Hiring can be risky business, and employers are always trying to improve their odds of finding the right person for the job. Where you find your candidates is an important factor in identifying the best people for role. And while job boards and networking sites make it easier than ever to reach a wider audience, they aren’t necessarily the best place to find top candidates. In fact, to find a more reliable source of potential employees, companies don’t need to look very far.
It turns out that current employees are one of the best sources of quality candidates. Studies have found that candidates who were referred to a company by a current employee were 3 to 4 times more likely to be hired than those who were not. Not to mention that companies that use employee referral programs have a 13% higher retention rate than those that don’t. So what makes employee referral programs so effective, and how do you go about cultivating your own?
First of all, employee referrals can help attract passive candidates to your company. Why is that important? For one thing, applicants who are currently employed and not actively looking for work can be the most qualified candidates. You can be confident they’re capable of performing the job because they’re already doing it successfully somewhere else. It’s also unlikely these candidates are interviewing with anyone else so there’s less competition to worry about. Your current employees can connect you with these passive candidates and also act as a trustworthy source of information about the job and company culture for their colleagues.
Employee referral programs also can reduce the cost of hiring. Job boards and recruiting firms can be costly means of sourcing candidates. However, current employees can advertise your positions or introduce you to qualified people in their network for free. This means you might be able to save on sourcing costs while still discovering top talent.
Referral programs aren’t just great for finding candidates either. They also help you increase engagement with your current employees. Employee referrals offer your staff more of a say into who they’ll be working with, offering them a bigger stake in your company and its culture. Your employees will be more productive and engaged with your business and are further encouraged to bring you great candidates.
So how do you capitalize on this wealth of potential talent? In order to create your own referral program, you need to offer your employees some kind of incentive. The majority of companies using a referral program offer cash bonuses to the employee if their referred candidate is hired - usually somewhere between $1,000 to $5,000. Other incentives may include various prizes or additional vacation days. These rewards motivate your current employees to refer candidates and are usually far less costly than a lot of traditional recruiting methods.
Additionally, implementing a referral program isn’t a one and done effort. Regular reminders that the program is in place helps keep your staff engaged with it. You should also do your best to keep employees updated about their referral’s progress in the hiring process. Acknowledge when you received their referral’s application, if they’ve scheduled an interview, and whether you choose to hire them. Moreover, if you choose not to hire a referral, be sure to thank the employee anyway. Communication with your employees encourages them to continue to refer quality candidates.