Referral recruitment is a highly effective recruitment method that activates people in your network (employees, alumni, partners) to scout their networks for potential candidates they can refer for open jobs at your company. Research shows that referral candidates are of higher quality than other candidates, leading to shorter hiring times and higher hiring rates. And once hired, they make happier and more successful employees.
Setting up a referral program is fairly straight forward: You ask anyone in your network that your trust to refer candidates for open jobs, and you can choose to incentivise them with a bonus (money or a present). In reality it is a bit harder to get everyone to have the open jobs top-of-mind and to get them to actively participate in the program. That's where Fishbowl comes in.
Steps to setting up a successful referral program:
1. Define the rules of the program and share them with the participating scouts (e.g. referral fee, payout time, etc)
2. Share your open jobs with your scouts regularly to make sure they stay top-of-mind
3. Manage incoming referral candidates
4. Enjoy hiring better candidates at lower costs
8 in 10 companies state they are not able to attract the right talent. This is largely because 75% of the job market are passive seekers, and traditional methods only reach the other 25% (McKinsey). With referral recruitment you can reach a bigger talent pool and hire faster at lower costs. Top ranked companies among employees like Google, Accenture and Salesforce rely on it for 30-40% of their talent acquisition (source).
Hire better matched candidates
People in your network know your company culture and values well, which puts them in a good position to find candidates that are a good match. According to John Sullivan Research 88% of employers state that referrals are the best source for above-average applicants. Jobvite found a similar result: 70% of employers felt that referred employees match the company values and culture better.
Reach larger pool of talent
Most companies don't reach passive job seekers, who account for 75% of the workforce. A 2016 LinkedIn study showed that 90% of professionals are open to hearing about new opportunities. Through your network you get access to this pool, because it's easy for them to reach out to their friends and former colleagues.
The average employee will have 400 contacts on social media networks – 100 employees means around 40,000 contacts (and possible candidates), according to a Techjury.
With Fishbowl you encourage your scouts to start looking for candidates and make it easy to search their LinkedIn network. But equally important: by keeping open jobs top-of-mind you ensure that when people casually mention to scouts they are unhappy in their current position, they act on it and get them excited about joining your company.
A happier workforce & lower churn
Meritage has found that a referred hire will stay at their job longer than a non-referred hire, a clear indication of higher quality. Specifically, one study by JobVite found that 46 percent of referred hires stuck around for at least one year after they were hired, which was far above the 33 percent of people hired through career sites and 22 percent hired through job boards. And referral hires have greater job satisfaction.
Just as interesting: if an employee at your company refers a candidate, and that candidate is hired, research shows they’ll be more engaged and thus more likely to stay with your company longer. Hiring more referral candidates creates an upward vicious cycle of employee happiness.
Research from CareerBuilder shows that 82% of employers rated employee referrals as generating the best ROI, above all other sources. A Meritage calculation proves this, even after factoring in the referral bonus. The savings can vary greatly, for example if a typical agency charges a fee of 20 percent of a hire’s first-year salary, that could be $20,000 for a single $100,000 hire. Even if you gave your employee a $2,000 referral bonus for successfully recommending a new hire, that’s a $18,000 saving.
Referred candidates are 55% faster to hire, compared with employees sourced through career sites (HR Technologist). According to a study by JobVite, on average it takes 29 days to hire a referred candidate, compared to 39 days to hire a candidate through a job posting or 55 days to hire a candidate through a career site.
2x likely to accept an offer if you had contact with employee before applying. Employee referrals have the highest applicant-to-hire conversion rate – only 7% apply but this accounts for 40% of all hires (Jobvite).
With candidate expectations higher than ever, the vast majority of candidates — 81% — expect the hiring process to wrap up in two weeks or less. An employee referral program is a great way to accelerate hiring, while working more efficiently to decrease acquisition cost.