Does your organisation have an employee referral scheme? If not, you could be missing out on high quality talent and a good opportunity to reduce your recruitment costs.
What is an employee referral scheme?
Similar to customer referral schemes, an employee referral scheme is an internal programme that rewards employees for recommending someone from their network to fill a vacancy within your business. If a referred employee is hired, the referring employee will typically be compensated financially, usually upon the successful completion of the referred employee’s probationary period.
The level of compensation varies from company to company, depending on their budget. Some might reward referrals with a bonus in the employee’s next pay packet, the other might reward with a voucher or the promise of additional perks, such as extra annual leave. Some companies might even offer a small reward per referred candidate who reaches interview stage.
Put simply, your employee referral scheme can take whatever shape or form you like. Just remember to research what would incentivise your employees to take part prior to launch and fully document the details of your scheme to make the rules and parameters clear to all staff within your business.
Why should you introduce a referral scheme to your business?
1. Referrals are a source of high quality hires
Referred employees who are hired are proven to be of a higher quality and tend to stay with your business for longer. In fact, 46% of referred employees will stay with your business for at least three years, which is higher than those acquired from job boards and your careers site.
As a referred employee is a recommendation of someone already in your business, they’re likely to be a better cultural fit and will have a greater understanding of what it’s like to work for your company prior to starting.
2. A good referral scheme will reduce your recruitment advertising and agency costs
Filling your vacancies via referrals means that you won’t need to spend as much money on advertising your vacancies or on recruitment agency fees. The only cost will be the cost of the reward for referring candidates.
Additionally, once your referral scheme starts to gather momentum, it’s likely you will find yourself with a high quality pipeline of employee referrals that you can keep coming back to every time you have a vacancy to fill.
3. It embeds an overall culture of hiring within your business
The hiring mentality shouldn’t just be limited to your HR and recruitment teams. If your business is growing and you need to attract candidates, all staff within your company should be marketing your business to their network like recruiters.
4. It’s great for employee morale
By helping your company’s future growth, your employees will feel much more engaged and responsible for its success. If they can refer great people to help shape the business as it grows, they are more likely to feel like they’re making a difference and playing a part in its story. Plus, they’ll be rewarded for it!
5. Referrals will typically be hired quicker
If one of your existing employees has recommended someone, you’ll likely have more of an idea of their skill-set, their experience and what they’re like, so you can progress them to interview stage quickly. Additionally, due to the pre-existing relationship between the referring employee and the referred candidate, communications are likely to be swifter, allowing you to hire quicker.
What’s the best way of managing your employee referral scheme?
Recruitment technology, such as Webrecruit ATS, can help you to manage your referral programme. Technology will help you to track all candidates who have applied who are referrals and will also allow you to see which of your employees have referred the most hired candidates.
Technology also allows you to easily report on the percentage of candidates hired by referrals, which is helpful if you’re looking to achieve a specific referral hire goal within a set time period.
Need some help managing your referrals scheme? Book your demo of Webrecruit ATS.