Remember a long time ago, before the Internet and online dating (and even longer ago when you were single) and you wanted to meet someone, what did you do?

The vast majority of us asked our friends and close associates to set us up. Who better to introduce us to someone than people who knew us well and cared about our well-being?

This same principle applies to hiring. Who better to introduce us to our next top performing production supervisor than the people who already work for us – especially if they, too, are top performers.

The reality is that when it comes to friends and business associates:

Yes, we are switching from fish to birds though we could probably make the same point with a school of fish. That being…

People tend to gravitate towards people who share their same values, perspectives, work ethic, income level, etc. And we tend to become like the people we associate with.

You see where I’m going here, yes?

Most likely your best people are hanging out on the weekends with other companies’ “best people.”

Yet, most companies don’t spend much time, money or energy encouraging their employees to make referrals.

Here are three reasons why Employee Referral programs are so effective.

Employee Referrals
HELP YOU HIRE FASTER

Traditional hiring methods such as posting job ads, scouring career sites and retaining a recruiter can take up to 55 days from start to finish.

On average, it takes a company only 29 days to hire a candidate who was referred by an employee.

If you are in a hurry to fill a position, this might be your best method of doing it quickly and effectively.

And here’s the kicker…referred employees are the most likely to refer someone else. That means you create a never-ending cycle of referred candidates for your future workforce needs.

Employee Referrals
LOWER YOUR COST PER HIRE

I’ve known of company programs that offered a $100 or $500 bonus if a friend is referred and retained for a year.

It’s great that they think to have such a program in place but let’s ask two questions:

How motivated would you be to do something this week that might take a bit of your time and energy if the reward was 12 months away?

Why is it that a company is willing to pay a search firm 20 to 30% of the annual salary to fill a position but then turns around and offers such a small amount to their employees to do the same thing?

So, if you’re going to create a referral reward program, make it compelling. Offer 5 to 10% of the position’s salary.

Pay a third when the person is hired, a third after their six month review, and the last third at the end of the first year. That way, there is an immediate incentive and additional payouts as the person stays on and performs.

Employee referrals produce the highest ROI of any sourcing method so make it easy for your employees to do so and give them a reward just for giving you a name of someone they would like to refer (such as a $1 lottery ticket).

Employee Referrals
DELIVER HIGHER-QUALITY CANDIDATES

Don’t worry that employees will refer just anyone in order to collect that bonus.

Most people know that their reputation will be affected if they recommend a dud. It’s sad to say but most of us have that friend or family member that we would never recommend for a job because we know it would reflect badly on us. So A-players tend to refer A-players.

Plus, if you’re following the proper screening and hiring process, you will be hiring only the qualified recommended people anyway.

~ Nancy Roberts
The DISC Wizard