Encouraging Employee Referrals as a Source of New Hires

There are numerous reasons why this source is so highly regarded among HR professionals.

Let's take a look at all the statistics from this insightful article on Medium - we can conclude that referred candidates are more likely to accept the job offer, therefore shortening the hiring process and reducing the costs. Since they, for the most part, know some details about your company culture, they tend to fit in quicker, making employee retention higher.

And while saving resources such as money and time sounds dreamy, the question is: how to tap into that precious candidate source?

Make Referrals Part of Your Company's Culture

It’s not enough to just talk about it occasionally - you HAVE TO integrate it into the company culture. Giving referrals shouldn't be an irregular occurrence, but instead, employees should feel encouraged to do so, just like they easily practice Pizza Fridays, monthly forums, or a no-shoes policy, for example. Only once it becomes ‘natural’ will you, as an HR professional, start getting a regular influx of referrals.

Naturally, the person the employee recommends doesn’t have to be the right candidate for the position, but that’s not a reason to feel discouraged or embarrassed. They should get updates about the hiring process (of course, not before the candidates themselves!) and know that the company appreciates their involvement and recommendation.

Ensure Transparency and Accessibility

Another prerequisite is for the employees to know all details - not just the name of the position and the application deadline but also what the role entails and any other important information about the working hours, location (remote, in-office, hybrid), necessary experience, etc. Transparency is important simply because it's fair - if they know the requirements, employees will be able to judge better if their friend is a good candidate. This saves everyone time and prevents possible disappointments.

As an HR professional, you might encounter issues if employees interested in making a recommendation don't know how to do it or if they heard incomplete details from casual conversations with other employees in the corridor. In short, if people don’t know how to actually recommend someone other than coming to the HR office, then you are doing something wrong. Introverts usually aren’t so thrilled to do things face to face, so creating a procedure and giving them the means to do so digitally would be the most efficient way to go about it - even writing an email with a specific subject can do the trick.

Offer Both Monetary and Non-Monetary Incentives

It’s not surprising that some employees would prefer monetary while some non-monetary incentives - after all, we come from different walks of life, and our immediate needs differ. Introducing both types should, at least in theory, satisfy all parties involved. Salary increases, bonuses, and stock options within the company are all valid reward methods, depending on the C-roles' stance on these budget allocations.

Non-financial rewards are perhaps even more versatile than monetary ones -  additional time off, flexible working hours, working from home, additional opportunities for professional and/or personal development, etc. Ultimately, you can ask the employees what incentives would motivate them to get more involved in the recommendation process to ensure you are not barking up the wrong tree.

Measure the Effectiveness of the Process

Is it possible that referrals may not be the right candidate source for you in the long run?

Yes, it is.

Is it possible that you may need to tweak your process in order to make it work?

Of course.

But to know these things, you need to measure the process’ effectiveness so that you make informed decisions.  

The number of referrals, the quality of candidates, the conversion rate, the retention rate, and the return on investment are some of the most important key metrics you need to keep track of and analyze. Only after tracking these points for some time can you see the best course of action in the future to come. It’s also essential to make sure that the employees know that you are taking this monitoring seriously and making beneficial adjustments - because this is a clear sign that their recommendations and opinion count in the long run.

Ready, Steady, Refer!

The struggle to attract quality candidates is real, so adding employee referrals to your list of sources is an unmistakably good move. Referrals provide top-tier candidates both time- and cost-effectively, it’s as simple as that. But what’s crucial is how to come about such candidates. In the end, whichever tactics you opt for, it’s important to monitor of both the effectiveness and efficiency of the referral process.