Reduce hiring budget – Hiring is unquestionably expensive. In reality, firms invest on average and depending on their industry, between 5% and 20% of their total budget in hiring. This includes all recruitment costs, such as all talent acquisition staff, job advertising, program spending, external recruiters, applicant travel costs, and technological infrastructure. Referrals not only expedite the hiring process by decreasing or eliminating some of the above-mentioned phases, but they also have a beneficial impact on the hiring budget by lowering recruitment overhead. The cost of hiring decreases as the time to hire decreases.
- Brand ambassadorships – ERPs create the possibility of free brand ambassadorships. Employees pitch the organization’s value proposition as they explore their accessible networks, advising potential acquaintances on how the company can meet their job demands. Value propositions generally have more credibility when they come from people who currently work for the organization.
Reduced turnover – Using an employee recommendation scheme to find applicants minimizes turnover since current workers recommend people they know are a good match. Current workers generally have a good idea of how their referrals will fit into the corporate culture, which is one of the most essential parts of lowering turnover. A prolonged position also has a positive impac
It is safe to say that referrals lead to excellent employment, we’ve proven this endlessly internally as well as when hiring for our clients. Several businesses have ranked employee recommendations as the source with the highest return on investment. Hiring individuals with a great set of skills and qualifications through recommendations is simply executed through an employee referral program (ERP). Employee referral programs are an integral feature of any successful talent acquisition strategy. They are not only a solid source of candidates for your pipeline, but they are also straightforward and inexpensive to construct. Instead of spending money on job ads to post for people who are most likely in the same talent pool as your employees’ network, this easy to implement system of referring employees is a go-to approach.
What is an employee referral program?
An employee referral program or ERP is an organized method in which employers seek candidate suggestions from their employees. Employee recommendations is an internal way for finding top talent through current employees’ professional networks. Employers promote reference referrals by offering incentives such as bonuses, time off, and other benefits. Employees often get these bonuses if their suggestion works out for the company for at least 90 days – the standard probational period to date.
Employees contact specialists in their network who meet the employer’s specifications and request resumes and cover letters. Employees submit any resumes or cover letters they have collected, and recruiters conduct interviews after reviewing all applicants. Employees that provide referrals often serve as a reference for the potential candidate to assist employers regarding professional background information and gaining insight into their work ethic and experience.
Components of an ERP:
Like any application process, it’s critical to begin by outlining your objectives. By doing so, you will have kick started the process in formulating and executing your employee referral program and it will have also assisted you in determining which key performance indicators (KPIs) should be set to monitor performance. Some of which are: increasing hiring rates, boosting new hire retention rates, filling seasonal or part-time positions, etc.
- Incentives and rewards: A referral incentive scheme for employees will help motivate them significantly. When they believe there is something in it for them, they are more inclined to consider and refer others in their network. Ensure that all employees are aware of the terms associated with the employee referral bonus by maybe sending an email announcing the employee referral program and explaining how the incentive works. Make it clear what constitutes a successful employee recommendation and when an employee becomes eligible for a referral incentive (e.g., workers get a bonus for every referred applicant who is hired or for every referred candidate who stays with the firm for a certain period of time). Instead of a financial incentive, some firms may give additional paid time off, gift cards, or event tickets.
- Engage employees in the process: The success of an employee referral program is determined by how involved your coworkers are in the process. Communicate your team’s hiring plans to introduce an ERP as early and across as many channels as possible. Be sure to make announcements during all in-person meetings, in addition to the regular digital methods of communication. You may also request that department heads and managers notify their employees about the specifics of your ERP. Be sure to communicate clearly and describe the requirements of the role, explain the method of submitting their referrals, and who they should submit to.
- Performance measurement of employee referrals: To review the effectiveness of your ERP and optimize it for future success, metrics relating to the objectives established during the planning process must be recorded and analyzed. Some of these should include: the proportion of new recruits sourced using ERP, changes in hiring rate, hiring budget, hiring score since ERP implementation, impact on new recruit retention rates, and turnover for referred candidates vs the rest of existing, non-referred employees.
- Feedback generation: Feedback is also important since it informs the organization of the overall performance of the present referral program. Employers should gather both internal and external input from existing and prospective candidates. Businesses may gain deeper insights and information from the comments they receive from these folks than they can from data alone.
Benefits of ERPs:
- Increased hiring frequency – Hiring strong candidates quickly might be the difference between success and failure in a competitive industry. You may simply broaden and diversify your applicant pool by using your entire employee network to find both active and passive candidates. Fast-tracking qualified applicants increases the hiring frequency when you are looking to hire immediately since it eliminates the need for tedious tasks in the recruiting process, such as job description creation, resume gathering, and screening hundreds of candidates.
- Better access to qualified candidates – In businesses where specialized talents are in great demand, such as information technology, employee referrals are much more effective than the traditional method of head hunting. These programs enable recruiters to tap into larger networks of certified people with specialized talents and increase the likelihood of finding a decent quantity of high-quality applicants as compared to traditional recruiting approaches. People in comparable professions usually prefer to network with one another and ERPs enable recruiters to tap into these networks and go directly to the source. Additionally, many employees only suggest applicants they believe are competent for the position, as their recommendation reflects on their judgement.
- t on the hiring budget because there is less need to fill positions over a long period of time.
- Increased employer satisfaction – Because ERPs attract qualified candidates whose goals align with the company, employee satisfaction also increases with time. Employees hired through recommendations have a pre-existing, trusted working relationship/friendship before they ever begin. It’s well-documented that such interactions in work contexts have plenty of advantages, including better engagement, productivity, and satisfaction.
- Filling hard to hire roles – For some roles, you may post a job ad and quickly receive many qualified applicants. However, if you’re seeking for hard-to-find expertise in an incredibly competitive field (such as the tech scene) ERPs would be an easier and faster approach.
Drawbacks of ERPs:
- Lack of diversity – Employees typically suggest applicants who are similar to themselves; individuals they went to high school with, people with similar backgrounds, people they like to hang out with, and so on. This has the potential to create homogeneous teams at the price of diversity and inclusion. To increase diversity in your teams, utilize recommendations as one of multiple candidate sources, not as your sole or even major source. You might also urge your employees to suggest competent individuals even if they don’t know them directly and are connections of connections they’ve heard of.
- Creation of groups – When you recruit several individuals only based on references, you run the possibility of alienating other employees since your new employees will most likely only hang out with people they know. It’s a side of ERP that many HR managers overlook, which may have a negative influence on team chemistry and overall workplace culture.
Even though recruiters are altering how they seek top talent, employee recommendations remain one of the most effective candidate sourcing approaches. With the perks of it staffing up faster at a lower cost, is certainly a striking proposition. As seen, recommendations have a major influence on the engagement of your current employees, your company’s reputation, and the key connections that drive revenue. In an era where business culture and brand values are among the most important selling elements for applicants, cultivating strong connections with workers and increasing their engagement should be at the top of your firm’s priority list. How would you set your ERP rules and guidelines for your employees? Will be similar to the suggestions above or different? What other benefits do you think it could offer?