Employee Referral Programs & Small Businesses
Employee referral programs have the ability to boost the bottom line of startups or small businesses, yet many young companies still neglect to take advantage of it when conducting their hiring.
Given its effectiveness in attracting quality candidates for companies, the LinkedIn Global Recruiting Trends 2016 study noted that 26% of businesses consider employee referral programs to be a long-lasting trend.
Small business and startups can benefit a lot from this because young companies need all the good employees they can get, without the high cost from traditional hiring methods.
Here are 5 reasons why small businesses should start implementing an employee referral program:
1.Referrals have been pre-screened
Your current employees act as your company’s first level of screening for referrals, checking if these potential hires fit your requirements and can integrate fully with the company culture. Most of the time, referred candidates are of a higher quality than an applicant that no one knows.
Current employees are basically putting their reputations on the line to refer the candidate. They pre-screen the candidate for you because they want to retain respect in your company.
2. Referrals integrate better
Because your current employees have pre-screened referrals, chances are they would find it easier to integrate better with your company. They need less onboarding time and less training overall. Referrals often reach the desired productivity levels faster because they are a great fit.
3. Referrals are better performers
Remember the saying, birds of the same feather flock together? You have awesome employees, so when they recommend someone for a vacant position. They will most likely recommend someone with a similar work ethic and someone who could produce great outputs.
The referred hire, in turn, wouldn’t want to let down his/her referrer, so they’ll work harder to prove their worth.
4. Referrals improve the work environment
Workplace dynamics becomes better with new referred hires because they usually already have friends in your company. The overall work environment improves when staff members get along, boosting employee morale even more.
Referrals can be an indicator of employee morale because a disgruntled employee wouldn’t recommend someone else for the job. So, the higher your referral rates, the better the morale at your startup or small business.
5. It’s cheaper than other hiring methods
Traditional recruiting can be quite an expense for a small startup, anywhere from $4,285 to well over $18,000 per hire, while recruiting with a referral program only costs about $1,000 per hire.
This is very beneficial for small businesses that don’t have much capital to spend on expenses like hiring. The fact that referrals stay with the company longer than non-referral recruits means companies save more money in the long run.
Employee referrals are one of the best ways to hire for its efficiency and cost-effectiveness. Help your business grow into a successful enterprise by implementing an employee referral program.
Do you have other recruitment tips for startups? Share them in the comments below.
Looking for an employee referral program to fit your small company? Contact our referral experts and book a call.