While this used to seem like an unconventional way to recruit new employees, it is now becoming the norm for a number of reasons.
“When you only have so many recruiters and so many resources to reach out to candidates, it helps to have a great referral program to empower all of your employees to help in sourcing,” said Meritage Talent Solutions Founder Kara Yarnot, who exclusively studies employee referrals.
That being said, we wanted to take you through the benefits of these programs for your company. As you are well aware, having an organization filled with great employees is the most important asset to your business, so why not learn about these to figure out if they are right for you?
The Benefits of Employee Referral Programs
The hiring process is shorter with referrals
Instead of going through a mountain of resumes, screening candidates, and then bringing in the top people for in-person interviews, referrals make the process quicker.
Since you trust the employees that are referring candidates – and understand that they know the scope of the job and have a good grasp on the culture – you can bring referrals in from the start.
A JobVite study suggests that on average, it takes 29 days to hire a referred candidate while it takes 39 days to hire a candidate through a job board, and a whopping average of 55 days to hire a candidate through a career site.
There is a higher retention rate with referred employees
On average, research has shown that employees hired through a referral are more likely to stay at the company longer, reducing turnover rates.
JobVite cites that referred employees rank first for retention at a 45% retention rate after two years, as compared to a 20% retention rate of employees from job boards after two years.
A lower turnover rate will reduce the costs associated with recruiting and training for your organization.
Referrals are generally a better fit for your organization
As mentioned above, referrals are generally a better fit overall for the culture of your company. Since your employees are the ones that know your business best, they will be able to most adequately detect what personality types will fit in best with the environment and other employees.
Hiring employees who are a better fit has a large impact, as these new hires will likely require less onboarding time and training and will become more productive quicker.
How a PEO Can Help
Your PEO can positively be of assistance when it comes to deciphering whether an employee referral program is right for your organization.
Additionally, if you decide that the benefits outweigh the risks, they can help design the right program to fit your business. We are here to help match you with the best PEO for your company.
Take advantage of our complimentary competitive analysis today in order to find the right PEO for you.