Employee referrals: what they are, benefits and tips

Employee referral is a recruiting strategy in which a company’s existing employees or customers refer candidates for open positions.

The process of gathering information from the candidate is different in this case because this is not a traditional application and is not a response to a job posting published by the company, but is submitted on behalf of the person you are referring to. 

After this introduction, we would like to show you in more detail what an employee referral is, what the benefits are, and what tips you can use in this type of recruitment. 

What is an employee referral?

Employee referral is a recruiting strategy in which an existing employee, client or someone in the candidate’s network suggests a candidate for an open position.  

The recommendation is based on the candidate’s suitability to perform the duties of the open position and is an effective method of sourcing and attracting talent. 

7 benefits of employee referral programs 

The benefits of employee referral programs are many and specific enough to justify companies considering this recruitment strategy. 

Increase candidate quality

Employees who act as referral sources are aligned with and aware of the company’s culture, mission and values, so they will only refer candidates who they know are aligned with these principles. 

In addition, these employees know that if the selection process is successful, they will be supported in the company. 

However, they could have the opposite effect if applicants turn out to be bad hires, so employees who propose them are very careful to make sure the people they suggest are the right ones. 

Attract passive candidates

The employee referral strategy is a way to attract passive candidates who may go unnoticed and may be overlooked in an active search. 

This type of recruiting gives you access to people who may be open to changing jobs but are not actively looking for work. (which can result in boomerang employees).

They are comfortable in their current position and do not consider changing, but if an acquaintance, family member or someone close to them raises the possibility and it is an improvement, they may come to appreciate it and submit their application. 

Accelerate the hiring process

Hiring processes do not happen overnight. In fact, they typically take weeks or even months, especially if they include pre-employment testing.

According to a study by Talent solutions and business consulting firm Robert Hall, hiring times in the U.S. have increased from about 7 weeks to more than 11 weeks in 2 years. 

Strategic solutions such as employee referrals can shorten these lead times and streamline the hiring process by reducing the number of steps required to fill a vacancy. 

Reduce recruiting costs 

One thing leads to another and when hiring timelines and the number of steps required to complete the process are reduced, the cost of hiring the new candidate is also positively impacted, resulting in lower costs. 

Some companies are considering referral programs for employees taking in consideration the people who refer being rewarded with some type of bonus. 

These rewards can be: 

• Monetary.
• Paid time off.
• Gift cards.
• Non-monetary bonuses.
• Recognition in company advertising. 

Improve the fit with the company culture

When employees recommend a family member, friend or acquaintance to join the company, it is because they feel comfortable with the company. 

As mentioned earlier, employees’ suggestions of potential applicants implies that they align with the company’s values. When the candidate changes status and becomes a new employee, those values come together and the company culture has a new ally. 

Promote an engaged workforce

Employees who see that their opinions matter, who have a voice in recommending new hires and influencing the future of the company, are staff who feel an integral part of the company and that has a direct impact on their levels of engagement. 

Fill challenging positions

There are certain positions that require a complicated recruitment, either because they correspond to a large project to be developed in a short period of time or because they require specific skills of professional profiles that are not abundant in the market. 

In such situations, the selection of a recommended candidate is fully adapted to the needs of the company, since the recommending workers are aware of all the conditions that are required, and they offer different candidacies, it is because they know that they will pass selections cuts.

10 tips to increase employee referrals 

Up to this point, we have explained how employee referrals help in the recruiting process. Now it’s time to detail the tips that will help you take this strategy to the next level. 

1. Hold regular meetings between hiring managers and employees.
2. Organize recruiting events that employees can attend. 
3. Allow employees to sit in on interviews. 
4. Post job openings on company channels, such as the intranet. 
5. Schedule time for hiring managers to meet with staff who have questions or concerns about open positions. 
6. Reach out to former employees who fit the profile and may be interested in rejoining the company. 
7. Offer monetary and non-monetary incentives to the referring worker if the candidate selection process is successful. 
8. Create automated candidate referral processes where employees submit their suggestions and the applicant is instantly sent to the hiring manager.
9. Turn employee referrals into contests within the organization so that the program gains popularity and the “winners” are even more visible to their peers. 
10. Thank all referrers so that they feel the value of their contributions.

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Just ask for a free demo and we will explain how our solutions are not only innovative but also designed to offer you experiences tailored to your project.