Having an Employee Referral Program (ERP) is one of the best ways of getting the best employees onboard your company.
According to Salesforce, “…employee referrals are our #1 source of new hires.”
Research has shown that referred candidates are the shortest to hire, are more affordable to hire (when considering the overall hiring cost), will stay longest with companies and have one of the lowest turnover rate.
According to Jobvite, it takes 29 days to hire a referred candidate, as compared to 39 days to hire a a candidate through a job posting and 55 days to hire one through a career site. Comparing the number of candidates needed for a position throughout the company lifetime, that would result in substantial amount of time and cost saved.
It is also cheaper to hire a referred candidate, as you don’t need to pay exorbitant fees to a headhunter or talent consultant. Referring to the point made that they are hired much faster, there are cost savings in terms of time as well.
A typical headhunting firm charges between 15% to 25% of gross annual salary of the candidate. Assuming the gross annual salary is $100k USD, that would cost between $15k USD to $25k USD per hire. However, an ERP would cost much lesser, at around $2k USD on average. For even lower cost using a talent referral program, check out Jobsrefer — Talent Referral Platform.
Onboarding will relatively be easier as the referral hire can always turn to her referee in the company to ask important queries on the company culture and policies. This helps integrate referred hires into the organization better.
Interestingly, Jobvite found that 46% of referred hires stayed in the company for at least one year after they are hired, which is above the 33% from those hired through career sites and 22% from those hired through job boards. This could be when referred by someone in the company, the referred hire has a skin-in-the-game to perform well and to outlast challenges in the company.
Let’s see some examples of Employee Referral Programs.
Salesforce
Salesforce organises “recruitment happy hours” and encourages employees to bring along their friends and networks to these happy hour events. It’s fun for everyone (minus the litres of beer vomits that they have to clear each time). On some occasions, they go the extra mile to surprise dozens of employees with attractive rewards, such as a pair of San Francisco Giants tickets. Lastly, they offer a modest bonus to Employees who refer.
Accenture
At Accenture, the referral experience starts from the candidates themselves. For interested applicants, they are given the chance to connect their social network on Linkedin or Facebook to find current Accenture employees that are working in the company. Then, these applicants can send a request to their connections to ask them for a referral into Accenture.
Intel
At Intel, they have a special referral program if you refer women, minorities, and veterans to the company. For referring this group of potential candidates, the referral reward is USD4,000, which is twice the amount of the usual referral reward. This program helps Intel to improve its diversity numbers and ability to attract the best minority candidates.
SMRT
SMRT reportedly offered up to $3,000 in cash incentives to employees for referring a friend to join the company. As the company looks to enhance its workforce quality and strengthen its labor capabilities in the areas of operations and maintenance work, the ERP is thought to be a good way to increase its talent pool. The employees will get $1,500 if the referred hire is a rail supervisor, $1,600 if the referred hire is a bus captain or trainer, and $3,000 if the referred hire is an engineer.
Atlassian
Atlassian has a referral program called “Refer-a-Mate” (not your sexual partner in case you get any wrong ideas) whereby you can refer a great candidate to them and get paid $2k in cash bonus. Using this program, they almost halved their recruitment costs per hire.
All in all, Employee Referral Program is a great way to attract talents and to hire amazing good candidates into your company. It’s not just the rewards but also the recognition awarded to successful referrals that result in better Employer Branding and a sustainable recruitment strategy.
For more information on how to kickstart a talent referral program, check out this web application: Jobsrefer.
