the key word here is ‘good’.
There are certain rules you need to follow to ensure everyone gets on board and stays there, including:
- Providing feedback on all referrals, whether successful or not;
- Publicly recognising those who provide successful referrals;
- Promptly paying, if financial incentives are involved;
- Providing education on how to improve referral rates;
- Keeping the process simple, with not too many rules;
- Encouraging participation rather than demanding quotas; and
- Including everyone, in the ERP, regardless of position.