SMEs looking to fill a job posting can hit a brick wall when they rely on a single sourcing resource. Successful recruiting strategies should leverage employee referral programs, which have been shown time and again to produce qualified candidates quickly and in an affordable way.
What Is An Employee Referral Program?
Employee referral schemes are internal programs that encourage existing employees to refer candidates for new openings. Current employees use their professional networks to make these recommendations.
Six Reasons To Encourage Employee Referrals
The benefits that should encourage you to introduce an employee referral program at your company include:
1. Talk To A Broader Network
Recruiters contacting passive candidates on professional networks, such as LinkedIn, aren’t always received well. However, passive candidates are receptive to hearing about a new job opening from their known professional contacts.
When your current staff mention a job vacancy to their professional networks or friends, they are vouching for your business and praising the referred candidate for their skills and traits.
2. Reduce Hiring Costs And Time-To-Hire
The external recruiting process conducted by your recruitment person involves many actions that cost time and hence money. The recruiter for your company will be undertaking tasks such as posting job ads, getting contact details, searching job sites or CV databases, and screening applicants, before moving on to recruiting tasks such as interviewing new candidates.
While external advertising is vital, the cost of repeating these hiring actions across endless networks are mitigated when your business leverages an employee referral process.
3. Attract Qualified Candidates
Because your team are already company insiders, they know what is expected from someone who joins your team. With this knowledge, employees only refer candidates with the right set of skills and personality traits, screening new talent on your behalf. As employee referrals are likely to be of a higher quality, you can expect them to complete onboarding and training up to three weeks earlier than employees your hire through the careers page of your company website.
4. Increase Job Offer Acceptance Rates
The job offer acceptance rate is higher for a referred candidate, compared to Job offers made to applicants attracted through traditional job posts.
5. Higher New Employee Retention Rates
Many recruiting studies show that new employees hired via an employee referral program are happier, more productive and stay with the company for longer.
6. Improve Employee Engagement
When you ask for employee referrals, your team feels more valued and perceive themselves as a part in the hiring process. You are recognising the more profound value of your employees, and this raises engagement and performance, with the team feeling like they have a stake in the business’s future. If the employee referral and hiring process are successful, companies and employers can publicly recognise the contribution of the employee in a social media post.
Incentivising Employee Referral Programs
There are a number of options for a small business to offer rewards to encourage employees to recommend more referrals.
Tiered Cash Rewards
A tiered cash reward structure is an excellent system for bringing in high-quality new recruits. In this system, your referral bonus is split into smaller chunks that are paid when an employee referral is made, when the candidate receives an interview with the company, when the candidate is hired, and if the referral stays with your company for a set time.
This reward process is excellent for existing employees and will help your company save money if employee referrals don’t work out. If your bonus and referral reward pot are limited, you could pay a bonus only if the person is hired. The referral bonus can be split into smaller rewards, released if the new hire is still with your company after months one, two, and three.
How To Introduce An Employee Referral Program And Fill Roles With Qualified Candidates
To successfully launch an employee referral program, it helps for your company to:
Set Your Recruitment Referral Program Rules And Process
You should set up a process for employees to refer other candidates. An internal company page works well and can state which employees can participate. For example, some employers choose not to offer a referral reward to senior executives. The recruitment portal will allow the hiring manager or recruitment admin to track and process each qualified candidate and allow employees to view the status of their candidate referral.
Communicate That You Have An Employee Referral Program
For employee referral programs to be effective, you need to openly communicate with your staff and share the details of your employee referral program. To ensure the quality of referred candidates, you might like to reveal the strength of referrals, which will encourage employees to recommend professionals and friends who are most likely to become a successful referral.
If you find that your employee referral program is not bringing in enough successful referrals, you can increase engagement and participation from other employees by creating a referral leaderboard or by adjusting your bonus and reward system.
Remember, the bonus you offer employees does not have to be a cash reward. Many companies increase adoption of their employee referral program by offering incentives such as a paid day off, vouchers, or a free experience day.
Referral Programs And Your Talent Acquisition Strategy
Small and medium-sized companies can find developing and implementing employee referral programs challenging. However, employee referral programs offer an excellent return on investment, and more companies should introduce them as part of their recruitment strategy.
Small Businesses Guide For Cost Effective Recruitment
Introducing An Employee Referral Scheme is a chapter from our Small Business Guide For Cost Effective Recruitment. In this recruitment guide, we explore:
- Why Should SMEs Build An Employer Brand?
- Preparing Job Descriptions
- Introducing An Employee Referral Scheme
- Social Media Hiring Strategies For SMEs
- Posting On Job Boards And Leveraging Fixed Cost Recruitment
- Centralising Recruitment With ATS
- Creating A Talent Pool
- Defining Your Interview Process
- Presenting A Job Offer
Resources for small businesses