Looking for new talent? You might just find it through your employees’ networks.
Companies looking to recruit faster and cheaper for quality talent need look no further than their own staff to help source the best candidates.
Why? Because employees are a referral network gold mine. Many organisations do not recognise the power of their staff as a highly effective network of recruiters. Human resource expertise notwithstanding, existing employees bring so much to the table when it comes to identifying and onboarding new recruits. Cost-effectiveness is just part of the bargain.
A global study conducted by Jobvite found that employee referrals have the highest applicant-to-hire conversion rate, accounting for 40% of all hires, even though only 7% apply.
Here are five key reasons why your company should consider embracing its employee referral network.
1. Recruiting Referrals Saves Time
Traditional methods of recruiting involve briefing recruitment agencies, negotiating costs, placing ads on job boards and wading through a stream of applications that may or may not meet the criteria. In stark contrast, Jobvite research found that onboarding candidates who were successful via a referral program took just 29 days to start work in their new position compared to 39 days via job boards and 55 days via career sites.
Think about the ease with which your employees can get the message out to their network. According to the Jobvite research, the average employee has around 150 contacts on social media networks such as LinkedIn. Multiply this figure by your number of employees – say, 100 – and you are suddenly accessing a network of 15,000 contacts, who in turn may share the job with their networks, growing the number of contacts exponentially.
2. Recruiting Referrals Saves Money
Think about the typical costs of recruitment. Engaging the services of a recruitment agency will generally incur a 20% fee based on the first year’s salary. For a C-suite candidate, that fee could hit tens of thousands of dollars. Even factoring in an incentive payment to the referring employee (of around $2000 to $3000, for example) there are huge savings to be made. Combined with the other benefits of utilising your employees’ referral networks, the savings quickly add up.
3. Higher-quality Candidates with Better Cultural Fit
When asked to rate the quality of candidates from a range of sources including referrals, job boards, social networks, direct sourcing, third-party search firms, corporate career sites and internal transfers, the organisations that responded to Jobvite’s Social Recruiting Survey gave a clear thumbs up to candidates who had been referred by an employee. 52% ranked them as the highest-quality candidates – the highest rating of any recruitment process. Candidates are likely to be a better ‘fit’ for your organisation because your current referring employees know your corporate culture and are consciously able to discern which members of their network are likely to fit in and hit the ground running.
4. Referred Candidates Enjoy Higher Job Satisfaction and Stay Longer
Although hard to quantify in dollar terms, employee loyalty is a huge benefit to an organisation – and survey results show that referred employees have it in spades. After one year, 46% of all referred candidates were still employed. After three years, 47% of candidates who were employed via referral were still with the organisation. This latter figure compares to 14% of employees who were recruited via a job board.
5. Higher Employee Retention Rates
When LinkedIn crunched the numbers of its own employee referral program, it discovered that employees who successfully referred candidates stayed much longer than employees whose friends didn’t get hired. LinkedIn believes this trend can be mostly attributed to employees building strong communities and networks at the office.
“For one, the wider and stronger your network, the quicker you can get work done,” says Boryana Dineva. “Referring people who end up being hired just makes your life easier. Imagine a world where you have a friend who you referred in every cross-functional group.”
In today’s competitive recruitment market, astute recruiters and companies will embrace employee referrals to find quality resources while saving time and money. Looking for talent? Who knows, your current employees may already hold the key to locating the ideal candidate.
Do you have a strong employer brand? Read about how to create a strong employer brand for your company.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.