6 benefits of employee referral programs

6 benefits of employee referral programs

With all the new ways of finding, contacting, and tracking job candidates, it can be easy to forget the power of employee referral programs. They may not have the same reach as other methods, but these programs often yield far better results. An employee referral program can help you find high-quality, engaged candidates by tapping into the network of your entire workforce. Here are six benefits of employee referral programs and why they may be one of your most powerful recruitment tools.

Higher quality of candidates

Even with all the information candidates include on their applications, it can be difficult to tell whether an individual will be a good fit for the position after only a few rounds of interviews. While you should still take time to interview referred candidates, there's a good chance they'll be better fits than the candidates you know by resume alone.

That's partly because employees know that when they refer someone for a position, the quality of that candidate will reflect on them as well. The risk of being responsible for bringing in a poor-quality candidate for an interview — or worse, being responsible for a bad hire — leads most employees to reflect carefully on the person's skills and qualifications before making the referral. They're also likely to help the candidate prepare for the interview process by giving the candidate a solid understanding of the company, position, and responsibilities.

Ability to reach passive candidates

One of the biggest advantages of a referral program is its ability to reach passive job seekers. They're the individuals who may be open to changing jobs but aren't necessarily actively browsing job postings or searching for opportunities on their own. Since they're typically satisfied with their current jobs, getting a passive job seeker's attention can be extremely difficult. When the suggestion is coming from a friend or family member, however, they're much more likely to take notice.

Faster hiring times

The process of hiring a new employee can take weeks, and that doesn't even include the onboarding process once a new hire arrives. A recent study from Robert Half, a business consulting firm, found that it takes employers up to 11 weeks to fill a vacant position, on average. That's up from seven weeks just two years ago. With an employee referral program, you can expedite the hiring process and fill your available positions more quickly.

When current employees refer others for open positions, you can save time on posting jobs, reviewing resumes, and screening first-round candidates. With a referred candidate, you can feel more confident skipping those lengthy steps and scheduling an interview right away. Employee referral programs have the potential to shave days or even weeks off the hiring process, providing you with quality candidates without the extra work.

"Employee referral programs have the potential to shave days or even weeks off the hiring process, providing you with quality candidates without the extra work."

Lower recruiting costs

The only thing better than a faster recruitment process may be a less expensive one. Unlike traditional recruitment methods, referral programs require no marketing or advertising costs. You can choose to spend less money on outside recruitment, since employees' word-of-mouth advertising can sell the job and company to potential candidates. Even with the cost of employee bonuses, which you should offer to generate excitement and show appreciation, a referral program can help lower the costs of recruitment significantly.

Improved company culture

Employees who refer friends and former colleagues to open positions at their workplace are usually quite happy with the company culture. For this reason, they're likely to reach out to people with similar values to their own when making referrals. When an employee makes a referral, they aren't just endorsing the candidate's skills and experience. They're also saying this is someone they wouldn't mind seeing and working with on a daily basis. The result is a company culture where people feel connected to their coworkers and are happy to go to work.

Better employee engagement

Employees like being involved in making decisions that will have an impact on themselves and the company. The very opportunity to influence the makeup and direction of a team by referring candidates can often increase workers' happiness and level of engagement. It gives them a sense of being involved in the business beyond the standard contributions associated with their position, and it makes them feel like they have more of a stake in the company's future.

That's not even mentioning potential incentives you offer for quality referrals. The right incentives will make employees feel more appreciated and, as a result, happier and more productive. Some incentives you may offer to employees for referrals include:

  • Cash bonuses
  • Additional paid time off
  • Gift cards
  • Non-monetary gifts, such as a lunch or team party
  • Recognition in the company newsletter or other internal publication

Good employees tend to attract other good employees. Make the most of your existing workforce and implement an employee referral program. The next time you have an open position, look within your company and ask if employees would be willing to speak with people they know about the role. You might just find the perfect candidate at a fraction of the time and cost of other recruiting methods.

More tips on employee referral programs and recruitment:

Ready to put a referral plan into action? Check out these three tactics to engage employees for effective hiring.

Take these five steps to build an employee referral program for your small business.

Like employee referrals, internal recruiting can also be a great tool the next time you have an open position to fill.

Need more ways to find top talent? Consider these five creative ways to attract high-quality employees.

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