Why you should consider Employee Referrals

So many companies have the challenge of recruiting the best employees. Every organization wants top talents and a way I advise on this is through utilizing employee referrals. Employee referral is an internal recruitment channel whereby an organization identifies potential candidates through existing employees. These existing employees make use of their existing social network to recruit the best possible candidate for available positions.

It saves your company about a quarter of recruiter’s fee if not more and brings to your organization the best employee for the role. One thing that excites me the most is that this medium of recruitment ultimately lowers the level of turnover which many organizations battle with.

Remember when I discussed how to retain your best employees? If you haven’t read the post, please find it HERE. Employee referral is one way to retain your employees and I will discuss this subsequently.

If your current employee loves your organization and is more than willing to refer his/ her friends to your organization, doesn’t that mean that he/ she would love to be at your organization? Doesn’t that show a great fondness for the workplace culture? This invariably means that the referred candidate will stay with your organization after all he/ she can see how your current employee holds your organization in high esteem.

This shows that you get to win! You retain two great employees. In another post HERE, I told a story of how a friend I referred turned out to be one of the top employees. So I can boldly say that I have a personal reason to back up my support for employee referral programs.

Below are reasons why you should consider employee referral as an option in your recruitment strategy. I am not saying your entire recruitment program should involve referrals, rather I implore you to consider it as one of your recruitment strategies and benefit from it.

1. A referred hire will onboard faster

I have previously written on how to go about an orientation, but even after having one and following up on the employee there has to be onboarding because it’s a process. Promoting employee referrals makes it easier for the new hire to onboard faster because he/she will be aware of your company’s culture through your employee who is his/her friend.

Secondly, there will be the notion of trust even with other employees he/she may not know. This is because there will be a sense of belonging and the feeling that there is someone to talk to, to ask questions for clarification when the need arises. The most important reason to consider referrals is because candidates will appear to be a better fit compared to candidates who have no background about your organization.

2. It is cheaper

A referred candidate incurs low hire cost. There wouldn’t be the need for adverts, agency fees, job boards, and in most cases less need to create new job descriptions. All that is needed is for your team to slightly become recruiters (no pun intended). It also reduces the amount of time management has to spend on recruiting candidates.

employee referral

3. Reduced turnover

It just makes perfect sense that if your current employee is willing to refer a potential candidate, then it means that he/she loves the organization and would love to remain there. The referred hire would notice this and most likely want to stay with your organization.

4. Morale indicator

Some organizations may argue that their current employees fail to refer prospective candidates. Well, see this as a good sign. See the positives in every negative situation. This could mean that your current employees are not proud of your organization and so wouldn’t want to refer candidates.

It takes much courage from your employee to inform a friend that he/ she will be referred for a job position. This is because much is then expected of your employee. What you need to do if you happen to be in this situation is to conduct a proper investigation to ascertain if this is the case and then work on your corporate culture.

The next question you may want to ask is; how to go about developing an employee referral program? Below are few points to keep in mind.

Have a goal. For example, identify the number of positions you intend to fill.
Develop an easy process for your employees to use.
Allow non-employees to also make referrals e.g your clients, business partners, etc. Anyone that wants the success of your recruitment strategies should be allowed to make referrals if necessary.
Train your employees on the program or process you intend to use. Explain to them the characteristics you expect from potential candidates.
Tell your current employees what to expect. Most organizations offer a referral bonus. It could be a vacation, recognition or other forms of incentive. Either way, inform your employees of what to expect in turn for their referrals.
Provide consistent feedback. Keep to your end of the bargain by giving necessary follow up and information of the ongoing referral process to your staff. This will encourage them to refer prospective candidates in future. They would want to be updated.
Measure the outcome of the employee referral. At this point, managerial accounting is needed. You want to evaluate how effective the program has been for your organization. How many candidates were referred? How many were finally employed? Were costs cut? What is the quality of hire? What is the retention rate? etc. The answers you get will help you conclude on whether to continue with employee referrals.

Will you consider employee referrals or do you have a referral program in place already? How will you go about it or how do you go about it if you have a program already? I would be glad to hear back from you.

If you have any questions, comments, or suggestions please feel free to provide those in the comment section or contact me via the Contact page. You may also choose to send an email to [email protected].

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