Employee Referral Schemes - Why re-invent the wheel?

employee referral schemes

Employee referral schemes from existing employees seems an obvious (and certainly not new) way of attracting potential talent into a business, yet many organisations seem to be missing this relatively easy step from their recruitment strategy.

Social Media presence is undoubtedly playing an ever-increasing role in the recruitment processes of most organisations, however, the principle of using networks of contacts to identify talent can be sometimes closer to hand than recruiters realise.

Employee Referral Programmes – more effective than you would think

Employee referral programmes have proven their worth in the past and should not be overlooked. Existing staff can often introduce connections to your business with a really passionate explanation of why it’s so good to work for you so who better to be approaching candidates on your behalf? It can also be argued candidates recruited in this way are likely to fit in more seamlessly, with a recent survey by Jobvite (2011 Social Recruiting Survey) suggesting 86% of respondents expressed employee referred hires were of the best quality. Whilst only 7% of all job applications were generated in this way, 4 out of 10 were hired, and half of those stayed with the organisation for over 3 years. Similarly, CIPD’s 2012 Annual Survey Report suggests that employee referral schemes are the third most effective method for attracting applications, just shy of recruitment agencies and the company’s own website.

Applicants referred by existing employees tend to be good quality as employees do not wish to risk their own reputation within the company. Your employees understand the requirements of the company and what sorts of behaviours and skills are required in order to succeed and meet expectations. With each successful referral recruited you become exposed to an ever increasing network or talent pool. Encouraging your employees to network on your behalf in this positive manner also sends a good message and helps engage them further.

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How to: Employee Referral Schemes

So, how should you go about implementing or refreshing your employee referral scheme? Simply acknowledging referrals with a thank you goes a long way, however you can encourage better results through other means:

Incentives – this method of recruiting is really cost effective. In many cases employees will respond to a request for referrals without expecting anything in return. However, if a reward can be offered they soon start to properly scrutinise their own networks for your benefit. A reward does not have to be exceptional, however it will almost always be less than the cost of recruiting using traditional channels when you factor in advertising, agency fees or access costs to job boards and social media outlets.

Competition – another relatively low cost option is to offer a reward based on a competition element, for example the employee who refers the most new hires in a year can win an iPad.

Creating simple to use templates and a clear process to follow, that is communicated to all, will ensure your referral programme is off to a good start. It’s advised to regularly remind employees about it though – their networks are constantly being refreshed so do encourage continuous examination of those pools with reminders and alerts of new vacancies becoming the ‘norm’.

Don’t forget your current employees!

Don’t forget your employee will likely want regular updates about the recruitment of their contact so a commitment to do this goes without saying. After their hard work it’s really the least you can do, and an explanation of why someone isn’t right for the business will also help them to make better recommendations going forward. Timely payment or receipt of rewards for successful referrals is also key in ensuring they don’t lose motivation. If your employees are utilising their networks then your company presence on LinkedIn / Twitter / Facebook will likely see an increase in visitors, so it’s worth noting these pages should be kept fresh.

With an already diverse workforce and a positive approach to diversity in all other recruitment activities there should be no concern about promoting a diverse workforce. Great people know great people and are few arguments against trying to take advantage of this!