In an age where an online job posting is king, the age-old “referral method” is overshadowed as a means of finding the right candidate for a role. In fact, more often than not, existing employees can potentially be that key link to a successful hire, providing HR professionals with an efficient process of filling an available opening.
There’s no doubt that the standard hiring process is a tried-and-true practice with great results. However, in an article on Jobvite, organizations that use employee referral programs for potential new hires – as well as those using ATS software – reported: “that these employees draw a higher volume of high-quality candidates.” Plus, the potential hires are more likely to be a better fit for a company than non-referral candidates.
According to LinkedIn, hiring a referral is also a method that can provide several benefits to a company as a whole, including:
- Time Savings: In a study conducted by the Society for Human Resource Management, the average time it takes to fill a position is 36 days. A referral can considerably offset this time as the whole process of creating an online job posting, screening resumes, and conducting interviews for a shortlist of candidates is often eliminated.
- Offsetting Internal Costs: There are always several costs that can be endured during the hiring process. Staffing agencies, online job boards/fairs, advertising, candidate travel fees, background checks and drug testing are just a few of them. In fact, according to the same study by The Society for Human Resource Management, the average cost-per-hire is approximately $4,425. While it may still take some time and effort when considering a referral, much of these resources – and the costs that go along with them – are often not required.
- Higher Employee Retention: According to an additional article on Jobvite, companies experienced a 46 percent retention rate after one year compared to 33 percent from career sites and 22 percent from job boards. Additionally, employee referrals resulted in a 45 percent retention rate after two years, more than 20 percent from job boards after two years and 14 percent after three years.
Although the conventional hiring process is still a great way for companies to fill a position with highly experienced candidates, a referral is just one efficient method to consider when hiring the right employee for your team and company.
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