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3 Hidden Benefits of Employee Referrals

hidden benefits of employee referrals

Is employee referral hiring a flash-in-the-pan fad or a new long-term recruiting staple? That’s an important question to ask of any trending recruiting strategy, even one as effective as finding and hiring candidates through your employee’s networks. But we’ve got terrific news:

Yes, right from the beginning, employee referral hires are quicker and cheaper to hire (and also less likely to quit). But they’re also one of the best things you can do to ensure the long-term health of your organization’s recruiting strategy.

Here are three not-so-obvious long-term benefits of employee referral hiring:

# 1 - Referral hiring builds a self-sustaining talent pipeline

Robust recruiting builds relationships with the future in mind, not just a single open position. That’s why traditional recruiting strategies like job boards and career sites don’t always deliver a long-term ROI even if they’re successful every once in awhile – the relationship starts out transactional and ends the same way.

Employee referral hiring, on the other hand, brings both short- and long-term benefits to the table. In the short-term, it offers the #1 fastest time-to-fill (29 days compared to 39 for job boards and 45 for career sites). In the long-term, it establishes a connection with a prospective candidate that will last even if it doesn’t result in a hire the first time around. Instead of being shallow, one-off connections, each addition to your referred prospect list contributes to an enduring hiring pool of high-quality candidates who might be interested in future positions.

For companies that operate globally, this can be a particularly important competitive advantage because of how hard it is to find candidates who live locally or who are willing to relocate. Tapping into your employee’s networks helps you expand your own, wherever you operate.

Don’t miss this: The best advice from the best recruiters

#2 - Referral hiring weaves together powerful (and productive) friendships

Friendships are a big deal in the recruiting process, with 80% of job hunters saying they’d take one job over another based on the personal relationship formed in the recruitment process. But did you know that friendships also play an important role in creating a productive workplace?

A Rutgers study cited in the Harvard Business Review found that workplace friendships – also known as “multiplex relationships” – significantly increase employee performance and increase the likelihood of employees cooperating with each other to ask for advice or access information.

Bringing in new hires who have one or more warm, pre-existing relationships speeds up this process, allowing you to quickly establish a productive social dynamic. Over time, these subtle synergies add up to a serious competitive advantage and an environment where employees respect, promote, and advocate for each other.

Ready to get some employee referrals? Start here: 10 Do’s and 7 Don’ts of Employee Referrals

#3 - Referral hiring gives you access to a year-round morale thermometer

Here’s a common frustration we hear from Teamable clients who have tried to manually build an employee referral pipeline in the past: during the last round of 1:1s, hiring managers asked employees for referrals and heard nothing but crickets. They followed up once or twice to see if anyone knew anyone, but nothing ever came of it, so they assumed employee referral hiring wasn’t going to work for them.

This is an all-too-frequent example of how employee referral hiring also acts as an under-the-radar morale thermometer. Because while it’s possible that no one in your company knows anyone in their personal network who’s looking for a job, it’s far more likely that – for whatever reason – your employees aren’t comfortable or interested in recommending your company.

If employees don’t want to refer their friends, even with creative incentives and firm support from the leadership team, that’s valuable information. Noticing the signs early gives you the opportunity to troubleshoot possible causes before it negatively affects your culture (and it will inevitably affect your company culture).

Before you try something new with your recruiting strategy, make sure it’s going to work for your current and future needs. Given the long-term and short-term benefits that increasingly make it the go-to recruiting strategy of top-performing companies, we can safely say that employee referral hiring is here to stay.

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