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What is an Employee Referral Program?

What is an Employee Referral Program?

Employee referral program is one of the best ways to recruit talent. Why are employee referrals so powerful? Because, they drive two key factors - Productivity and Retention. This makes referrals one of the most efficient ways to impact top line through HR practices.


Productivity, because the quality of hire in employee referrals results in 32 percent more productivity than any other hiring source or channel. Retention, because employees who refer and are referred tend to stay longer in an organisation, resulting in low attrition.


So, what is an employee referral?


Employee referral is a program, where your employees recommend their friends for roles in your organisation. Getting an employee referral program right is extremely important in a candidate driven market. A market where quality candidates are in short supply and where each candidate who is offered always has multiple options to choose from.


Remember, employee referral program is not about having a referral policy. Rather, it’s about having a structured and defined program for you to engage employees, allowing them to recommend friends in their social network. An effective referral program involves a structured way to communicate open positions, an easy way for employees to recommend their friends and then subsequently making it effortless for your recruiting team to process profiles.


Benefits of an Employee Referral Program


1) Unlike traditional sourcing which is largely outbound, employee referral programs bring high quality candidates to your doorstep. Candidates who have already expressed interest in your roles and candidates who already have a connection to your organisation through the employee who referred them.


2) Time to fill through this channel is lesser than other channels. If the referral program is done right, the employee who is connected to the candidate reduces the time to onboard and keeps the candidate engaged throughout the whole process.


3) A good referral program lowers your cost per hire. Two reasons


  1) Traditionally the payouts paid for referral is lower compared to other sources.


  2) Typically, most employees refer because of the culture and the desire to help the organisation or the friend more than the desire for the reward.


4) Employee referrals are also a great channel for distributing your employer brand. Everytime, an employee recommends a candidate to your organisation or distributes a job in their social network, they are essentially letting their entire network know that my organisation is a great place to work and I would love for you to come and join me there.


It is very well known that people do not refer friends if they don’t like working at the place themselves. Hence, it is critical to have your employees as strong ambassadors and disseminate your brand to where talent exists today.


Do you have a formal employee referral program in place? If so, I would recommend you to take this assessment test and assess the quality of your referral program.


Do let me know your thoughts in the comments. 

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