Hiring managers have a full plate these days. New generations are entering the workforce with Millennials representing the largest employed generation today. Job candidates have more choices when it comes to job selection and are increasingly asserting higher demands, which companies need to consider in a tight labor market.
Because of increased candidate choice, employers also face more competition for top talent than even ten years ago. Hiring managers must move quickly when making an offer to capture proficient candidates and avoid at all costs lengthy, grueling application and interview processes.
Employee referrals can solve for a lot of problems caused by the job-seekers market. When you engage your team in referring top talent to the company, you decrease the cost of traditional hires, quicken the time to hire, and retain referred employees longer.
Recent studies have indicated that employee referrals are hired 55% faster than candidates from other sourcing platforms, such as job boards. Additionally, employers enjoy a 75% reduction in the cost per hire for referred candidates over traditional recruiting methods. Finally, when an employer extends an interview to a referred candidate, there’s a 40% higher chance of that candidate receiving a job offer. In today’s tight labor market, these statistics could make a significant difference in hiring competitive talent while contributing to the overall financial health of the organization.
Why should recruiters care about employee referrals?
Employee referrals do allow employers to hire quality candidates faster and more affordably. Additionally, these candidates often have higher retention rates that job seekers sourced from other sources. While these benefits are impactful, employee referral programs offer additional benefits that will not only keep your current team loyal but will also drive the success of the company.
Here are some additional benefits of employee referral programs.
Hire candidates that are a better fit for your team
Creating a team-based, diverse, and collaborative culture is a top concern for employers. Great cultures not only produce happier, more productive employees, but they also encourages employees to shout it from the mountaintop—potentially to other qualified talents.
Hiring for skills cannot be the only driving factor for recruiters. Employers must make sure that potential candidates not only possess the requisite skills for the job opening but also must fit within the company’s culture. Cultural fit is often hard to discern in a job interview.
When you have employees referring job candidates, these employees already understand your mission, goals, and culture. They would not recommend someone who wasn’t a good fit at your organization, as your team doesn’t want to receive any backlash for a bad referral. In this way, you get referred candidates who share your corporate values, making them a cultural fit and less of a guessing game.
Expand to a wider talent pool
Through employee referrals, employers can also expand their candidate sourcing 10x over. By not solely focusing on active job hunters, companies can take advantage of seeking passive candidates as well, those employees that aren’t currently looking for a new job. Passive candidates make up 70% of the global workforce. That’s a lot of potential talent!
Further, think about how many connections your employees have on various social media platforms, such as Facebook, LinkedIn, and Twitter. For example, if you have 50 employees, and each employee has 100 social media connections, you now have access to 5,000 potential candidates. According to a recent Deloitte study, 61% of employers interviewed stated that their top concern was finding qualified, experienced hires. By implementing an employee referral program, you’re expanding your recruiting efforts to hard-to-reach, highly skilled, and passive talent.
Test your company's employer brand
Your employees are your greatest brand advocates. If they’re happy, productive, and loyal, they’ll tell their friends and acquaintances. If your team sings your praises, then let them. A compliment from your employees about your company carries significant weight.
Thirty-five percent of employees refer open positions to help their friends, and 32% do so to help their employer. Interestingly, only 6% of employees suggest candidates for money or recognition. Employee referral programs inspire your employees to examine their connections when a job opportunity becomes available. But to have a successful program, employers need to make the referral process easy on employees, not taking up a considerable amount of their time. Remember, they’re employees, not professional recruiters.
Employers should also communicate with employees about open positions as well as the recruiting process status on their referred candidates. How can employees suggest top talent to you if they don’t know what you need? Also, by including employees in the hiring process, you’re letting your team know that they matter.
Companies should also encourage employees to share work-related photos or posts. They can share pictures of a team pizza party or updates on your company’s success. Doing so will enhance your branding by showing their connections what it’s like to work at your organization.
Create a pipeline of talent
Recruiting managers hire for not only open job positions but also for the future growth of the company. Often, if you hire hastily to fill a position, you may not attract the best candidate for the job. On the other hand, if you continually source employee referrals, you can build a talent pipeline that you can access when a position becomes opened or when the company decides to expand.
Social professional networks and employee referrals are top sources for quality hires. By implementing technology into a structured employee referral program, employers can source from their employees’ social media connections, creating a high-performance talent pool that drives employee referrals and passive recruiting strategies.