Referral recruitment programs have often been cited as one of the best ways to recruit potential candidates. According to experts, your firm needs to hire at least 25 to 35 percent of new employees through an employee referral program. However, establishing a referral program that helps you access a pool of high-quality candidates can be hard. Given the amount of effort it requires, the ultimate gains from these programs are debatable. In this article, we are going to discuss the potential benefits of a referral recruitment program for your middle-market firm and settle the issue once and for all.
The Benefits of Using a Referral Recruitment Program
1. It Delivers a High Return on Investment
Before we talk about the qualitative aspects of employee referral programs, let’s look at the numbers. As it turns out, employee referral programs score pretty high in terms of ROI. Research by Career Builder states that compared to other recruitment tactics, employee referrals generate the highest ROI.
The high rate of return on this recruitment method is also associated with the overall cost of the hire. Unlike traditional recruitment methods such as job advertisements, employee referrals cost considerably less. Most organizations offer a referral bonus to the employee who recommended the new hire. This bonus is less expensive as compared to what you would spend on job advertisements and other recruitment methods.
2. It Allows You to Hire New Employees More Quickly
Another significant benefit of a referral recruitment program is how it speeds up the hiring process. According to a LinkedIn research report, it can take a company 55 days to hire an employee when using hiring methods such as posting job advertisements or looking through career sights. On the other hand, employee referral programs can allow you to hire a new employee within 29 days. That marks an increase in productivity by a whopping 47%!
3. It Makes the Onboarding Process Much Easier
The onboarding process becomes significantly easier with candidates hired through a referral program. These employees have a preexisting relationship with other people in the company, which makes it easier for them to understand the company culture. The employees that referred these recruits also help them make a comfortable transition into their new office routine. In the long run, these benefits can go on to lower your employee turnover rate as well.
What’s the Downside?
There’s no denying the benefits of a referral recruitment program. However, like everything else, this recruitment method has its disadvantages too. Let’s take a quick look at what these are:
- Relying on employee referrals can reduce the diversity of your workforce
- There is an increased risk of personal arguments between employees disrupting the office environment
- Employees may provide you with inaccurate information to help a referred candidate get the job
If you want to avoid these problems, then we suggest you gather recruits with the help of a recruitment agency. These agencies vet all potential recruits and will provide you with a high-quality pool of candidates that can add value to your middle-market firm.
Are you interested in hiring top talent? Then get in touch with our team at Go4ROI for the best recruitment solutions!