Employee referrals are a recruitment channel with a number of benefits such as boasting an extremely high conversion rate, where only 7% of applications come in through referrals yet they’re responsible for 40% of all hires. For employees, referral programs often feature appealing bonuses such as time off, cash, physical prizes and much more. Similarly, the secret to success when it comes to candidates finding their ideal, next position often lies within their professional networks. Employee referral programs, when handled correctly, create a best-case scenario for all stakeholders: employers, employees and applicants.
Benefits for Employers
A referral program is a great way to source pre-qualified applicants, passive talent and even poach candidates from your competitors. It’s simple really, the people who you trust to produce results in your company have a vast network of likeminded individuals, who are more likely to be a cultural fit and get the job done. They also on average carry a 39% higher employee retention rate than candidates sourced through agencies and other recruitment tactics.
A solid employee referral program is also more cost and time efficient than other forms of recruitment. From a financial perspective, recruitment agencies are known to be extremely expensive. Thanks to aggressive commission schemes, they often care less about matching the ideal candidate with the role than they do about fulfilling their quotas and generating revenue. On the other hand, internal recruiters spend a significant amount of time searching for candidates, qualifying them and setting up conversations. For hard to fill roles, these considerations can be extremely difficult challenges to overcome.
Finally, assuming your employees are appropriately incentivised to refer candidates, the success of your employee referral program can speak volumes for the rate of satisfaction your employees experience in the workplace. After all, an employee that cherishes their position and company is much more likely to recommend their friends and the people they trust, if they’re happy with where they work. They’re also more motivated to recommend people they believe will truly make a change at your organisation and satisfy your growth targets as they truly care about what’s best for your company.
Benefits for Employees
While most employers have financial incentives in place when it comes to referrals, they also opt for other bonuses ranging from free travel to prizes such as bikes, gadgets and much more. On top of this, recognition in company communication channels as well as from supervisors are great motivators that push employees to become active in an employee referral program. However, there’s also the recognition within their personal networks, such as their social media channels, and the satisfaction of knowing that they helped someone close to them progress in their career.
Successful and happy employees have your company’s goals in mind and are looking for solutions to hit their personal and professional goals. For example, a software engineer may have a daunting roadmap in front of them, which an additional, productive team member would help them achieve. Finally, the prospect of having an active hand at choosing their colleagues, and working alongside people they like and respect, is very motivational.
Benefits for Candidates
Being referred for a position by someone who already works at a company often grants job seekers the coveted status of a fast track candidate by getting their CV in front of the right people at the right time. Rather than submitting their CV to hundreds of companies and filling out tedious, often painstakingly long application forms, their own networks can be a great first step to finding their next position. Or, better yet, perhaps one of your employees will reach out to them, whether they’re actively looking for the next step in their career or not, with a recommendation for the position of their dreams.
Employee referral programs are one of the strongest forms of sourcing talent that focuses on quality. They feature multiple benefits for all stakeholders and have an active hand in creating a tangible, positive company culture. If you’re interested in learning more about employee referrals, Real Links’ platform automates the entire employee referral program through an intuitive matching system that promises to reduce the time spent and costs of recruitment.