Employee referral programs are a great recruiting channel to find qualified professionals. It has been proven that referred candidates identify more strongly with the company and its values ​​and stay longer with the company. However, many companies are still not using employee referrals in a targeted, structured manner. Digital employee referral programs can automate the application process and reduce recruiting costs, and have many other benefits as well! But is employee referral software essential for the success of your program? We discuss the advantages and determine why having a digital program can help your recruiting considerably.

What Is Employee Referral Software?

There are many stumbling blocks on the way to hiring a qualified employee. For example, according to CareerBuilder, 60% of the candidates abandon the online application process because it is too complex or takes too long. 

Furthermore, 66% of applicants have already found a job in another company by the time a company has made its hiring decision. Many suitable candidates, therefore, refuse the job offer, which means that great talent is lost. 

A poor application process also negatively impacts the company’s image. For example, 80 % of candidates who don’t receive any feedback on the status of their application don’t consider reapplying to another of the company’s open positions. Employee referral software can easily forgo making these mistakes and significantly improve the candidate journey. 

Employee referral software helps companies to structure and manage all incoming referrals and incorporate them into the application process. Companies can also use it to create company branded job advertisements and a talent pool. Digital employee referral programs can make up for all the problems we listed above. But how does it work? 

Employees submit referrals via employee referral software, while talent acquisition teams use the platform to manage the referral process easily, quickly and transparently. Both employees (known as Talent Scouts at Firstbird), or referrers, and referred candidates promptly receive notifications on the status of the application. Since the communication is automated, all the intermediate steps are no longer necessary, such as sending emails to the HR department asking for feedback on submitted referrals. The level of digitization of the referral process, of course, depends on the implemented software. 

Many referral platforms provide data analysis and reports to measure KPIs and suggest strategies for their improvement. Additionally, the data analysis of gathered referrals enables companies to understand which stages of the referral process should be optimized. All in all, employee referral software is an all-around tool to streamline the employee journey and win over the best talent. 

Why Is Employee Referral Software So Important?

Nowadays, the search for personnel poses many challenges to companies. First of all, the shortage of skilled workers is a major long-running issue. In Germany, for example, 352 of 801 occupational groups suffer from a shortage of skilled workers. And demographic change is compounding it. 

Due to the ageing of society, the generational turnover is stagnant: fewer and fewer young employees move up, and apprenticeship positions remain vacant. Open positions for experienced specialists are usually open for very long times. At the same time, an important change in the world of work is underway: the digitization process of the workflow. And it has been accelerated by the Covid-19 pandemic significantly. 

If you think about it, some digital processes are so natural that we hardly think about them anymore. For example, there are many everyday tools and processes like websites, online shops, CRM tools and software for video conferencing. If companies don’t stay up to date and embrace tech innovations, they risk losing competitiveness on the market. This is also true for the company’s attractiveness on the job market. Having an automated application process and employee referral software is therefore essential to attract and retain a qualified workforce, and at the same time, it showcases your company brand.

The advantages of employee referral are apparent. For example, it digitizes the stages of the recruiting process, reducing the workload for the TAs as well as the overall hiring costs. Naturally, different software has different levels of automatization, but all of them allow automated browsing of résumés. The employee referral platform is also able to rank suitable candidates and schedule interviews automatically. The communication between recruiters and candidates is automated since candidates receive automated notifications on the status of their applications.  

Companies can easily integrate an employee referral platform into their existing employee referral programs and improve them in no time at all. Of course, that also means that you can create your own talent pool on the fly.

Features and Advantages of Employee Referral Software

When implementing an employee referral program, it is advisable to rely on experienced specialists. As industry experts, for example, we not only offer customers its know-how but also the technical infrastructure and integration with existing applicant tracking systems. Additionally, the digital employee referral program has many functions and advantages.

Simpler Workload

Via an employee referral program, employees refer their friends and acquaintances for open positions within their company. The referral employee software takes on the rest by keeping referrers up to date through automated communication. Talent Scouts are notified as soon as the company hires their candidate. Afterwards, they will receive a bonus or a reward for their successful referral.

All applicants also receive automated feedback on the status of their application. That helps to enhance the candidate journey. Candidates who do not receive any feedback or receive it too late are not willing to apply for open positions in the same company in the future. And we all know that bad word-of-mouth negatively affects the company’s brand. Companies can effortlessly avoid this mistake with employee referral software. 

When applying, candidates enter their data into the employee referral by fulfilling different sections. This provides several advantages. First of all, it is easy to filter the applications and remove ones that are unsuitable (and it’s important to keep in mind that the candidates not selected for this open position might be suitable for others). The second advantage comes with the employee referral software’s feature that enables recruiters to feed the data to a talent pool automatically. This saves the TA teams a lot of work.

Simpler Reporting

Thanks to a digital referral platform, the company can also easily monitor the performance of its employee referral program. A statistics dashboard can provide companies with an overview of all activities. This should make it easy to see which employees are the best brand ambassadors and how broad their outreach to the applicants is.  

The statistics, therefore, should also showcase how often a Talent Scout shares jobs on social networks. Talent Scouts themselves also receive feedback on the success rate of their referrals and the monetary and/or non-monetary rewards for their referral activities.

Broader Outreach to the Workforce

The reach of the employee referrals is vast, provided that employees share job postings on social networks, by word-of-mouth, or by directly submitting referrals. The reliability of referrals even reaches the highly qualified passive candidates, who are not actively looking for a job but could consider changing their own for a more favourable position. 

The Firstbird software, for example, tracks the source of incoming referrals and automatically assigns each referral to the Talent Scout responsible for it. Talent Scouts can also provide referrals via the Firstbird mobile app. In this way, passive candidates can be reached anywhere and at any time. 

Automated Reward System

Within each good employee referral program, employees receive rewards when their referrals are hired. A reward system naturally contributes to increased employee motivation and engagement in continuously providing referrals. 

Many companies, therefore, put in place their own reward system by deciding the amount of monetary reward for each advertised position, graded in some cases according to hard-to-fill roles criteria. However, what is of utmost importance for a successful employee referral program is clarifying from the very start the procedure of a rewarding system: the reward amounts, when it is paid out and for which positions.  

Firstbird’s reward system is based on collecting additional coins for each referral activity. Talent Scouts can then redeem the coins in the reward shop for non-monetary rewards. Each company can decide what the prizes are. They can be, for example, company gadgets, shopping or cinema vouchers or coffee vouchers. 

Why Is Employee Referral Software Particularly Suitable for Remote Hiring?

The Covid-19 crisis posed significant challenges but also provided opportunities for important turning points in the world of work. Home offices and remote work were some of them. However, they also allowed companies to erase time and space boundaries in recruiting: companies now have the opportunity to hire employees from all over the world. 

The emerging remote hiring enabled enormous growth of talent pools. Therefore, the shortage of skilled workers is a less alarming problem for companies. But how can qualified applicants who do not live in the immediate area be aware of open positions within your company? Again, employee referrals are the key. 

By sharing the vacancies with their friends and within their networks, Talent Scouts approach a wider audience than you would expect. Therefore, the company can reach suitable candidates who are also an excellent cultural fit since they share the values ​​and goals promoted by your Talent Scouts. Additionally, employee referral software simplifies the recruiting process and improves the candidate experience. This new recruiting approach is also well received by the candidates.

In conclusion, there are multiple advantages to having a digital employee referral program. In terms of success, features like automated communication, an inbuilt reward system, appreciation functions to maintain employee motivation and a seamless integration will mean your employee referral program is destined for success. And in times of remote working and the war for talent, employee referral software is now more valuable than ever!

Would you like to learn more about Firstbird’s platform and its automated employee referral program? Book a demo now and get to Firstbird’s features and integrations.