Hiring managers at businesses of all sizes and industries have to balance a full plate these days. New generations are entering the workforce: more than one-in-three American labor force participants (35%) are Millennials, making them the largest generation in the U.S. labor force, according to a Pew Research Center analysis of the U.S. Census Bureau data. Job candidates have more choices when it comes to job selection and are increasingly asserting higher demands, which companies need to consider in a tight labor market. And companies are still hiring amid the COVID-19 pandemic, so it’s very likely that human resources professionals have needed to refine their hiring strategy. For instance, companies will need to consider doing a virtual onboarding, delaying start dates if necessary and keep their Zoom recruiting tactics as sharp as a Ginsu knife.
Because of increased candidate choice, employers also face more competition for top talent than even five or ten years ago. Hiring managers must move quickly when making an offer to capture proficient candidates and avoid at all costs lengthy, grueling application and interview processes.Employee referrals can cut through the clutter and solve many problems caused by the job-seekers market. When you engage your team in referring top talent to the company, you decrease the cost of traditional hires, quicken the time to hire, and retain referred employees longer.
Recent studies have indicated that employee referrals are hired more than 50% faster than candidates from other sourcing platforms, such as job boards or traditional media job postings. Additionally, employers enjoy a 75% reduction in the cost per hire for referred candidates over traditional recruiting methods. Finally, when an employer extends an interview to a referred candidate, there’s a 40% higher chance of that candidate receiving a job offer. In a world where COVID-19's unprecedented impact has altered a tight U.S. labor market, these statistics could make a significant difference in hiring competitive talent while contributing to the overall financial health of the organization.
Why Should Recruiters Care About Employee Referrals?
Employee referrals do allow employers to hire quality candidates faster and more affordably. Employee referrals can save organizations $3,000 or more per hire (Recruiter).
Additionally, these candidates often have higher retention rates that job seekers sourced from other sources. According to CareerXroads data, referrals were are listed #1 as the “most productive” source for diversity hires, well ahead of major job boards, company affinity groups, and diversity career fairs. While these benefits are impactful, employee referral programs offer additional benefits that will not only keep your current team loyal but will also drive the success of the company.
Here are some more great benefits of employee referral programs.
Expand to a much wider talent pool
Through employee referrals, employers can also expand their candidate sourcing 10x over. By not focusing on only active job hunters, companies can also take advantage of seeking passive candidates (those employees that aren’t currently looking for a new job). Teamable reports that passive candidates make up about 70% of the global workforce---that’s a lot of potential talent. And think about how many connections your employees have on various social media platforms, such as Facebook, LinkedIn, Twitter and Instagram. For example, if you have 50 employees, and each employee has 300 social media connections, you now have access to 15,000 potential candidates. According to a recent Deloitte study, 61% of employers interviewed stated that their top concern was finding qualified, experienced hires. By implementing an employee referral program, you’re expanding your recruiting efforts to connect with hard-to-reach, highly skilled, and passive talent.
Test Your Company's Employer Brand
Your employees are your greatest brand advocates---think of them as walking billboards for your company. If they’re happy, productive, and loyal, they’ll tell their friends and acquaintances. If your team sings your praises when they’re not on the clock, then not only let them, but encourage their efforts. A compliment as small as a “I love my job!” posting on Facebook from your employees carries significant weight.
Thirty-five percent of employees refer open positions to help their friends, 32% do so to help their employer---but only 6% of employees suggest candidates for money or recognition. Employee referral programs inspire your employees to examine their connections when a job opportunity becomes available. But to have a successful program, employers need to make the referral process easy on employees, not taking up a considerable amount of their time. Remember, they’re employees, not professional recruiters.
Employers should also communicate with their employees about current open positions as well as the application status of their referred candidates. How can employees suggest top talent to you if they don’t know what you are looking for? Also, by including employees in the hiring process, you’re letting your team know that they matter and you value their insights. There are countless ways that companies can provide their employees with valuable content to share across their personal social media networks:
- Posting photos of your staff and work environment helps your brand’s personality shine through to your audience.
- Did your company participate in a food drive, community clean-up or other kind of civic engagement project? Don’t forget to share! Current and potential future employees are interested in the community values of companies.
- Celebrating staff accomplishments on social media will make your employees feel valued and appreciated, and motivate them to repost to their own social media channels.
- Highlighting your employees on social media won’t only improve your company culture in-house, but it can also grab the attention of potential clients and make them eager to learn more about what you do.
- Offering a behind-the-scenes look into what your team is up to is exciting for you social media followers, and it gives them an exclusive peek into your company culture.
Create and Organic Pipeline of Talent
Recruiting managers hire for not only open job positions, but also for the future growth of their company. Often, if you hire hastily to fill a position, you may not attract the best candidate for the job. On the other hand, if you continually source employee referrals, you can organically build a talent pipeline that you can access when a position becomes opened or when the company decides to expand beyond its current capabilities.
Social media professional networks and employee referrals are top sources for quality hires: according to LinkedIn, the top channels people use to look for new jobs are online job boards (60%), social professional networks (56%), and word of mouth (50%). By implementing technology and rewards into a structured employee referral program, employers can source from their employees’ personal and social media connections, creating an efficient and high-performance talent pool that drives employee referrals and passive recruiting strategies.
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