Employee referral programs (ERP) are a type of hiring strategy in which HR professionals ask their current staff to recommend qualified candidates who might be a good fit for the company. It’s a way to increase the talent pool without wasting time consulting external sources or conducting research to recruit the workforce.
In this article, you will find useful tips on how to make your employee referral program more effective and learn about the benefits this program can bring to your company.
Why an employee referral program is important for today’s businesses?
According to Zippia research, more than 71% of US companies have an employee recommendation system in place. However, only 4% of these programs are effective in hiring workers. As GoRemotely’s statistics show, recruiting through referrals is quicker and more cost-effective than the typical hiring method, saving companies over 13 days and at least $4,129 per hire. This shows that ERPs are a valuable tool for adding new talent to the team, but they must be correctly implemented to have the greatest impact. With an effective ERP strategy, HR professionals can concentrate their efforts on hiring someone referred by an employee, that is more likely to be serious about the job and have better qualifications.
How to effectively implement an ERP?
There are a number of factors to consider when implementing an employee referral program. Ensure that the program is well-designed and simple to use so that staff members are eager to promote their friends and colleagues. Here are some pointers to get you started:
Clear communication
It is essential that workers know exactly what to do to direct someone to a job opening. The company should inform its employees in brief what an ERP is and how it benefits them and the organization as a whole. They should also be made aware of what qualifies as a successful reference (e.g., a referred candidate being hired or having worked for the company for a specific period.) It is also critical to explain any constraints, such as someone who applied but was not chosen previously cannot be considered for the program.
Compile all the above information into a well-structured and customized email and send it to everyone in your company. This will make it easier for them to recommend candidates and ensure that everyone is on the same page regarding their eligibility.
Incentives
Employees are more likely to suggest someone if their referral will be rewarded. This could be in the form of a monetary incentive, such as cash bonuses, gift cards, or other rewards. According to Recruitee, financial incentives can range from $250 to $25,000, depending on seniority. However, the average incentive varies between $1,000 and $2,500.
It’s also important to consider other ways to reward employees for endorsing candidates. These can include letters of recommendation, appraisals (such as more responsibility or a higher salary), and social recognition. This will make employees will feel appreciated and motivate other staff members to refer candidates.
Update employees on the outcomes
When a worker recommends a candidate, they expect to be updated on the recruiting process. Employees will be hesitant to make another referral if they are not kept informed, even if their recommended candidate was unsuccessful. Providing honest feedback about why the proposed candidate didn’t get the job and what can be done to improve the process is critical. Also, do not forget to send employees a “thank you” email after each proposal, so they know their efforts are appreciated.
Track and measure success
It is essential to track the success of the ERP to determine whether it is meeting the company’s goals. HR professionals should tally how many candidates were referred, how many of them were hired, and what metrics (such as salary and performance) increased as a result of the program. Additionally, they should examine whether recommendations have resulted in an increase in employee satisfaction. By tracking these stats, recruiters can better understand the effectiveness of their ERPs and make adjustments if necessary.
The easiest way to do this would be to use tools and software that can automate and evaluate the entire system. However, perform a comprehensive study before selecting since each software is distinctive in its own way.
The benefits of ERP
Recruiting can be a daunting experience, but an efficient employee referral program can make the process a lot easier. Below are the most significant benefits of ERPs:
Talent Attracts Talent
Employees tend to recommend candidates based on their expertise, competency, and personality, not just their qualifications. Since they are already part of the company, they know best if a referee would be a good fit. Skilled individuals will look for and recommend people who share similar values, work ethics, and beliefs to create a cohesive workplace and achieve common goals.
Increase in Employee Retention Rate
A good retention rate ensures that talented workers stay with the company, which leads to happy and satisfied customers. According to Zippia, referral hires have a 46% retention rate, compared to 33% of job board hires. The report revealed that 50% of all referral workers remain in their post for at least three years. On the other hand, 50% of non-referral employees leave the company within a year and a half after being hired.
Create an Engaged Workforce
Workers who refer candidates for open positions to their employers develop a sense of belonging and unity. Companies with highly engaged personnel foster an environment that encourages productivity and profitability.
Conclusion
Recruiting new team members can be both time-consuming and costly. Employee referral programs are an excellent way to navigate this process. They help reduce hiring costs, increase staff retention rates, and ensure that the candidate is a good fit for the environment.
