Have you ever wondered how to effectively grow your talent pool with fewer recruitment efforts? A solution for you can be word-of-mouth marketing or more commonly known as referral marketing. This recruitment approach is an under-utilized strategy that poses a handful of benefits for your business. LinkedIn reports show that 82% of employers consider referral marketing as number one, among other sources, that generated the most return of investment for their company in 2019.
Attracting new applicants through an employee referral program can give a significant boost to your recruitment efforts and employer branding. By allowing your employees to refer friends and other associates for open positions, you end up with a workforce that does a lot of the recruitment for you. You essentially get high-quality candidates in a cost-effective way because satisfied employees will have no problem promoting open positions and give a testimony of how it’s like working for your company.
Want to know more about what referral marketing is and how it can benefit your business? Here are six ways it can impact your recruitment strategy positively.
1. Strengthens your employer reputation
Smart HR leaders know that a strong employer brand is pivotal for effective recruitment strategies and business growth. The first step is to increase brand awareness and strengthen your reputation management. Referrals are the most organic way to boost employer branding because your employees are your best assets to build credibility and trust among talent pools. This helps you secure qualified candidates easier. Engaged employees regularly promote company culture and job openings. This attracts potential candidates, especially those already within their professional networks. Inevitably, your employees become your brand ambassadors and help promote your company profile.
Every time an employee spreads the word about the benefits of working for you, they reinforce your brand and strengthen your reputation. As a result, you become a preferred employer of choice for candidates.
2. Shortens your recruitment process
Based on LinkedIn reports, traditional recruitment takes an estimated 45 days to complete, but referral marketing can effectively cut this timeline in half with referrals onboarding as fast as 20 days. Moreover, studies show that talent acquisition is 55% faster through referrals than career websites. In a fast-paced world, time is of the essence. This is a significant benefit for HR leaders as efficient recruitment saves valuable time, especially considering that the competition for qualified candidates remains strong.
Referred candidates ease the hiring process as they remove the need for extra steps to screen potential candidates without compromising talent quality because your current employees become the first level of screening. They already have a good grasp of your expectations and are most likely to refer individuals who are the right fit for the job. Subsequently, excellent employees are most likely to recommend candidates whom they believe are within the same caliber of skill and competence as they are.
3. Promotes low-cost recruitment and boost ROI
Amidst economic decline, saving money is a priority and an employee referral system can go the distance in cutting costs. A referral bonus can be just a fraction of the overall expense that your company would usually spend on traditional recruitment costs. Because employee referrals usually produce relevant candidate profiles, hiring cost is lower, time is improved, and ROI inevitably increases.
In hindsight, it costs less to motivate your employees to advertise your company’s job postings than to promote them using traditional advertisement methods. On top of this, you can save by implementing fixed monetary rewards for employees compared to commission costs by outsourced recruiting firms. Considering that referrals are the primary source of top-tier candidates for 88% of employers, the monetary incentive that comes with a successful referral hire then becomes a smart investment that can potentially yield more ROI in the long run as you build an all-star team that can weather uncertain market conditions.
4. Opens opportunities to reach untapped talent pools
Going beyond the traditional pool of candidates allows recruiters to reach passive candidates. These untapped talent pools are most commonly inaccessible to recruiters because they are not active job seekers. Passive candidates are most often top performers working full-time jobs, making them extremely attractive for recruitment. Because these individuals are not actively looking for a new job but are willing to explore new opportunities, your best bet at reaching them is through referral recruitment.
You can utilize your employees’ professional network to source top-tier candidates and use your in-house brand ambassadors to demonstrate how great it is to work for your company. Your employees already have a good grasp of your company culture and can sell that better to the potential candidates in their network. A colleague’s referral can instill credibility to your company that can potentially make a currently-employed candidate reconsider.
5. Increases morale in your current talent pool
More than the monetary incentive, employees are most likely driven by the desire to receive corporate recognition and make a more significant contribution to the company’s growth. Including your employees in the recruitment process communicates that they are valued, and they can take part in the success of the business. This is a powerful way of building an engaged advocacy group that fosters a positive work culture, increased employee productivity, and boosted overall morale.
When employees are given an avenue to contribute to the growth of the company, they feel trusted and valued. On top of this, they feel a sense of accomplishment when their referral gets the job. Couple those with a monetary incentive, and you’ve got a recipe for a much-satisfied workforce.
6. Decreases talent turnover
LinkedIn reports indicate that 45% of employees hired through referral marketing stay for more than four years. Comparing this to 25% of employees sourced through traditional career websites who have an average of two-year retention rate, this is a significant difference in talent turnover. As any recruiter knows, the employee turnover rate can pose substantial monetary and time losses for companies because the cycle of recruitment and training starts all over again. For this reason, finding quality candidates that will stay with the company for a long time is essential.
The key to longer employee tenure among referrals is a more positive recruitment experience and a better culture fit. Because referred candidates start their recruitment process with a clear grasp of the company culture and experience a more expedited hiring process, they end up fitting in easier than candidates sourced traditionally. Moreover, the very same employees who referred them can also be potential friends and mentors who support the critical onboarding period. These factors significantly impact the candidate’s experience and contribute to creating a more engaged employee.
Now is the time to start maximizing your employee referral marketing
Great Recruiters is designed to provide the transparency you need to ensure the best possible candidate experience. Promote a strong brand reputation that will help you manage referrals and shorten the hiring cycle.
Request a demo today to see how we can help you optimize the process and generate more referrals.