Employee referral can be one of the most powerful team augmentation strategies. Know how to set up a super effective employee referral program. Read on!
Employee referral is the hiring processes done based on the referrals of a candidate referred by an employee of your firm. The employee referral process is not new and has been used to find the best fit for a position. The success of referral drive can vary, you may find a candidate quickly, and sometimes it is time-consuming. In this blog, we elaborate on the pros and cons of the employee referral process and how you can implement an employee referral program in your organization.
Also Read: Disgruntled Employee | A complete guide
What is a referral?
What is a referral? A referral program is a process in which you reward customers for spreading the word about your product. An employee referral is an extension of the referrals where companies reward employees for referring a candidate for your company.
What is an internal referral?
An internal referral is a structured program where companies find a talented candidate by asking their existing employees to recommend candidates from their existing network. When you recruit the candidate, the company offers the employee referral reward. The employee referral reward could be money, tickets, food and drink, days off, trips, etc.
What is a referral source?
A referral source is a way that a possible recruit found out about your organization. Referral sources can be internal or external. Other referral sources can include advertisements and search engines.
What is an external referral?
An external referral program can be called a community referral program, non-employee referral program, or bounty hiring program. In an external referral program, the company’s collective community (ex-colleague, friends, family, and acquaintances) refers to a potential candidate. External referrals can allow you to hire a more diverse range of people to make referrals.
What is a referral drive?
Referral drives are recruitment drives where an employee can refer large-scale hiring process. It can be an entry-level hiring process. After a recruit successfully cleared the written and interview process and is hired the employee who referred them is entitled to a reward.
What is an employee referral program?
An employee referral program is a recruitment method designed to allow employees to be involved in their company’s recruiting process. In this method, the staff shares their company’s vacancies with their acquaintances and recommendation for candidates who apply.
How does job referral work?
Finding the right candidate has become increasingly difficult for recruitment in a candidate-driven job market. Hiring a new candidate costs time, effort, and resources. Employee referrals are the most reliable, available, and untapped sources for the candidate. Here is how job referral work,
Employers with organized referral job programs
You need to have an effective and organized referral job program. It should be a transparent and straightforward mechanism like paper or online referral systems where staff can forward referrals easily.
Rotate reward in the associate referral system
You need to change the rewards in the associate referral system. Some employees prefer monetary rewards, while others want recognition. You need to provide various options to your employees.
Market your job referrals well
Market your job referrals program announcement well. Engage your marketing to show and remind your employees about the referral program. You can put employee referral notices in a prominent place in your office or notices on your notice board.
Implement your referral recruiting with your ATS
An applicant tracking system helps you make most of the referral drives. It eliminates errors or delays and helps to ensure everyone involved in hiring has a smooth experience.
Benefits of employee referral program
A report by LinkedIn Global Trend Report 2016 shows a massive 90% of professionals are interested in hearing about new job opportunities even if they are not looking for the new job opportunity.
But reaching potential recruits when they are not actively looking for a new job opportunity can be challenging. Employee referrals and social media can prove to assets in these situations. Job referrals help the candidate be better prepared about knowledge of the job and company. Other benefits of an employee referral program are as follows,
Referring someone for a job reduced time and cost for hiring
Referring someone for a job means you will get a quality candidate applying for the post. You can ask the candidate for a formal interview. Employee referral saves you valuable time and money from the sourcing and screening process. It helps make your hiring process more efficient.
Candidate referral improves the quality of hire
Your current employees know your company culture, mission, and vision. They are likely to recommend a candidate who is a good cultural fit for your company. The employee referral program is a great way to approach a passive candidate. The best job candidates are said to be passive job seekers, and you can have quality hires.
Employee referrals advantages by showing better retention rate
Employer retention and the quality of the candidate are interrelated. The better quality of candidates improves employee retention. Unsuitable candidates are likely to leave sooner. We see employer referral advantages candidate can get a better idea of work culture and atmosphere. Candidates who are hired from job boards are less likely to know about the employee experience.
Referred by job application helps to strengthen employer brand
When an employee wants to recommend someone for a position, they generally talk to the candidate first. A prospective candidate trusts an employee’s word more than CEOs or from a corporate brand.
An employee generally enjoys working for your firm when they give an employee referral. Referred by job application helps to strengthen employer branding and improve talent pool for future openings.
Referral job applications are better for hard-to-fill roles
For some positions, you might post an ad and get numerous job applications. Alternatively, you can browse on the portfolio site and shortlist suitable candidates. But for some hiring roles finding candidates may not be easy. It may be a large project you are looking to scale up or looking for skill sets in a highly competitive space. Your staff or coworkers can help you find a candidate through employee referrals. Referrals job applications source are a good source to find candidates.
How to build an effective employee referral program?
An employee referral program can help your human resource department cost-effective source and hire candidates within employee’s networks, speeding up the hiring process and reducing the cost-per-hire. As per a survey by Yello Recruiting Study, 94% of employees would refer a friend. Here is how you can build an effective employee referral program,
Work referral by incentivizing employees
Create a tiered incentivize program for referrals. Incentives can include in-office interviews and cash rewards for accepted offers. Work referral incentives like gift cards, extra vacation days, or work-from-home opportunities.
Candidate referrals by creating brand ambassadors
You need to provide your employees with material to promote your company. Consider holding a candidate referral training session to best position your brand. It may be your company’s mission, what makes a great candidate, steps required to refer a candidate, and incentives to encourage them to refer candidates.
After training your employees should know the required qualifications for the candidate. How to communicate the criteria to their spheres of influence? How you will reward your employees for the successful referrals?
Referring to employee program by staying on top of their mind
After briefing your staff about referring employee program, you need to continue to build momentum. Works with the internal communication team to secure a spot in the employee newsletter include a synopsis of your training program, vacancies, and referral rewards associated with the program.
Be transparent with referred by the employee
Show your employee where their referral stands when they refer a candidate. Use referral technology to automatically increase hiring transparency saving you time from responding to employee referral status inquires. Your employees are engaged regarding the hiring process to know what stage their referral is in the process. The total number of candidates referred over time and the total reward associated with each position.
Invest in technology for employment referral to work
Referral technology can enable the employee to access employment referrals. The technology gives access to refer candidates, track the process, and calculate their associated rewards. Referral technology improves the applicant-to-hire conversion rate, automatically incentivizes the referrals, streamline inter-departmental communication.
5 demerits with employee referrals
There are disadvantages of referred by the job application process. We have listed the top 5 demerits with employee referrals,
Referral for a job can alienate the team
Referral for the job your team may think is not a level playing field anymore. The two friends may interact more with one another alienating other members of the team.
Employee referral on job application might lead to lack of ideas
Employee referral on a job application could bring an attitude where some employees stick together. This attitude can lead to a situation where organizational problems can be hidden and increase. The growth of employee referrals can lead to stagnation.
Work referrals can lead to disillusionment in the employee referrals program
When bonuses are tied up with your employee referrals program employees may become disillusioned with the process. The disillusionment can lead to discontentment with the company.
Referral application can lead to charges of discrimination
If your company is heavily on the referral application process, then your firm may face charges of discrimination from candidates who have not to be selected.
Employee referral benefits can limit your options
It is impossible to gain all your recruits through employee referrals. You need to have other strategies to recruit candidates. You should implement processes from hiring candidates from a larger talent pool or you could be missing on thousand of great recruits your employees don’t know.
Examples of employee referral program from top companies
Here is a list of examples of employee referral program from top companies in the US,
Salesforce’s employee referral example
Salesforce is a market leader in cloud computing. The Salesforce employee referral example offers their employee monetary and other types of rewards. The company organizes a recruitment happy hour get-together where employees can invite the person they plan to refer. It is a perfect way for a recruiter to interact with a potential candidate. The employee gets to enjoy an evening with their friend.
Facebook referral process
Facebook has an internal tool that allows its staff to track the progress of their referrals. Facebook referral process prevents the referrer to be involved to prevent a conflict of interest. The employee referral tool allows the staff to see their acceptance rate and how they have done in the past. Facebook has a strong employee referral program.
IBM referral program
Before an employee refers a candidate they need to register in the referral program. Employees can fill the form and the candidate in question. This will tie the candidate to the specific listing. The employee can provide an external reference link for the listing. In the past, the referral bonus point could go up to 7500 points.