Employee Referrals in a Changing HR Landscape

With social media gaining a growing influence on the recruitment market, and HR software becoming more and more essential, businesses must embrace these changes to improve their employee referrals and their recruiting process as a whole.

Early in my recruiting career someone said to me, “Good people refer good people”. That really stuck with me through the years. Incentive programs are a nice way to generate employee referrals, but how can you guarantee that these individuals fit your corporate values and will be a good addition to the team? It is important to not only offer a bonus to your staff but also engage with them so they understand the company’s needs. To be successful, Referral programs need to cut the costs, reduce the time to hire, motivate the team, engage the workforce and, ultimately, increase retention. Here are some ways these principles can be put into action.

Reduction of Cost and Hiring Time

The cost of hiring a new employee doesn’t only include salary and benefits. Recruiters will often spend weeks searching resources to find the right candidate and all of these avenues cost money. You are paying the recruiter’s salary, the cost of the job boards or advertising, and pre-employment assessments on several potential candidates. Using the network of professionals already within one or two degrees of your staff, employee referrals can cut these costs dramatically.

The HR department is responsible for many aspects of employment, including recruitment. Often this will lead to using outside sources such as staffing agencies to assist with the hiring process. Eliminating this step not only reduces the cost of hiring it also can consolidate the time it takes to go through the process. Interviewing one or two referred candidates takes significantly less time than the typical recruiting lifecycle from sourcing resumes to interviewing and vetting candidates.

Motivation, Employee Engagement, and Retention

Your team wants to perform well for an organization that recognizes their contribution to the company. Offering a bonus for employee referrals can go a long way to encouraging employees to make suggestions. Offer more than just a lump sum. Consider adding incentives such as paying for networking opportunities outside the area and paying smaller fees over a longer period of time based on the retention of the new employee.

The one most destructive downside to offering referral bonuses is that occasionally employees will take advantage of this by referring anyone they meet to be able to earn the money. Rather than allowing this kind of culture, provide employees with self-service access to detailed job requirements which are non-negotiable in the referral reward scheme.

Have you ever thought about ways to harness your employees desire to spend time on social media? Social media isn’t the enemy of the corporation when employee time spent on it is productive. Allow for your employees to become brand advocates for you. This crowd-sourcing approach to recruitment not only keeps employees engaged, it will also help attract potential talent to your door.

However you decide to implement a referral program at your office it is equally as important to ensure that it remains organized. This organization - whether it is the employee self-service portal or the ability to track referral sources - can be built upon HRMS functionality. You may receive names and resumes all year round even when new positions aren’t available. If you don’t have immediate access to them when a position opens up you may miss out on a great hire. Being able to organize them in an HRMS means you can streamline your hiring system and maximize your referral program.

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Laura M. LaVoie

About the author…

Laura LaVoie has 15 years of experience as a recruiter in the temporary staffing industry. Laura also writes about 120 square foot houses and brewing.

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Laura M. LaVoie