Employee Referral Program: What is it? and why is it important?

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What is an Employee Referral Program?

An employee referral program is a recruitment method in which employees are involved in the recruitment process by allowing them to recommend candidates for their company’s open vacancies. Employees usually receive a reward if the candidates they referred get hired.

What are the Main Benefits of Employee Referral Programs?

  1. Better Quality of Hires

Your existing employees fully understand your company culture, values, and expectations, so they will recommend people who would make a much better match than the ones coming from other recruitment methods. In addition to that, your employees know that when they refer someone for an open position, the success of that candidate will reflect on them as well, so they’ll most likely help the candidate gain a good understanding of the company’s culture and the position.

  1. Reduced Time and Cost to Hire

Hiring referred candidates speeds up the hiring process by eliminating extra screening steps, especially that referred candidates are usually filled in on the hiring and on-boarding processes of the company. Shorter time to hire means less hours spent to fill an open position, which consequently leads to less hiring expenses and costs. Hiring  referred candidates saves you all the recruiting and advertising expenses that are associated with using other methods.

  1. Better Employee Engagement

Involving your employees in the decision-making process by allowing them to refer their friends and acquaintances to open positions in your company makes them feel trusted, valued, and empowered to make an impact on the growth and future of the company. It’s also worth mentioning that referred candidates feel more at ease on their first day at the company as they know at least one person who can help answer any inquires that they may have.

  1. Reaching Passive Candidates

One of the main benefits of referral programs is the ability to reach passive candidates – candidates who are not actively looking for job opportunities but when the recommendation comes from a trusted friend or relative they might actually consider the opportunity.

  1. Higher Retention Rates

Employee retention rates are highly related to the quality of hires. The better the quality of hires, the higher the retention rate. Hiring candidates who possess a good understanding of the company’s requirements and expectations is a successful strategy for reducing turnover.

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