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employee referral program - HR help board

Why Employee Referral Program is Important for Company?

Employee referral programme is one of the most effective and trusted means of the recruitment process. Employees hired via employee referral have better recruitment rate which means that those who apply for any given position through employee referral have the higher chances that they are capable to make it fit into the organization. The advantage of  trusting  over this mean source of Hiring  process lays with the fact that the candidate have a better retention , joining and working for longer duration  rate, the cost of hiring reduces automatically. One of the add-on advantages is that such candidate adjusts with the organization culture more efficiency than  as compare to they are more or less known with company's environment through the employee who has referred them. That is a kind of win-win situation for both the company and the referee employee.

The employee referral program is explained below with details on the recruitment and training process to be followed for referring an employee.

  1. Make them part of proper training regarding to employee referral policy. Educate them. Explain to them why referring an employee is beneficial to both employer and employee. What are benefits employees will get for referring a candidate?
  2. Keep all employees updated about the open positions through proper announcement via email, feeds, posting job vacancies on the company's intranet, the discussion in the meetings etc.
  3. Referral process simplification and enhancement: Keep the employee referral program simple and easy to understand for every level of employee. It means that make the employees understand in simple ways what the company is looking for a referred candidate.
  4. The job description (JD) should be made with commonly simple used words and not using tough, complex terms and technical jargons. In turn, that will help employees to understand what exactly the demand of the position skills and other things accordingly   they will source CV from their network.
  5. Communication channels for referring employee: Once the employee has referred a candidate the job responsibilities are not over. It's an HR responsibility to involve the employee in all communication relevant to them. Tell them the timeline, modes, department, person name so that in any case they can contact concern person when can they expect a revert back.
  6. Send them Thank you messages, letters, mailers appreciating their effort of referring a candidate.
  7. Incentivize the employee referral programme by designing Employees referral bonusprogram which is most important one in the referral policy of company .Modify bonus amount with the level and grade of employees. Referral bonus is given once a candidate has been hired finally (generally after 90days of joining of candidate). 
  8. Take some time to map out the journey of a referred candidate from start to finish, especially if you have to integrate the process into an existing applicant tracking system. This will help you find holes and speed bumps in your process

Why Employee Referrals Candidates are the Best Source of Hire? 

 The employee referral program advantages make employee referral one of the important tools for entire recruitment process.  Now let's see how it helps.

  1. Appreciable Employer skill set: By implementation of employee referral policy, it encourages employees to think the greater part of the organization they are working for. Makes them feel positive about their brand and thus they like to talk about it in their network thus making the way for referral their Networks.
  2. Quality source Hiring: New hires sourced via a referral program generate 25% more profit for their company than employees sourced via a different channel. Better candidates are hired through employee referral. This has been observed severally by different surveys conducted in India or abroad. The reason behind it can be that employees notice skills and quality possessed by a person in their network and they refer them only after analyzing what skills the organization is looking for. Only if there is a proper match of demanding and supplying skills a referral is done. This has been studied and researched in various employee referral examples.
  3. Fostering positive work culture: The employees who are currently working with an organization understand its culture well. They are aware of mission, vision, and cultural values of the company so while making a referral from their network they look for similar qualities, thus promote positivity in the organization culture.
  4. Employee Engagement: Since referrals are more likely to be a good (culture) fit, they’ll probably feel at home straight away. Motivation among employee is increased with the incentive, bonus and other perks as given under employee referral policy thus it increases the motivation level in employees and improves upon the engagement.
  5. Less Hiring period/Shorten hiring time: Employee referral technique reduces time to hire. According to a data, hiring is general from a career site or through a recruiter takes around 55 days whereas with employee referral it is reduced to 29 days.
  6. Reduce in Cost of Recruitment: Employee referral helps you to save money spent money on job advertisement, consultant, commission or agency fees.
  7. Lower Job leaving rate: Research shows that employees hired through internal referral reduce the turnover rate. Inspire the people who referred them to stick around.
  8. Higher Job Diversion: Well thought of and better-designed referral program has no negative effect on diversity. If clarity is given to employees that the company focus lies on diversity, it will help in the increase of diversity.
  9. Get competitive: Offer a prize for the person or department who produces the most referrals. You might be surprised by the power of a little healthy competition.

​Hiring through employee referrals serves your recruitment efforts in so many intertwined ways. Referral hires save the company money, are more likely to accept an offer, become productive faster, and stick around longer – what else could you want from your employees?