In the sales world, warm leads are the best leads, right?
The same holds true to recruiting. A strong employee referral program can improve quality-of-hire, company culture and retention. But it can be difficult to see the full potential without a strategy.
According to LinkedIn’s latest Global Recruiting Trends report, 48 percent of recruiters say employee referrals are one of the biggest outlets for finding quality hires. And it’s not hard to see why:
More Engaged Candidates
Candidates that come through an employee referral can be active or passive job seekers who are already interested in working for your company. Referrals for non-entry-level positions may also have a standing within your industry, opening up new networking opportunities. Referred candidates often come in already knowing a thing or two about your company, and if they’re interested in a position, that means you’re going above and beyond with your employer brand.
Better Cultural Fit
Your employees wouldn’t recommend someone they wouldn’t want to work with themselves. They also don’t want to risk taking the blame if a candidate they recommended turned out to be a bad hire. This means most referrals will have already been “screened,” saving you time when assessing for cultural fit.
According to a study by Achievers, talent that is sourced through an employee referral program are hired at a 1 to 3 rate, compared to a 1 to 10 rate for traditional candidates. Acquiring referred candidates can be cheaper too, often costing less than $1,000 per hire. Considering the average cost-per-hire is around $4,000, that’s some serious savings.
Higher Retention Rates
Employees who are sourced through a referral program are also more likely to stay. Retention rates for referred hires are at 45 percent after two years, more than double the 20 percent retention rate for traditional hires.
A successful employee referral program is built in a way that support company culture. Employees should be encouraged to search through own connections to find the right fit. Follow these guidelines to make sure you get the results you need:
- Be Responsive. Screen all referrals within a week of the initial referral.
- Offer immediate rewards. Offering rewards provides employees with incentive to actively seek referrals. Some companies even offer incentives for introductions, regardless of their hiring status.
- Make it easy. Be sure to have a way to track or segment referrals.
It will take time to develop a strong employee referral program. But with the right strategy, you’ll be able to see a return on your investment and end up with high-quality hires.