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Employee Referrals: How a Digital Program Can Help

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A company is worthless without the right employees. Finding them is not always easy these days. It is, therefore, helpful having your current employees providing you with referrals of their potential new colleagues.

To use these referrals as a recruiting tool not just occasionally but systematically, a well-thought-out concept is required. A digital employee referral program sets the basis for this.

The numbers speak for themselves when it comes to employees hired through referrals: referred employees are 25% more productive and stay with the company 25% longer than employees hired through traditional channels.

Hiring through referrals should not be confused with hiring as a favor or nepotism. Referral recruiting channel aims at broadening the pool of suitable candidates.

This is particularly beneficial in industries where skilled workers are in short supply. Behind this lies also the hope of addressing the passive labor market. Through referrals, you can reach those highly skilled professionals who would not have applied for the vacancy independently by themselves.

Employees Referrals: Requirements for an Efficient Program

For employees to become successful ambassadors (Employer Branding) and headhunters of their own company, some criteria must be met:

  • The company’s current employees must be satisfied with their jobs. Therefore, providing a pleasant working environment and good working conditions is an investment in preventing a high turnover rate of employees and easily attracting new talents.
  • New jobs are promoted broadly and systematically via efficient internal communication channels within the company, which is not just via small talks.
  • It must be easy for employees to make referrals of their friends or acquaintances and draw their attention to a job posting. A digital employee referral program can help here.
  • The company must show appreciation for those employees who make referrals and provide them with transparent information about the status of their referrals.

The Challenge: Processing Employee Referrals With Little Effort

Filling a vacancy is always an administrative effort. Integrating employees referrals into the hiring process sounds like the same. An automated referral program makes it easier for HR’s teams to manage the referrals: employees who are willing to provide referrals are registered as Talent Scouts.

HR teams can use an app or e-mail to inform the company’s employees or interested departments about the new job postings with a single click. For an employee who wants to forward a vacancy to an acquaintance or post it on social media, sharing now takes only a few clicks. In this way, the target of the passive skilled workforce consisting of your employee’s former fellow students and former colleagues is reached.

Interested candidates can directly submit their applications. In addition, the referred candidate is automatically linked to their referrer, and the referral is stored in the digital employee referral program. This automated application process is particularly convenient for the Generation Y and Z digital natives. At the same time, employees can also use it to forward referrals to the HR managers directly.

Applications via employee referrals pose new challenges for HR departments: not only the applicants themselves need to be updated on the status of their application but also the referrers who made this application possible. This additional administrative burden can quickly push the recruiting process to its limits, causing delays and errors.

An automated employee referral system keeps track of the application’s progress and significantly decreases HR’s manual efforts. It can be integrated into all standard recruiting channels. The feedback on the status of an application is automatically sent to the referrers when their candidate has moved to the next touch-point of the candidate journey.

Setting up an employee rewards program also entails additional administrative effort. An HR manager has to check whether the requirements have been met and arrange for the reward’s payment. Implementing a digital employee referral program allows to automatically keep record of the incoming referrals, when the referred candidate has turned into a hire, and when to pay out a reward. The HR managers do not have additional tasks regarding the rewards and can easily overview the rewarding process.

Rewards – Can’t Do Without Them

Should companies offer a reward to employees providing referrals? There are different opinions on this question, and the answers vary according to the industry and the unique working environment.

Some companies fear that setting a monetary reward might give rise to the wrong purposes for submitting referrals. On the contrary, there are also companies where just sharing a job ad on Facebook matters. Some others prefer to offer rewards in the form of non-monetary incentives, such as vouchers. Some companies use to pay out cash bonuses instead.

Offering incentives in the form of cash bonuses rather than non-monetary rewards for a successful referral often depends on the new hire’s role. Paying out the rewards for referrals is a common occurrence for large and successful companies. Nevertheless, a non-governmental organization, whose sustenance depends on its members’ donation, will save on the rewards.

Get a benchmark on current rewarding strategies in the following Firstbird’s study.

The fact is that a monetary reward motivates employees in providing referrals. There may be a risk that less suitable candidates come from referrals because the referrer is interested just in getting the reward. However, the employees who refer an acquaintance to their employers are not interested in ruining their reputation. In the end, it is up to the HRs to check the referred candidates’ qualifications.

Rewards are an essential part of any employee referral program. Each company must develop its own strategy. It is crucial to start building it gradually, beginning from transparent communication.

Referrals can be rewarded with a points system and the actual successful referral with a bigger reward. If too much time goes by between the referral and the rewarding, the employee’s motivation to keep providing referrals fades.

Regardless of the reward model chosen by a company, the reward’s payment must take place in complete transparency. So don’t forget to give out a bonus under any circumstances. Managing the rewards via a digital platform that is linked to the entire recruiting process simplifies the payment procedure. In this way, the HR department is enabled, without additional administrative effort, to monitor which bonus’ payment is due and who is the referrer entitled to receive it.

How to Foster Employee Motivation to Continually Provide Referrals

The larger the company, the more frequent the need for new personnel. As a consequence, employees are frequently asked to share job postings or provide referrals of new candidates. The efficiency of a well-implemented, automated employee referral program really shows in the long-term employees’ engagement in submitting referrals. Once the employees have recognized that the platform for submitting referrals is easy to use and that their colleagues appreciate the whole referral process, they are motivated to take part themselves.

The company’s feedback on a referred candidate is essential, regardless of whether the candidate is being hired or not. The employee who referred a candidate is expecting to be informed about the status of its referral. Of course, without violating the data protection.

And last but not least, promised rewards for referrals must be paid out promptly. All these elements can be easily managed by implementing a digital employee referral platform. A digital platform always allows the HR department to keep track of the status of referrals without any additional effort. Read further in this article about “The 7 Employee Referral Program Mistakes”.

Summary

A company is successful when the employees perfectly fit within the roles. Employee referrals can be of enormous help in filling vacant positions adequately.

Not only referrals allow you to reach candidates who would not have applied for a position at all, but also candidates who apply have realistic expectations regarding your company and usually perfectly fit into the team. Therefore, recruiting via referrals is a win-win situation. Of course, the exact qualification requirements must apply both to referred candidates and candidates who applied through traditional recruiting channels. Otherwise, what you are risking here is nepotism.

A uniform, transparent referral process, managed with a digital employee referral program that anyone can use, helps eliminate prejudices and suspicions. Furthermore, such a digital platform gives all employees the same opportunity to refer fitting candidates, regardless of how close or far they are to the decision-makers. This also has a positive effect on the company culture and employer branding. If your current employees recommend your company to their networks, the suitable candidates are much more convinced to apply by them than by any other image campaign.

Companies often fear that an employee referral program will create too much additional work for the HR department. The workload for managing referrals can be reduced by implementing a digital platform directly into your existing employee referral program. This way, it is not only easy to keep track of incoming applications of referred candidates, but also to link the referral to the referrer. If all elements of a successful employee referral program are implemented quickly, the referral strategy will be successful in the long run.

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