How to Harness Employee Referral Programs as Part of Your Recruitment Strategy
By Jamie Womack Vice President, Corporate Marketing & Sales Training, Careerbuilder | May 29, 2011
Word-of-mouth referrals are a strong and meaningful form of communication for the hospitality industry. Some organizations consider recommendations from satisfied customers to be their most important marketing tool. Imagine harnessing this same type of communication from satisfied employees to help you build your workforce. Employee referrals are an important component in a recruitment strategy and are one of the leading sources of hire for a number of organizations.
An employee referral program is a valuable internal recruitment process that organizations use to identify potential candidates from their existing employees' social networks. If your organization doesn't have a formal employee referral program, you may be missing out on a useful and low-cost source for job candidates. Forty-three percent of hospitality employers said they will use employee referrals, in addition to online resources, to recruit candidates, according to a recent CareerBuilder survey of more than 100 hospitality employers. [The multi-sector survey was conducted among U.S. hiring managers and workers online by Harris Interactive© from August 17 to September 2, 2010.)
Why Create an Employee Referral Program?
Recruiting candidates using employee referrals is widely acknowledged as the most cost-effective and efficient method to recruit candidates through trusted contacts and make quality hires. After all, who is more equipped to refer great people – and sell those people on why they should work for your organization – than your own employees? Employee referral programs make good business sense too. Studies have shown that these programs provide significant benefits when it comes to increasing quality of hires, employee morale, and a company's bottom line.
This relatively inexpensive sourcing method relies mostly on word-of-mouth marketing, and an effective program will, therefore, lower your cost per hire. Successful referrals also tend to generate other successful referrals. The American Journal of Sociology notes that referred workers are more likely to refer future employees.
Beyond the mere numbers of good candidates, employee referrals help identify the best candidates to meet your desired skills needs. That's because they know what makes someone a successful employee at your organization and are also unlikely to refer anyone who would reflect poorly on them. Well-structured programs also have the dual effect of increasing employee morale and lowering employee turnover. By enabling employees to have an active role in the hiring process, employee referral programs foster a sense of connection to an employer and help employees feel they are making a positive contribution to the company. Those hired through employee referral programs tend to stay with the organization longer because they are brought on board with already-established social connections and a better understanding of the company culture than hires recruited from other sources.