Improve Retention (and Much More) with Employee Referrals of New Employees

Posted by in Recruiting, Hiring and Retention | Comments Off on Improve Retention (and Much More) with Employee Referrals of New Employees

Your recruiting of the best and brightest talent for your business can be much more effective — and save you time and money — when you enlist the help of your current employees for referrals.

Another primary benefit of an employee referral program is retention. There appears to be clear evidence that new employees hired in this manner and current employees referring them have a positive outlook of their employment situation.

Other benefits worth considering are:

  • Better candidates — Current employees are more discriminating about whom they refer.
  • Employee involvement — In some ways, your employees know your company better than even you, which means they are more likely to do a better job selling the attributes of your company to candidates.
  • Employee incentives — This is another retention benefit. Employees that refer individuals who are hired receive an incentive, as included in your referral program.
  • Saves money — The cost of that referral incentive will probably be considerably less than a recruitment service fee.
  • Saves time — Because your employees are making the initial contact (and they’ll be careful about who they refer), the hiring process could be dramatically shortened.

The Keys to a Successful Employee Referral Program

An employee referral program will save time and money during the long term; however, a successful program requires some investment of time and money. As with other business system, once it�s in place and functioning as expected, your investment will prove to be wise.

There are just two basic components of an employee referral program: developing the process (and its best on paper) and promoting internally to your employees.

The process should be as straightforward and as simple as possible. It�s best to create an online system, since it makes it easier for everyone, and all data is neatly stored in one place. Employee referrals should go to the head of the line to help demonstrate how much you value employees� assistance. It�s also a good idea to explain the status of candidates periodically to the referring employees.

Make sure that you write into your process a few guidelines about how to recognize good candidates. It should be clearly stated that this is not an opportunity to refer friends and family members who are not qualified.

If a referral is hired, then make sure the referring employee receives recognition with a sincere thank you and the reward your program provides. Incentives can take many forms: cash; points earned for extra vacation days, trips, electronics, etc; or products and services you sell, if appropriate.

The second component, internal promotion of your referral program, can be successfully done with regular emails about open positions and other forms of communications. The participation and support of managers and supervisors are also critical to keeping the program on everyone�s radar.

Your internal promotion should be proactive and constant, so designate a staff member or manager to be the regular cheerleader of the program. He or she can send those emails and develop other means to keep employees excited.

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