Get the Most Bang from Your Recruiting Buck

Recruiting is difficult, expensive, time-consuming, and often ineffective.

Doesn't it seem logical to use every possible advantage to make recruiting easier, less costly, and more successful? Then why aren't more of us doing it?

Referrals are the most successful means of recruiting. In fact, 88% of employers rate referrals as the best return on investment for sourcing talent. However, only 7%  of U.S. hires come through referrals. 

Why do Employers Believe that Referrals are the Best Way to Hire?

Employers have cited many favorable reasons for employee referrals versus other methods of recruiting, including:

• Require less time and cost to hire referrals.
• Retention of referral hires is longer.
• Culture fit of referrals with the organization is better.

All these factors mean lower costs for hiring, fewer hires required and increased profits for the company. As employees stay longer with the organization and fit in better with the company's people, the organization spends less time and money on recruiting. Furthermore, more synergies and working relationships develop that increase the company's productivity, efficiency, and profitability.

The business can reduce its reliance on job boards, agencies, and other recruiting methods that do not have the same cost savings and positive aspects of the candidates involved as employee referrals.

Why is There a Disconnect in Recruiting Employee Referrals?

71% of companies indicate that they have an employee referral program, but only 7% of total U.S. applicants are referrals. This study also shows that employee referral candidates have a 28.5% chance of being hired, while non-referral candidates have a 2.7% chance of being hired.

So why don't organizations pursue more employee referral candidates? The answers to this question can be numerous, and each organization must determine its limitations. However, some of the possible problems may include:

• Your organization does not have a referral program in place.
• Your organization has a program for employee referrals, but very few people know about it or participate.
• Parts of your organization, such as specific departments or locations, may have a referral program, but it is not companywide nor designed to facilitate the entire organization's recruiting needs.
• Your organization may not have a positive working environment or culture; thus, your employees do not refer their friends and others to the company.

The first three bullets above represent a starting point for a viable employee referral program. Unfortunately, if the 4th bullet point applies to your organization, you may have a lot of work before implementing a successful employee referral program.

How Do We Get More Referrals?

Develop a referral program that is easy to understand, includes all employees, and communicates with everyone frequently. Your employees have knowledge of your company, the work environment, and the company's culture. They should be the best source for people who will fit in that culture and enjoy/excel working there. Their referrals will provide candidates who will most likely succeed in your environment.

Send a survey to your current employees. Ask them to provide information about what is good and bad at your organization (you may want to do this anonymously or through a third party to get the most candid responses). This survey will provide insight into areas needing improvement. It will also establish a foundation for the "why" your organization is a great place to work.

Ensure that your employees know about all openings, not just those in their department or location. Your assistant controller may play softball with a logistics expert interested in making a career change. One of your salespeople may have a neighbor who wants to find a new role in human resources. Or your assistant vice president of marketing knows a parent at her child's school who is an expert in chemical engineering.

Consider the focus of referrals being on helping others. Your employees refer friends, acquaintances, people they have seen or heard about, and people they know are unhappy or looking for alternative employment. Emphasize the good feeling of helping someone they know to go from a bad or uncomfortable situation to a positive one.

Once you document the "why" people should consider your company a great workplace, provide this information to every employee. Add other company information, so they have a complete package of information to share with potential candidates.

Incentivize employees by offering a finder's fee for successful hires. This incentive may be a certain amount of money, possibly some time off, a contribution to their favorite charity in their name, or another benefit that will motivate employees to make referrals.

In the early stages of the referral program, you may consider a small fee or other bonus to anyone making a referral, whether the company hires that referred person or not. This incentive will encourage employees to participate and learn to look for good referrals.

Go beyond employees. You may consider sharing your information and position needs if you have a delighted customer, a long-term vendor, or other company partners.

You may not have an immediate need for every referral. Contact the referral and explain your current hiring situation. Initiate or expand your database of potential future candidates and keep them informed of the company's activities through newsletters or other communications. They will be critical members of your recruitment marketing efforts.

With all referrals, ensure proper contact, communication, and consideration. If not, your referral program will not last.

Why now is a good time to step up your referral program

During the Great Resignation and Quiet Quitters, your employees, customers, vendors, and other company partners know people who would entertain employment alternatives. Now is an excellent time to aggressively go after those folks assuming they are suitable for your company.

Many believe we are in or nearing a recession. We see some layoffs and business contraction. However, you may be trying to recruit new or replacement people. If you need to trim your recruiting or recruiting costs, make sure you get the best bang for your buck. Invest your time and money in a program consistently demonstrating superior recruiting results.

Developing or expanding a solid referral program will help you with immediate and long-term hires. In addition, it will serve as a strong foundation for improving the quality of employees throughout the organization and generating significant business success.