7 myths about referral recruitment

Ibrahim Moustaine - 2 min read

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Referral recruitment has proven its efficiency but there are still quite some misconceptions that refrain companies from choosing this recruitment method. We will discuss 7 of them and show you why they're wrong.

#1 - "I don't have a big enough budget."

Probably the number one reason why companies don't want to use employee referrals. The Referral Recruitment Report - 2020 shows that the average bonus given by companies is $1,225. When compared to budgets spent on traditional recruitment, we can see that referral recruitment is up to 90% cheaper than hiring through recruiting agencies. Some companies even offer rewards as low as $100 per hired referral.

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#2-"My company/department is too small for referrals."

Size doesn't matter for this one. It's all about how you manage your workforce and how you get them engaged. When motivated, a team of 10 people can bring as much as a team of 100 people. How do you get them motivated? Simply by engaging with them on your referral platform. At Nakama, we have ready-to-go templates for our clients. These templates are made to be shared with your workforce and increase their engagement in your referral strategy.

#3 - "The traditional way works for me."

If you are a company that uses traditional recruiting, you must already know that a lot of meetings, Excel sheets and interviews are needed to find someone decent. With referral recruitment, the preliminary screening is done by the person that knows your company best, your employee. When you post a vacancy, they immediately know someone who would match the requirements and the company culture as well. This saves you a lot of time, effort & money.

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#4 "What about people who will just refer anyone for cash?"

At Nakama, we have found a very effective way to battle this. Companies can choose to give a reward at 5 different moments of the referral process;

  • Referral
  • Approval
  • Interview
  • Hire
  • 3-months in service

You can either choose to give rewards at every step or only activate some or one of them. The number of points received and their value in money is also chosen by the company. This means that companies have to approve candidates at each step before an employee is rewarded. Companies will then remove the risk of an employee referring just for money.

#5 "A referral program will not increase the diversity of my workforce."

To the contrary. Companies often use referrals with the goal to bring diversity. How? You can ask specifically to a certain demographic of your team to refer you to someone. This can also be included in the Referral Persona where we ask if the candidate comes from a specific demographic.

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#6 "It will cost me money and not make any profit."

Referral recruitment will not only cost you money. In fact, it can even bring in new clients. When your employees post about your company on social media, it increases your employer brand. This will make your brand appealing to people and they will be activated as customers.

#7 "Employees are not recruiters."

No, they aren't. It is the job of a recruiter to decide who comes aboard. But, it is a proven fact that referred candidates are better candidates than non-referred candidates. They stay longer within the company and they are more productive than a non-referred candidate. So, who can say that employees are not good at referring people?

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About the Author

Ibrahim Moustaine is the Growth Marketer within Nakama