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Does Your Employee Referral System Work To Your Advantage?

According to HR experts, one of the most effective ways of finding and recruiting top talent is through an employee referral system.  Finding the right candidate via referrals is easier because the referring employees make sure that their referrals are qualified. Also, most prospects identified through employee referrals are passive candidates who are not aggressively on the lookout for new jobs. A study of the Institute for the Study of Labor (IZA) by Meta Brown, Elizabeth Setren and Giorgio Topa in May 2014 also showed that referred candidates have longer tenures in the firm compared to non referred candidates.  This not only increases the number of job prospects for an employer but also increases the quality of the candidate pool.

While a lot of companies understand the value of an employee referral program, many fail to take advantage of the power of referrals. The reason is that most companies do not consider employee referrals as a mainstream channel for recruiting.

Most employers do not have an effective referral system in place to facilitate employee referrals in a way that offers easy company wide adoption.

Companies often use their own adaptation of a referral program and come up with their own implementation.  As a result, a lot of companies seem to make mistakes and end up not getting much out of their referral programs.

The reason why many referral programs fail is because there are too many complexities in the program. The referral system cannot be a success if it is complicated and hard to understand. A complicated system can make it inconvenient for employees to participate in.  The majority would just dismiss the idea and not bother again. They would conclude that it is not worth their time and effort. Lack of communication regarding policies, incentives and company rules could also become a problem and result in unhappy referrers. Here are some tips that could be helpful in implementing your referral system and a solid employee referral program.

Simplify: Make it easy to understand

A key to a successful referral based program is its wide-scale adoption inside the company.  The employee referral system should be easy to understand, simple to use and appealing enough to win the support your employees.  Moreover, all rules and policies surrounding the program should be clearly communicated. Referral qualifications should also be emphasized when rolling out the rules.  It is important to make sure that the necessary support is available for the referral system via training, emails, videos or in person.  A great way to quickly implement a referral program is with the use of an integrated recruiting platform. When the employee referral capability works seamlessly with your applicant tracking and social recruiting activities, the whole process works more efficiently and effectively. Employees can easily see the open positions, submit referrals and track the progress in a self-service way.  This makes the whole process easier and hassle free for everyone, including the HR staff.

Provide incentives and recognition

Effective referral systems present employees the opportunity to earn incentives and/or rewards on top of their salary. This can be in the form of cash bonuses, additional leave benefits, all expense paid trips, and more.  This will surely get the workforce more interested in participating.  It is important  that the rules are crystal clear including the eligibility, amount, mode of payment and when it will be given so that there will be no confusion on the part of the employees. Make sure the system works and delivers as promised so that employees keep making referrals.

Communicate: Keep everyone updated

Most referral systems fail to get company-wide adoption or get real benefits out of the program.   The saying ‘out of sight, out of mind’ is especially true in this situation. It will be hard to keep the momentum going when there’s little or no communication with the employees.  Constant communication is one of the important ingredients to a successful referral system. It is important that the communication is done efficiently using the most effective ways such as emails, notifications and meetings. This is also a great way to recognize the referrers and encourage others to take part in the referral system and submit referrals. Hiring is a collaborative activity and you need to have systems in place to keep the various stakeholders informed and updated as the recruiting process moves forward. Employee referrals, in particular, are most effective when the referrers are able to see the progress of their referrals.

Ensure you are getting the right candidates

Referrals from employees and your close network by default bring in a qualified group of candidates that have been pre-screened by people who know your company well. If your referrals system starts bringing in a lot of candidate interest, you probably have a good problem at hand. In this situation, you can raise the incentives and reward for those referrers whose referrals make it to a certain stage within the recruitment process. This creates a further incentive for your employees to spend the extra time to screen their referrals for specific skills and qualities before they are referred. In order to make this referral process more efficient, you will need to provide your referrers with the necessary criteria and screening questions to help them filter through their connections.

People who work for your organization are most likely to refer candidates that are good fit for the company.  If you have a high quality workforce, the referrals you are going to get from your referral system will most likely be of high quality as well. The list can go on but putting these suggestions into action will ensure that your referral system will serve its purpose, that is,  get more quality candidates for your open positions in way that is fast and cost-effective – improving you overall applicant to hire ratio as well as you cost and time per hire.