Referral programs are all about filling talent pipelines with qualified candidates while reducing time and costs associated with recruitment. Harvard Business Review research suggests that referrals can generate 70% more quality hires than non-referrals, since employees already vet candidates for experience and culture fit with the company. New hires who already have strong connections with existing employees are also less likely to quit. Statistics Canada shows a record tight labour market is leaving 36.9% of Canadian companies eager to hire but struggling to fill vacancies, so having more hands on deck to accelerate the search makes the company stronger.
Implications to consider
When designing referral programs and implementing your specific company goals, you should be aware of potential biases. Employees often refer people who are like them, so your referral pool will likely reflect the characteristics of your existing workforce.
To ensure you maintain fair hiring practices when finding the best candidate from a diverse talent pool—and do so in a timely and cost-efficient manner—here a few steps you can follow.
Step 1: Encourage employee participation
Employers who struggle to find talent can use a mix of incentives to encourage employees to make more referrals. Generally, employees want to work with people they know and like. Through referral programs, employees can feel they are contributing to hiring decisions and feel invested in the company’s future success.
Referrals are more powerful when strong connections are made between employees and potential new hires knowing they would be a great fit for the team. A candidate is more likely to apply to the company if a happy employee refers them. Numbers from LinkedIn show 42% of employees considered company culture a top priority when choosing their next job, while a similar LinkedIn Talent Solutions study showed an additional 75% of candidates said a current employee’s positive feedback is important.
Step 2: Communicate expectations and procedures
The referral program should be easy to understand, accessible, inclusive, and (most importantly) simple to use. Share the program through a variety of internal channels long before you need referrals to fill the talent pipeline. Promote inclusion and broaden your candidate pool to a more diverse group of talent by opening eligibility to anyone in the company who does not pose a conflict of interest. A real, perceived, or potential conflict of interest may exist if the employee would in some way manage the open position or is otherwise involved in the hiring decision.
Step 3: Assess referrals objectively
Although referrals are already partially vetted by the employee referrer, they shouldn’t receive special treatment in the recruitment process by skipping essential steps like an interview or skills assessment. To show fair hiring practices, assess all applicants, including referrals, against the same criteria.
You should build a diverse interview panel and recruitment team to ensure you hire the best candidate and to ensure recruiters do not pose a real, perceived, or potential conflict of interest.
Step 4: Measure the success of the program
In creating a referral program, be sure to figure out your goals and the key metrics you’ll use to measure its progress. Once a plan is in place, evaluate the program as needed to find where it’s achieving company goals, such as demographics and costs, and what factors may have contributed to any missed goals.
Measuring these factors will uncover trends and insights that will help you improve your program over time.
Prefer to refer
Creating a strong and practical employee referral program can have a major influence on whom your company can attract and put you a step ahead of the competition in an always tightening labour market. If you want more information and helpful resources about the steps above, simply book a demo. Remember, landing the right new hire doesn’t have to be costly or time-consuming for your organization.