Strength from Within – Employee Referrals

Strength from Within – Employee Referrals

January 14, 2016

What’s the best way to find your next star recruit? Ask your current team members.

Recruitment Trends discovered that 74% of recruiters believed that their best hires came via employee referrals. It makes sense when you think about it. Who best knows the type of person that will fit your culture; can explain the requirements of the company; and will encourage an applicant to embrace the new role? Someone who lives and breathes it every day.

And it’s a case of “quality not quantity.” The online recruitment company Jobvite reports that their clients receive 7% of applications through internal employees, but hire 40% from referrals.

The quality of candidates is boosted by the implicit responsibility that an employee accepts when they make a referral. They are saying “this person is a good hire,” and few people would risk their job or reputation by bringing in a slacker. In fact, many companies expect a written recommendation as part of the referral, to make it clear that the employee has some skin in the game.

What’s in it for the employer? Beyond the expected quality of the candidates, the acquisition costs are lower – no recruiter’s fees, fewer job ads, and a 3X higher retention rate in the first three years. Most companies manage the process through an online platform, and offer a reward for hiring a referred applicant, at a fraction of the cost of other recruitment methods.

It’s also a useful indicator of the level of engagement in the company.  An employee will only tell their network about a job opening if they believe in the company, and think it’s a good work environment. As Liz Ryan suggests in her Forbes article The Truth about Employee Referrals, “If you can’t get your employees to forward their friends’ resumes, you’ve got a cultural problem.” Think of it as an alternate to a pulse survey. If the rate of employee referrals drops, it’s time to take a look at the engagement level.

A positive employee referral process will also help with employee retention. Humans are social by nature, and want to work with people who they enjoy spending time with. Create an environment where team members are working with their friends, and they are more likely to stick around. Ryan goes on to observe that “When you hire the friends of your friends, the original employee …. gets to say ‘Yeah, I got my friend a job’ which is a pretty cool thing to say and a great feeling to have. You build glue in a company that way.”

So if you’re looking for a stronger pool of candidates, a lower cost recruitment process, and increased engagement, maybe it’s time to take a fresh look at your employee referral program.