5 Cold, Hard Facts for Hiring Employee Referrals
As hiring trends increase along with the global economy, there has been a renewed interest in employee referrals, and with good reason. Employee referral programs can generate some of the highest returns on recruitment investment and below we will discuss what we believe to be five of the most motivating factors for increasing your reliance on employee referral programs.
- Employee referrals are easier to hire.
When a current employee makes a referral, they are pre-screening that candidate for culture fit and a multitude of additional intangibles. These are the types of things that are much more difficult for a talent acquisition team to uncover in a first-round interview. In addition to being pre-screened, referrals are faster to hire. Employee referrals are hired at a ratio of 1:3, versus an overall average of 1:18.
- Employee referrals are 29% less expensive to hire.
By maximizing employee referral effort and even with paying out handsome referral bonuses, organizations can cut high agency and recruiter fees drastically, thus reducing direct recruiting cost. In some instances, employee referrals have been up to 29% less expensive to hire.
- Up to 26% less likely to quit
There are many factors at play here, the least of which being the fact that the employee was pre-screened by the referrer to be a better cultural fit than most. There is also the added benefit that the referred employee starts on day 1, already having a good relationship with at least 1 employee. Recent studies (by US News) show that 65% of referred employees are very happy with the job fit and besides, who doesn’t want to work with their friends? Looking for ways to increase employee retention in 2017? Try a renewed focus on employee referrals.
- Up to 37% less likely to be fired
For some of the same reasons that referrals are less likely to quit, they are also less likely to be fired. Having a deeper connection to the team, and beginning their career with an endorsement from current staff, help guide employees towards longer tenure. These team members also have the reputation of the referring employee at stake, which could be helping guide them down the path of a longer tenure.
- Up to 39% more profitable
If it weren’t good enough that employee referrals are higher quality and easier to hire, the combined cost savings and increased efficiency can generate up to 39% more profit. Higher quality employees also become productive quicker than average employees. That’s why at top performing firms, referrals make up 46% of all hires.