A recent article in HR Executive magazine included our founder, Dan Campbell, among company executives who recognize the value an employee referral program brings to their recruitment practices. At Hire Dynamics, mining our talent base for referrals is so important to our business that we have dedicated staff and resources to the initiative.
Through new and ongoing programs that help raise awareness of our Referral Bonus program internally, we are working to keep it top of mind among employees, while continually encouraging our managers to focus at least 10 percent of their time attracting talent through referral channels.
Employee referral systems are strategically smart for business according to a study by Oracle titled, “The Shortest Path to Better Hires,” which says that internal hires yield performance rates up to 15 percent higher than employees found from a third-party source. Here are other notable points from the study:
- On average, it takes just 10.4 referrals to lead to a hire.
- Referrals account for anywhere from 24 percent to one-third of all hires in typical companies.
- Some companies make as many as 75 percent of their placements through referrals.
- Referral hires perform 3 percent to 15 percent better than hires from other sources.
- Referral candidates accept offers 15 percent more often than regular candidates.
A Hire Dynamics, we’ve put some serious thought into a program that is fun and innovative, offering monetary and other incentives for successful referrals. Encouraging employees to recruit like-minded colleagues and friends benefits a company in several ways:
- A referral can establish trust between the company and potential employee even before a first interview.
- According to Oracle, job interviews preceded by a referral reduce time to hire and cost per hire. The cost of rewarding employees for referring hired talent is much less than the cost of a drawn-out hiring process.
- Referrals lead to more referrals. Rewarding employees for attracting talent motivates others to do the same.
- Employees can get to potential employees in ways that a third party recruiter can’t. Many of these potentials are passive job seekers who may just need a nudge from a friend to get your company on their radar.
- As Dan shares with HR Executive magazine, “There is a direct correlation between the engagement of your employees and the quality of referrals. We have a saying here: ‘Don’t ask a client for referrals unless they rate us a nine or a 10 in service quality.’ And the same applies to internal referrals.”
Investing in a formal employee referral program allows companies to tap into their greatest asset –employees. But while positive outcomes include talent acquisition and company growth, strong referrals are a natural consequence of a company culture that is strong and supportive of its teams.
What have been your company’s employee referral best practices, or what are some examples you would like to see put in place?