4 Things to Consider Before Introducing an HR Referral Program

For organizations to remain productive, they must implement a strategy for attracting and retaining the right talent. The acts of hiring, interviewing, training, and on-boarding new employees capture the process of talent acquisition. However, talent acquisition goes further than getting the right person for a job. It tries to determine an employee’s career path in an enterprise.

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There are numerous talent acquisition strategies available for firms, and the most beneficial is an HR referral program. This strategy is sometimes called recruitment referral and usually involves an employee referral program. Here, companies look up to their current employees to supply some fresh talent. Read on to get a clearer image of an employee referral program’s dynamics, merits, and guidelines for making it successful.

What is an Employee Referral?

An employee referral is a candidate recommended by existing employees, business partners, or clients. In almost all aspects, an employee referral is similar to a regular candidate. However, their application process is unique, as referrers can submit personal feedback and insights on behalf of the referrals, and in most cases this can fast track the application process for both the candidate and the company.  

An employee referral program is a tool used to acquire employee referrals. Typically, an employer broadcasts an open position to current employees or customers through some form of media, say via a specialized app or email notification. The parties broadcasted to can then share these positions with people they know, and submit resumes of candidates they know and feel would be ideal for the vacant position.

The employer then gets in touch with recommended potential hires, assesses them, and hires the successful ones. Traditionally, those who recommended candidates who go on to get the job receive an award.

Advantages of Employee Referral Programs over other Talent Acquisition Strategies

More than 80% of employers agree that HR referral programs generate high quality hires compared to other talent acquisition strategies. Without exaggeration, employee referral programs rank among the cheapest, fastest methods of recruiting. The benefits of this strategy list as:

Reduced Cost to Hire and Time to Hire

Implementing employee referral programs means that the employer will not have to advertise open positions. Eliminating job ads translates to cost savings. Similarly, there is no need to budget for an external recruiter’s fee.

Organizations also reduce the time they take to hire. Screening steps, such as resume analysis, which are necessary when hiring through other strategies, are not carried out when sourcing employee referrals. This benefit makes referrals 55% faster to hire.

Higher Employee Retention

Employee referrals tend to stay longer in the companies they work in. They have a personal connection to their colleagues and the company. Besides, referrers tend to feel treasured after recommending a successful hire. Therefore, they become more productive and serve their organizations for considerable amounts of time.

Quality Candidates

There are three significant ways that employee referral programs help attract quality hires. Firstly, referred candidates have a general idea about the culture of a company. Therefore, it takes less time and effort to induct them.

Secondly, referred candidates have a referee that the company knows and trusts. Hiring a person with trustworthy referees boosts that company’s confidence in the employee.

Finally, employee referral programs reach out to passive candidates. Research suggests that this is where the most talent lies. By tapping into it, companies can acquire quality candidates effortlessly.

4 Things to Consider Before Introducing an HR Referral Program

Implementing a successful employee referral program requires the accountability of the management and the involvement of employees. All parties to the program must feel valued and appreciated. Here are four considerations that may contribute to the fruitful implementation of a recruitment referral strategy.

Rewards on Offer

The executives spearheading the program’s implementation should develop creative ways of rewarding those who recommend not only successful hires, but also those that participate in the referral program. Most executives may hastily settle on cash rewards. However, only six percent of employees recommend candidates for cash.

Alternative reward items include free lunches, extended leave periods, and fully paid trips. To make it even more interesting, a company’s executives may offer custom rewards. If the company has offices in an area famous for great motorcycles, they can prize employees with quality motorbikes after successful recommendations.

Information Flow

The team leader of an employee referral strategy should articulate how to disseminate all details about the program to the relevant parties on time. It would be prudent to call employees to a meeting and explain how the program will work. If an employee asks: “How do you write an employee referral,” a knowledgeable team member should be present to help. Additionally, they should keep in touch with recommended candidates and executives interested in the program.

The easiest way to prepare for a fast flow of information is by using HR software. By having a digital employee referral program in place, a company can easily communicate with employees about new positions, successful referrals, and new rewards in the program.

Result Measurement Methods

Executives should clearly define how to measure the effectiveness of an HR employee referral program. Moreover, they ought to explicitly state how such results will get to the interested parties.

Before measuring results, the objectives of the program should exist. Exemplary clear goals include:

  • Cut time to hire by a certain percentage in a given period
  • Reduce cost per hire by a certain percentage in a given period
  • Increase employee engagement by a certain percentage within a given period

Once the executives lay down the goals, they should figure out how they will monitor the program’s progress.

Software to Use

A company should determine how to veer from manual tracking systems. Indubitably, they need HR software for automated resume screening, interview scheduling, HR email templates generation, among other tasks.

The software employed should be secure to guard all private information uploaded to its database. Also, it needs to be flexible. If the company changes the reward offered to referrers, it should be easy to alter the system. Ideally, this software should also offer features for activity incentives, gamification, tracking, implementation and launch support and full integrations to ATS providers.

Tips for Successful Employee Referral Programs

While employee referral programs are among the cheapest, fastest strategies to bring new talent on board, their effectiveness varies from one organization to another. Companies can increase the efficacy of their program by:

  • Adding gamification to the program by, for example, awarding points to successful referrers on a public board
  • Providing employees with a complete set of referral tools and giving them a clear picture of the job position the company wishes to fill
  • Continuously marketing the program to remind all parties to participate
  • Communicating with referrers and recommended candidates promptly and letting them know the latest time to expect correspondence, ideally automated to reduce the manual effort on recruiters
  • Offering creative rewards to employees, such as camping trips, shopping vouchers, special lunches, etc.

Interested in knowing more about HR referral programs?

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Majella Grawatsch

Originally from Brisbane, Australia, Majella completed her studies with a Bachelor of Business majoring in advertising from Queensland's University of Technology. After a few years of working in the gaming and entertainment industry in the APAC market, she moved to Vienna, Austria and joined the Firstbird team as a copywriter in 2016. She has never looked back, and now works across marketing, partnerships and sales in Firstbird’s international team.

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