Recruitment Strategy

Discovering Top Talents Through Employee Referrals

In recruitment, today, closing the loop as fast as possible means gaining an advantage over your competitors. As technology has advanced to the point where automation has become an essential part of every operation in industries, the recruitment process too has benefited from many modern tools that are designed to help companies and recruiters achieve their goals as effortlessly as possible. 

From job boards and social recruiting - that leverage digital platforms to find the right candidates - to career pages that help organizations establish employer brand image while attracting candidates to join their ranks, there are many options available on the market today. 

However, there is another hiring method out there that does not rely on innovative technologies as much as other approaches, Yet, organizations - big or small -  should consider embracing it as an effective long-term hiring strategy. In this article, let’s take a look at how employee referrals, a strategic recruitment method, works.

The Basics

An employee referral is a hiring method through which employers request their own employees to recommend candidates whom they believe would be fit for open roles. This approach leverages the organization’s internal resources - employees - and their networks to find potential candidates. 

It is important to note that employee referrals are not the only or core hiring strategy for a company. Rather, it is a powerful complement to a recruitment team’s existing hiring channels. Companies would oftentimes establish an employee referral program, which includes incentives such as cash or benefits for any referral who successfully completes a defined duration of employment. For example, an employee would receive a cash incentive, or referral bonus, when a candidate successfully completes a period of three months on the job.

Employee referral is not a one-off program. It is a structured, long-term exercise that encourages employees to take part in the expansion of their organizations by actively recommending potential candidates to the hiring team. 

The main goal of employee referrals is to create a sustainable, and dependable source of candidates out of existing employees’ recommendations. Employee referrals can be one of the most efficient hiring approaches, especially when done right. The method comes with many benefits over traditional recruitment approaches like cost-savings and increasing the chances of building a higher quality team that perfectly fits a company’s culture and more.  

LinkedIn’s research from 2020 addressed that referrals are four times more likely to be hired while 83% of employers rated employee referrals above all other sources for generating the best return of income. Hence, many companies today - particularly those with strong cultures - are including employee referral programs into their recruitment strategies.  

Why Employee Referrals Can Help You Find Top Talents

It Saves Time & Cost of Hiring

As mentioned earlier, there are many great recruitment methods and tools in the market today. However, sourcing new candidates can be a time-consuming task. You might have a tool to make it easier to create a candidate list, but if you do not have a strong employer brand, especially in the hyperconnected digital world, it can be a challenge to attract enough applicants to make a list. All you can do is wait. 

Instead of waiting for job seekers to scroll through job boards to find your advertisement, employee referrals bring the potential candidates right to your doorstep. Moreover, by bypassing time-consuming processes, the cost of hiring is naturally reduced. You can save a fair amount of budget for some other future projects that you have in mind. 

It Improves the Quality of Hire 

Although other hiring methods like job advertisements on social media might reach a large audience in no time, the huge wave of applicants you receive after publishing the advertisements would show that many may not be suited for your organization, and as time is the essence of the recruitment, you might not have enough hours to dig out the gems from the creek. 

With employee referrals complementing your social media and job board strategies, there is a good chance that you will get candidates who are familiar with your standards and expectations, and are interested. Why? It’s quite simple. When employees are recommending people from their networks, they know the strengths of their referrals that could potentially help the company expand and are confident that these individuals can go along with the culture. 

Once a referred candidate is hired, the onboarding process is likely to play out smoother. Due to their already established bonds between the referrers and referees, your existing employees would probably provide tips and advice to referred hires on how to make a good start in your company.  The new hires would be quickly aware of their responsibilities and what the company is expecting from them. 

It Gives You Better Employee Retention Rate

Quality of hire leads to better employee retention. And with guidance from your existing employees, referred hires have a clear picture of your work culture and can fit in better. This is also another factor that has contributed to referred hires staying on the job longer than average.   

On the other side of the fence, referrers may feel appreciated - regardless of whether it is about the incentives or not  - simply by adding value to the company they work for. A good recommendation goes a long way and employees who have successfully contributed to this would know that they have played a role in the future of the company. This, on top of rewards, creates a powerful multiplier effect in terms of motivation and productivity for both the existing employee and the referred hire. 

It Helps Build Your Employer Brand 

There’s no denying that other hiring methods like advertising on social media or job boards provide strong opportunities to establish your employer brand. This is, however, a more distant impression of what it’s like to work in your company. With employee referrals, the case is slightly different. Your employer brand is strengthened in a person-to-person approach directly through your brand ambassadors - your employees!   

Your employer brand - and more importantly, value proposition - will likely be more attractive and authentic when your employees spread the word around about your open jobs. A personal approach like this also benefits the visibility and awareness of employer brand image as well. 

To give you an example of how employee referrals can help strengthen your brand image, try to imagine a scenario where existing employees advocate the positive side of being part of your organization to their networks. It doesn’t matter who your employees are spreading the word to, if they are doing it right and with their experiences backing it up, it would inspire a fair amount of people to visit your career site or social media profiles to learn more about your company.   

Things to Keep In Mind When Recruiting with Employee Referrals

The Referrals Might be Biased 

It is more fun and comforting to work with friends, right? Wouldn't it be nice to have a buddy around in the same office? Well, it surely would not be fun for the employer. New hires from biased referrals could potentially bring in issues to your organization. Firstly, due to the friendship between the referrals and referrers, there is a chance that these individuals would isolate themselves from the rest of the team members.    

Socializing only among themselves would cause a negative impact on the working environment as other employees might feel that they are left out, which leads to a team’s formation stage not taking off smoothly. To prevent your company culture from being compromised by this issue, you must keep an eye on new hires and encourage them to socialize with other people in the workplace aside from their affiliates.   

When you are expanding with employee referrals, you need to also acknowledge the kind of skills and perspective you are expecting from candidates that would complement the rest of your team. This goes back to the work environment. Some promising recommendations might not actually fit the vibe of your team. So before you make final decisions on adding referrals into your organization, be thorough about what they should bring to the table. 

Another challenge with biased referrals is that it could cause under-qualified hires. An employee referral is a hiring method that offers rewards, so keep in mind that there will be a number of employees who are just chasing money and rewards. Recommending anyone just to get money without thinking about the consequences could wound your work culture.     

Referrers may try to fix the situation by giving new hires shortcut training to improve their skills. However, this will only produce a compounded negative effect on both referrers and new hires. Your existing employees could be wasting their valuable time trying to help their friends catch a beat while the new hires might not know what they are doing. Having underperforming employees and new hires could end up forcing you to quickly look for replacements for both of them.  

There Is a Chance That You Might Lose Both the Referrer and Referee 

Usually, referrers and referees share a well-established connection. Should one decide to leave their position for whatever reason, you could be at risk of losing both employees as the other tends to naturally follow. The risk may even be increased if the referees do not go along with the rest of the team. 

Therefore, it is important that you pay close attention to new hires after their initial onboarding to make sure they are connecting with other individuals in the organization instead of just the one who referred them.     

Strategizing Your Employee Referrals

An employee referral process involves not only employees and employers. The hiring team also plays a crucial role in this recruitment method. It takes employers to encourage their employees to spread the good word while the hiring managers need to inform employees of all of the information people should be hearing in order to inspire them to become part of the company. These include the requirements for the role and why the company is different from others. 

Essentially, It does not matter who the recipients are for your employees’ message. It could be anyone from their network. As long as they strictly follow your strategic campaigns. 

To help you make sure that your campaigns are well planned, here are some ways to create a well-strategized employee referral program.     

Explain Job Requirements & Keep Employees Updated

Right from the beginning of your employee referral program, the most important thing to do is inform employees about what you are looking for and expecting from candidates. Simply telling your staff members to go out there and spread the good word about their company is not the right way to do it. 

Surely, your employees would get a concept of what ‘cultural fit’ is, but they could not possibly know the specific requirements for your open positions. Especially, if you are asking them to refer to individuals who work in different lines of work or other departments.

When you are sending emails encouraging employees to make recommendations, don’t forget to include job descriptions in there. Furthermore, to make sure no under qualified candidates slip in at your front door, it is a good idea to let your employees know what you are not looking for. 

An American energy company, DCP Midstream, strengthened its employee referral campaigns while preventing irrelevant candidates by reminding the staff members that their friends or acquaintances can not all be good additions to their teams. 

One more thing to keep in mind is that employees who recommend candidates are expecting to receive updates on the process. Don’t make them feel left out. Employees who do not hear back from recruiters about how far the referrals are going might be reluctant to make recommendations again. 

As an employer, you must let hiring managers know that it is important to communicate with referrers whenever possible, keeping them up-to-date with the process. Even if their referrals don’t make the cut, send emails to provide updates anyway and encourage them to keep looking out for potential candidates. This will make employees feel that they are appreciated.

Don’t Offer Only Monetary Incentives

To understand why this suggestion makes sense, we’d like you to look at examples from companies who overlooked this aspect first. Google’s employee referral program has led it to double its $2,000 incentive to $4,000. Well, money is good motivation, but offering unique experiences via non-money incentives like special trips, extra days off, or gift vouchers can be another motivator that pushes employees to make recommendations for potential candidates. Plus, as a benefit to employers, these kinds of rewards are less expensive than cash rewards. 

An example of a company that offers non-monetary incentives for its employee referral programs lies at Salesforce. The San Francisco-based software company rewarded its team members who participated in employee referral programs with baseball tickets! Aside from that, the company also offers surprise rewards to motivate its employees. It’s also interesting to note that more than half of its new hires have come from referrals made by current employees.

However, if you are keen on providing money as a reward, do it in a tiered structure and mix monetary incentives in there as well. This is a good way to motivate employees to participate in your referral campaigns. Higher rewards will be given to recommendations for positions that are tough to find the fills. 

At the same time, offer fixed amounts of rewards for each referral and give more if referred individuals get to the interview process, get employed, or stick with your organization for more than half a year.   

Be Aware of Your Good Referrers

Aside from offering rewards as a token of appreciation, acknowledging good referrers is also a powerful motivator. For instance, if an employee has recommended eight people and four of the bunch were employed and successfully contributing, you can rank that employee as a five gold star referrer on the board. The point is, it’s important to let your team members know they are being appreciated for their efforts. Recognize them as brand ambassadors of the company who can help strengthen your brand image. 

Dell offers award points to its ‘Top Referrers’ via its social sourcing equipment called Dell Talent Community. Points will be given each time Dell employees make a recommendation. The more employees refer people from their networks to the company, the more points do to them. Dell even took a further step to put its top referrers’ names on its internal system and show its appreciation to successful referrers in its local and global team meetings. 

Bringing It All Together

Finding the right talent to help you increase efficiency and rise above the competition is quite a challenge these days. No matter the size of your company or what your business is, establishing strong recruitment strategies must be on top of your priority list.   

An employee referral is one of the most effective ways to expand your organization with top talents. The fact that it saves time and money, improves the quality of hires, increases employee retention rate, and builds your employer brand are some of the reasons why this hiring method should be implemented in your recruitment strategy.   

Employee referral programs can get even more effective with the help of powerful digital tools that are designed to simplify the process and take the workload out of your hand. 

Manatal helps you organize employee referrals confidently, and with our AI-powered recommendation tool, you would know which recommendations coming your way would meet your requirements and expectations. 

With Manatal, you will be able to receive referrals directly from your career page. You can also simply track and manage these referrals and referrers directly within a single platform.

Start your 14-day Free Trial now and discover more features from Manatal that are designed to complement your recruitment strategies and push you towards success over competitors within a few clicks!

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