What Is An Employee Referral Scheme? Employee Referral Schemes Explained
It can be very challenging to consistently bring in top industry talent. Nonetheless, an employee referral scheme provides one of the best and most proven methods for bringing in great candidates that result in successful hires. Read on to find out all about employee referral schemes and why 85% of companies put it in their top three hiring methods!
What Is An Employee Referral Scheme?
An employee referral scheme is a structured and organized program that employers use to request their employees to endorse candidates for open positions. Unlike sourcing, an employee referral scheme is an internal program used to search and hire the top talent from the existing networks of employees.
This approach is considered the most successful recruiting strategy. It’s proven that a referred employee makes an excellent employee in several different ways: they take a shorter time to hire, they are affordable to engage, they stay with the company the longest, and their turnover rate is also the lowest.
Why Are Employee Referrals Important?
Covid-19 brought chaos to job markets around the world, driving organizations and candidates to try innovative methods of hiring. Today’s job market sees companies be flooded with an extremely high volume of applications, often poorly matched for the job at hand, resulting in hiring teams and resources being overwhelmed. Employee referrals have a significant advantage in the current market, given that referrals are somewhat prescreened by the employees, resulting in a far higher application:hire ratio in comparision with other channels.
An employee referral program involves including current employees in a company in identifying and recruiting quality talent for several reasons, and has proven to be the best method of sourcing. There are numerous indirect and direct gains of employee referrals, including:
- Increases retention: Usually, employee referrals are more reliable since they already know the company’s vision and work culture through knowing the employee that works there. Thus, they are aware of what to expect; hence, there won’t be any major surprises once hired. Knowing the work environment, the newly hired employee will not take long to adapt and absorb it and will stay much longer than the other employees.
- Employee referrals enhance the quality of hire: The virtue of talent is high when hired via an internal recruiting method like a employee referral scheme. This is because your employee has done the screening by considering whether this person is right for the job. Generally, employees will only refer candidates after they are confident about their eligibility and suitability of the role, so they give only top quality candidates as their referral.
- Hiring more specialized prospects with employee referrals: When seeking the right applicant with specific skills, employee referrals work best. Employees are closer to their networks, and that’s why they know the applicant’s professional capabilities and skills very well.
Employee Referral Scheme Benefits
- You’ll save time: A digital employee referral program is quicker since there will be fewer bits and pieces of paperwork, less administration and complete tracking and automated processes. You will reach employees where they are, boosting engagement dramatically and really leveraging the program.
- Attract better candidates: Employees naturally screen their prospects, and if they feel someone doesn’t possess the right skills, personality, or work ethic, they usually will not pass their details. This means you end up with a pool of highly qualified, culturally fitting candidates for the open role.
- Saves money: An employee referral project costs less than a recruitment agency and headhunters. Other than time spent interviewing candidates and assessing CVs, money mainly spent on the rewards to show appreciation and recognition to employees for the participation in the scheme.
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