4 Buzzworthy Benefits of Implementing an Employee Referral Program

Written by Miranda Nicholson on November 3, 2016

Posted in Human Resources

Recruiting is hard work.

HR professionals spend days (or months) promoting an open position, sifting through applications, and vetting potential candidates—all to hopefully find the right person for each job. Plus, these professionals are tasked with creating an inviting environment and culture that are attractive to potential hires in the first place.

There must be a way to lessen the burden, right?

In fact, there is: employee referrals. Implementing an employee referral program—which allows current employees to refer friends, family, and other associates for open positions within the company—can give your recruitment efforts a major boost.

How?

An employee referral program allows your employees to do a lot of the recruitment work for you. If your employees enjoy their jobs, they’ll have no problem promoting open positions to friends and family. And they’ll be able to speak from personal experience about what it’s like to work for your company, which means any candidates they bring in will be more informed and likely better suited for the company than those who apply with no previous knowledge.

If you need a bit more convincing to get started with accepting employee referrals, no problem! Here are 4 great reasons to consider creating your own recruitment channel through an employee referral program:

1. Shave Days off Your Time to Hire

Saving time through more efficient processes is a big priority for most businesses. In today’s fast-paced world, no one has time to waste. And that includes time spent on recruiting and hiring.

The good news is that hiring referred candidates can shave days off your time to hire. According to research from Glassdoor, hiring times have been steadily increasing over the last few years, and job interview processes in the United States now take an average of 23 days.

Hiring referred candidates can speed up the process by eliminating extra screening steps and allowing HR professionals to breeze through steps that may otherwise require closer investigation and negotiation (such as application and resume analysis).

Cut Days off Time to Hire with Employee Referrals

2. Cut Recruiting Costs

When you slice the time and effort it takes to recruit a new employee, you also slice the required dollar amount.

Think about it:

You don’t pay anything for your employees to advertise your job openings to friends and family. And when employees are doing this work for free, you can cut back on traditional job advertisements. You can also cut back on outside recruiter costs since employees have a better understanding of your company and culture anyway and can make a better sell through personal relationships.

Even if you offer a monetary employee referral bonus for successful hires (and you should), it’s typically only a fraction of what you might have paid for recruiting and advertising.

3. Create an Engaged Workforce

Allowing current employees to recruit their friends or family members for open positions at your company is a powerful way to create an engaged workforce. And the benefit is twofold:

  1. Current employees feel trusted and valued since they are participating in the company’s future and growth (and often receive a financial boost through an employee referral bonus). Plus, if their referral gets the job, they feel a sense of pride and accomplishment.
  2. Referred employees feel more engaged from day one since they already know at least one person at the company. And they are often easier to assimilate into the culture since they have a built-in buddy or mentor to turn to for guidance.

As one HR professional put it, implementing a recruiting program that celebrates employees’ personal connections is a great way to “build glue in a company.”

Employee Referral Program Boosts Engagement

4. Increase Employee Retention

According to a report on social recruiting, the best talent often comes from within—through internal hires or employee referrals. Additionally, a study on employee referral programs indicates that employees hired via referral tend to stay with a company longer than those hired through other channels. More than half (56%) of employee referrals who were surveyed for the study said they’ve been in their current role for more than five years.

This is great news for your employee retention rates! Hiring employees who start out with a good understanding of the company and an in-house advocate is a successful strategy for reducing turnover.

Ready to build an employee referral program for your organization? Formstack is dedicated to providing streamlined HR solutions. Click below to check out our employee referral form template, which can help you quickly and seamlessly start collecting employee referrals.