An Employee Referral Program can provide you with a lot of advantages, but also requires a few investments. In the following article we will provide an overview of the benefits & costs that a strategic Employee Referral Program entails.
LinkedIn measured the time to hire of Employee Referral Programs and compared it with other recruitment methods. The results point to interesting differences::
The cost per recruitment at referrals is only a fraction of the normal recruitment cost.
Example of a Sales Director with 10 years of experience:
Indirectly, you also save a couple of costs:
88% of employers indicate that referrals are the best source for recruiting qualitative employees. This is because:
An important advantage of referral recruitment is that both the referring employee and the referenced person feel more involved.
An Employee Referral Program gives employees the opportunity to choose people with whom they would like to work. Thanking them for bringing in colleagues increases the sense of appreciation and recognition even more.
A job candidate trusts information provided by an employee up to 3 times more than information gathered from any other channel.
Referral recruitment is a form of word of mouth - the most powerful and authentic form of marketing. A study by the University of Ghent therefore recommends companies to invest in this method.
Research shows that refereed candidates are 15% more performant than non-referred candidates. For example, there is less need for:
Referred employees stay with their organization longer than employees recruited through other channels such as job boards and career sites.
Research shows us that:
It is essential to draw up a personalized referral strategy for the target group and align it with the EVP (Employer Value Proposition). This guarantees success over a longer period of time.
This process does not require a budget, but does require time & effort from the HR team.
To keep the referral program top of mind, marketing is needed. That doesn't have to be complicated. A postcard, poster or referral party are things that work well. Make the referral campaign recognizable by using a slogan and symbol.
Rewarding employees for recommending candidates is an important cost, but is not always necessary. Survey your employees and find out what motivates them
A reward can take the form of cash, non-cash (perhaps a gift voucher or dinner), donation to charity or even something fun (for instance, using the CEO's parking lot for a month). The amount of the remuneration varies per industry and location.
You can manage an Employee Referral Program manually, but it is strongly recommended to digitize this with software. It is definitely worth the investment.
A specialized referral platform makes it easy and clear for employees to refer. The ERP is automated and results are measured. This saves time and money.
More Referrals. Better & Faster Hires.
 Dr. John Sullivan, "Raising your employee referral program results to 50% of all hires".
 Pieper, Jenna R.; Greenwald, Jessica M.; and Schlachter, Steven D., "Motivating employee referrals: The interactive effects of thereferral bonus, perceived risk in referring, and affective commitment"
 LinkedIn Survey 2016; “Global Recruiting Trends 2016”
 Greet Van Hoye, Universiteit Gent, “Word of mouth as recruitment source an integrative model”.
 Raymond, Pamela; “Employee Referral Programs”
 Floyd Hamilton, “Referral Recruitment”
 Dr. John Sullivan, "10 compelling numbers that reveal the power of employee referrals"
Pieter Neels is the founder of Nakama HR. His goal: creating the perfect match between an employee and a company.