Everything You Need To Know About Employee Referrals

Employee referrals can be a reliable source for recruiting the best talent when used efficiently and tactfully. Effectively frame your job requirements and recruitment strategies to hire the best candidates, even for those difficult-to-fill roles, without compromising on diversity and transparency.

While hiring for your job positions, did you ever think about the hidden potential of your existing employees in helping you hire the best candidates for the job? If not, we are here to tell you why you ought to do so.

There is no better publicity than that of the word-of-mouth. And a positive word-of-mouth from your employees, when used effectively and productively, can help you hire the most successful candidates for your available job positions. Hiring through word-of-mouth can fetch you unimaginable benefits, especially when you are hiring through employee referrals.

In this blog, we will discuss employee referrals, its advantages and disadvantages.

What is employee referral?

Employee referral is defined as a process, wherein an existing employee is asked to recommend qualified candidates from within their existing social network for a job opening within the company.

In general, referred candidates are not an outcome of a traditional sourcing and recruitment process. Rather than responding to job advertisements and submitting their application through the traditional process, a candidate has an existing employee of the company, whom they know, submit their resumé on their behalf.

The recruiting team then determines whether the referred candidate is a good fit for the company or not, by implementing the same recruitment process as followed with the other candidates — evaluating their professional background and resumé, assessing their performance on different role-specific tasks and then conducting interviews.

Importance of employee referral

The recruitment industry has changed fundamentally, and now, candidates have a greater say in the recruitment process.

According to the latest research by a leading HR firm, almost 90% of the job market is candidate-driven. It means that the company no longer picks the talent, rather the talent picks the company.

This trend is absolutely a positive one which has forced many companies to rethink their recruiting strategies and focus more on including their existing employees in the hiring process, as their chances of getting a reliable long-term candidate increase when a candidate is sourced through employee referrals.

Consequently, employee referrals can help find the most suitable candidates with the required skills for in-demand job roles, which are generally extremely hard, time-consuming and expensive to hire.

It is for this reason that modern recruiters have started to increasingly involve existing employees in the sourcing and recurring processes. This phenomenon has resulted in the creation of Employee Referral Programs, which have now become one of the most productive and favourable methods of finding and recurring talent.

What is an employee referral program?

An employee referral program is defined as the structured process of organising, asking and receiving employee referral from existing employees.

In the absence of an employee referral program, your existing employees may still recommend qualified candidates for open job positions. However, this strategy is better suited as a need-based recommendation, which cannot be relied upon for your long-term recruitment efforts. Inversely, when you run a comprehensive employee referral program, you add this arsenal to your hiring strategy. It improves your chances of getting the perfect hire.

The advantages of employee referral

Let us find out the main reasons why you must build an employee referral program for your company:

Faster recruitment
Employee referrals help with faster and efficient recruitment. When your existing employees refer a candidate, they already know about the candidate and vouch for their skills and qualifications. Further, they will make sure that the candidate meets the eligibility conditions for the job role. Therefore, you could opt to skip the initial phases of job advertising, job listings and resumé screening, and move directly to contacting the referred candidate for interview rounds. Interesting statistics from leading job portals shows that referred candidates are about 6% more likely to accept the offer of employment.

Lower cost
Employee referrals allow you to move quicker through the different stages of the recruitment process, which naturally reduces your hiring expenses. For instance, rather than paying an external recruiting partner to provide you with a list of shortlisted qualified candidates, you can directly ask your employees to recommend skilled and highly qualified candidates for open job positions at a comparatively lower cost, that too in the form of the referral bonus. The benefits are multifold — you don’t just greatly reduce your hiring expenses by faster recruitment, but you also get access to a highly qualified candidate, as well as keep your existing employees happy and satisfied by offering them lucrative referral bonus. It ensures the efficient and productive use of your available resources.

High-quality culture fit candidates
With a comprehensive evaluation, you can ensure that you are getting a qualified candidate for the job position, but how will you know if the candidate is a good culture fit for the team and the company? Knowing whether the candidate is a culture fit is an important aspect of the hiring cycle. Because, if missed, it can land you with a bad hire despite being highly skilled and qualified for the job role.

Employee referrals can assure you of finding good culture fit candidates, as the candidates would already be aware of the company culture by their interactions with your existing employees. And they have made a conscious decision of being a part of the company culture by allowing the existing employee to submit their resumé for the available job positions.

Employee referrals also improve employee retention rates. The candidate feels empowered to have decided in favour of joining the company. Furthermore, they are familiar with an employee who already works for the company, and they know what is expected out of them. These factors boost long-term association with the company — not to mention the happy and satisfied employee who is rewarded with a bonus upon a successful hire.

Recruiting for difficult-to-fill roles
Some job positions are easy to fill. You get numerous applications from top candidates the moment you post a job ad listing. Or you may instantly find the right candidate when you browse through your candidate database. However, certain job roles are difficult to fill. Generally, these job positions are the ones that require the knowledge of specialised skills and expertise.

For instance, you bag a new project and immediately want to scale up your operations, but you lack the bandwidth and the outreach to hire large quantities of skilled workforce. Or you may need the services of a specially skilled workforce to get your project started and to guide it to its successful completion and delivery.

These roles are hard to fill in an open job market and can only be achieved through employee referrals. Employees would be in close contact with different types of prospects in their social circle who would fit your job requirements. A proper employee referral program will encourage your employees to explore their network and find the most suitable candidates for the job. And their positive word-of-mouth will help you fill even the most difficult to fill roles.

The drawbacks
Employee referrals do have their share of disadvantages. Let us see what the drawbacks are and their effective remedial measures to tackle them:

Less diversity
In general, employees usually tend to recommend more like-minded candidates. It is normal human nature. We like to associate with those who have a similar thought process and actions as ours. Likewise, your employees would like to recommend people whom they know — people with similar backgrounds, attended the same college or school, and with whom they hang out. This will make the team more homogenous and exclusive, rather than diverse and inclusive.

Therefore, to bring more diversity and inclusiveness into your team, you must use referrals as one of the many sources of recruitment and not the only avenue. Also, provide equal opportunity to suitable candidates from other informal recruitment sources as well, as it will provide you with opportunities to diversify your team.

You could encourage your employees to refer qualified candidates even if they don’t know them personally, but are aware of them professionally. For instance, your employee might be a data specialist, but they may know of a good developer in their previous company, whois up to the task. This way, you can effectively engage employees for hiring diverse candidates.

Less transparency
Sometimes lack of transparency is observed while conducting recruitment drives through employee referral programs. For instance, your existing employee has recommended a candidate for a given job opportunity and has explained the benefits of the company and the job to the candidate raising their excitement and eagerness for the new job opportunity. Few days have passed, and the candidate doesn’t hear any response from the company. The employee inquires about the status only to find that a different candidate has been selected for the job.

This lack of information doesn’t just crash the expectations of the candidate but also dissuades the employee from recommending any candidates in the future.

Recommending doesn’t mean that the candidate automatically gets the job, but that doesn’t mean that candidate has no right to know the status of their application. A referred candidate deserves to know about the status of their application. And, as a responsible hiring company, you must be transparent and open about your communication and let the candidate know of their application status regardless of the outcome.

This simple act will bring trust and transparency to your employee referral system. Further, it will help you provide a better candidate experience despite the outcome, resulting in positive branding for your company.

Employee referrals can be a reliable source for recruiting the best talent when used efficiently and tactfully. Effectively frame your job requirements and recruitment strategies to hire the best candidates, even for those difficult-to-fill roles, without compromising on diversity and transparency.

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One of the prime contributors for this blog, Expertise in Staffing and Recruitment, Content Strategist by Profession. A Music Lover & Traveller by Choice.

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