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How Can Recruiters Set up a Proper Referral System?

Photo by Christian Velitchkov on Unsplash

Regarding recruitment, there are more than necessary options available in the marketplace for almost everything a recruiter needs. The same goes for the sourcing channels. There are multiple ways recruiters can source candidates for an open position.

While the job board is the first place a recruiter turns to for candidate sourcing, trying other options may prove more beneficial too. An employee Referral System is one such option.

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You must set up a proper referral system to make the sourcing more effective and beneficial for your company, especially if you are new in this field. To help you out, here is the guide for the same.

What is Employee Referral System?

Candidates recommended for a specific position in a company by its existing employees or external partner are called employee referrals. These candidates don’t follow the traditional application process but rather submit their resumes through mutual acquaintances.

Evaluation of referred candidates remains the same as the rest, except that they don’t need to submit the application and pass the pre-assessment round. Recruiters review resumes determining if they are the right fit for the position.

The employee Referral System is a structured system to organize and request these referrals. Though you can ask your employees for referrals without a proper referral system, managing them becomes hectic since you can’t purely rely on these referrals for your hiring efforts.

Why Must You Set Up a Proper Employee Referral System?

Setting up a proper employee referral system comes with many benefits. Here are five of them:

1. Saves Time

One of the significant benefits of a referral program is the reduction in the time to source a potential candidate. Instead of waiting for candidates to apply for the job, you can directly contact the referred candidate and move to the evaluation process.

Establishing an employee referral program ensures the constant flow in your talent pipeline without having to write job advertisements to attract candidates.

2. Reduces Cost-Per-Hire

Recruiting an ideal candidate requires a lot of material investment, which can be cut off to a certain extent by an employee referral program. You might need to give a bonus to your employee to encourage them to refer a candidate, but it will be worth it.

Apart from using a recruitment software or an Applicant Tracking System, you can also cover additional expenditures easily by reducing the cost-per-hire through the employee referral system. You won’t have to spend on marketing and subscribing to multiple job boards.

3. High-Quality Candidates

Every employee has contact with someone who works in the same field. It is reasonable to tap into their network to find a high-quality candidate.

Your employee can help you determine if their acquaintance fits the job role or not by judging their skill level and knowledge, unlike the usual recruitment process, where no one has any idea about the candidate’s potential.

4. Better Employee Retention Rate

Apart from the higher probability of referred candidates accepting the job offer, they stay in the company for an extended period. Research shows that referred candidates have higher job satisfaction and more extended cooperation.

A high employee turnover rate damages the company’s reputation and works environment—the best way to address it is to set up an employee referral program.

5. Employee Satisfaction

Since referred candidates get to work with someone they know and trust, they have higher job satisfaction. Similarly, employers also experience high satisfaction and ease in establishing a relationship with referred candidates.

Indeed, an employee referral system does not guarantee 100% compatibility with the candidate but improves the chances of a positive candidate experience and satisfaction by multiple folds.

Set up a Successful Employee Referral System in 4 Easy Steps

1. Choose When to Invite Referrals

First, determine when you want to use referrals to locate qualified candidates. It would help if you consider answering the following questions:

  • Will you ask for referrals at the beginning of the recruitment process, or will you first try the more traditional recruiting techniques, like job advertisement?
  • Do you need to use them for each open position or for certain positions which can be tougher to fill?

You can answer these questions only when you’ve set a clear hiring goal. For instance, if you want to recruit applicants quicker than the typical timeline, it is better to invite referrals immediately to reduce the hiring time.

It’s also critical to recollect how hiring tactics for a specific function have worked in the past for developing better employee referral strategies.

2. Communicate Your Employee Referral Strategy

The effectiveness of an employee referral system relies upon your employees’ engagement in the process. You should ensure that they are aware of the following:

  • the way to refer someone (and that you’d like them to refer someone, to start with)
  • submitting a referral is simple and quick
  • Requirements of the job position

As long as you’ve structured and communicated your employee referral strategies efficaciously, your employees will reply likewise, contributing to the success of your employee referral system.

Here are a few ways to do so:

  • Create your Ideal candidate persona and describe it to the employees: Your employees must clearly know what you are seeking in a candidate. You can communicate it through messaging, email, or in-person meetings.

    Provide them with every detail beforehand, rather than letting them research everything independently.
  • Explain the process of submitting referrals: After your employees know what type of talent you are looking for, tell them how they can submit their referrals.

    Ensure that this process is quick and easy; otherwise, they will not bother going through the lengthy process.
  • Evaluate and Contact referred candidates: Once you find a qualified candidate in your inbox, it’s time to assess them.

    If their profile suits your requirements, follow your regular hiring workflow. If, however, you locate any deal-breakers, let the candidates know that they are rejected.

    While reaching out to recommended candidates, make sure they recognize they are referred by someone or explain how you discovered their profile.

3. Encourage and Reward Your Employees

By implementing an employee referral system, you take advantage of your employees’ existing network to find the best possible candidate.

However, it’s now not that easy; it’s your job to source suitable applicants, not theirs. They’ve their duties and initiatives. This is wherein you may want to incentivize the process.

An employee referral bonus can be beneficial in motivating your coworkers. When they feel there’s something in it, they’re much more likely to consider and refer talents from their network who qualify for your open roles.

Ensure that every employee knows the terms associated with the employee referral bonus. Be clear about the policies that constitute a successful employee referral and how they can be eligible for the bonus.

You don’t need to go over the top to determine the referral bonus amount. These employee recognition ideas will come in handy.

4. Track Employee Referrals

To define the success or failure of your employee referral program, you must analyze some essential HR metrics. These metrics involve:

  • No. of total referrals vs. No. of hired referrals: This metric will show you whether your employees refer candidates who are appropriate for your open roles or not. In case your coworkers frequently recommend candidates who don’t qualify, you would possibly want to provide an explanation for your requirements more in reality or reassess employees’ motivation factors in making these referrals.
  • The number of referrals per job role: If for a specific position, you usually get suitable candidates through referrals, it will be beneficial for the subsequent time you open that position. You can money and time by directly asking for referrals instead of marketing the job position.
  • Turnover and retention rates for referred candidates vs. rest of employees: Referred candidates stay longer than sourced candidates, but if it is not the case for your company, you may need to look into your employee value proposition. Your employees won’t recommend their acquaintance to work with you till they are themselves satisfied with the work.

Conclusion

While an employee referral system offers various benefits, recruiters must ensure that the transparency and diversity of the company remain healthy. There are some pitfalls to avoid while establishing an employee referral system. These are:

  • Lack of engagement: You must proactively contact the referred candidates and provide them an open platform to reach out to you anytime.
  • Failure in follow-up: Whether the referred candidates are selected or rejected, you must communicate to them the result. It improves your brand perception.
  • Hiring based on relationship alone: Though trusted employees have referred the candidates, you must avoid bias while assessing them.

By following the four steps in the article, we are sure you can create a successful employee referral program for your company.

Healthcare Business Today is a leading online publication that covers the business of healthcare. Our stories are written from those who are entrenched in this field and helping to shape the future of this industry. Healthcare Business Today offers readers access to fresh developments in health, medicine, science, and technology as well as the latest in patient news, with an emphasis on how these developments affect our lives.

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