Sourcing Through Networks: Why Employee Referral is the New Way to Hire
Fishing in the ocean can be challenging when the nature of the underwater world is broad and unknown. The same idea applies to hiring. Given how scarce human resources are in the labour force these days, traditional recruiting can put businesses at risk of bad hires that may cost anywhere from $4,285 up to $18,000 per hire.
There’s no doubt recruiters are changing the way they source talents. But at times when the talent pool is stagnant, employee referrals is both a cost- and time-effective alternative to make quality hires. In fact, more common now than ever, savvy talent pros (and employees even) have been combating new limits by tapping into their niche LinkedIn networks, hoping to find well-qualified candidates who are also on the lookout for new opportunities.
Perks of an Employee Referral Program
Though the success of a recruiter is generally determined by how well and fast one can make a good hire, the benefits of an employee referral program stretch further than just the immediate costs a company could save.
- Employee referrals are also considered to have the highest return on investment. 82% of employers rated them for generating the best ROI.
- Compared to hiring through traditional career sites, hiring via referrals are measured to be 55% faster.
- Referred candidates can also improve the quality of hire, as 88% of employers agreed that they are the best source for above-average applicants.
- Employee referrals may increase retention and lower turnover as well. 46% of referred hires stayed within a company after a year, as compared to the 33% who were hired through job boards.
Above all, employee referrals are a great method of hiring that can aid in the success of the current team. For instance, it helps build a sense of trust and belonging with your existing employees, which in turn boosts morale and job satisfaction. Hiring a candidate who is already familiar with someone in the company can also result in a smoother onboarding and a more suitable culture-fit. As I like to call it – a triple win for the company, the employees, and the new hires.
Enforce It With Online HR Tools
Needless to say, as with any recruiting initiatives, it is still important to follow a standard and fair hiring procedure no matter who you’re evaluating.
- Don’t hire the person just because they’re someone’s friend. Grab a better picture of your referrals by having them complete a pre-employment assessment that measures their abilities, interests, and personality.
- Utilize an Applicant Tracking System to filter and sort through candidates.
- Set incentives and offer rewards or bonuses to your existing employees for every successful referral.
In the era where top candidates are considered luxuries in the job market, hiring outside the box is not only wise for immediate purposes but for long-term sustainability. In the words of Kara Yarnot, founder of Meritage Talent Solutions, a good hiring strategy is one that “allows you to turn your entire workforce into recruiters.”