Employee Referral Programs for Small Businesses
As small businesses compete amid ongoing talent shortages, often with fewer resources than large companies, they may need to get creative in their attraction and hiring efforts. As such, employee referral programs are growing as a popular strategy. They are generally successful because employees put their names on the line by endorsing someone else.
This article explores the benefits of employee referral programs for small businesses and strategies for creating and maintaining successful programs.
Employee referral programs allow existing employees to recommend candidates for open positions. The idea behind employee referral programs is that candidates brought in this way will be better suited for the organization because the existing employees have already done the pre-screening work. Employees tend to carefully consider possible referrals because they feel accountable to the organization and the person they refer. High performers tend to refer other high performers, which benefits employers.
Current employees can provide information about the company to referred candidates and describe the company culture and employee benefits package, giving candidates a good idea of what working for the organization would be like before being called in for an interview. In this way, referral programs can help save HR, hiring managers and the organization time and money; since the employee knows both the company and the person they refer, this typically leads to a good match for the employer and new employee. In fact, referral programs can reduce hiring time by half compared to traditional hiring methods. LinkedIn reports that while it generally takes a company 55 days to hire a candidate, referred hires only take 29 days. Since referred employees are faster to hire, organizations also save money on internal labor costs or outsourcing.
In addition, employee referral programs also give organizations increased access to passive job seekers. Such candidates may currently be employed and might not have interviewed for a position with the company without a recommendation.
An effective employee referral program can also help support an organization's reputation as an employer. A strong employer brand enables a company to stand out from others. Employer branding aims to promote an organization as a good place to work, with the target audience being current and prospective employees. Simply put, the employer brand answers, "Do I want to work there?" So, when a current employee is engaged and satisfied at work, they will likely speak positively about the company and encourage their friends and family to apply for open positions.
An effective employee referral program can save small businesses time, money and other resources during hiring. Employers can consider the following strategies for establishing and maintaining such programs:
Because employees know company culture and employee experience firsthand, they are uniquely positioned to understand other workers who would thrive in the environment or perhaps have a similar disposition as themselves. Word of mouth travels fast, so small businesses can use that to their advantage to secure more top talent.
Amid ongoing talent shortages, employee referral programs can be a cost-effective strategy to attract and retain talent, hire faster and boost employee morale.
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This article is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice.
Marty has spent most of the last 20 years developing software in the marketing space and creating pathways for software systems to talk to each other with high efficiency. He heads our digital marketing efforts as well as oversees any technology implementations for our clients. As a partner, Marty is also responsible for internal systems in which help our team communicates with each other and our clients.