Staffing tech marketer, enthusiast, podcaster. Founder of The Growth Co.
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A lot of people have gotten a job from a referral — it’s not unlikely that your next job will come from someone at your last job. Research from Jobvite shows that 40% of hires are employee referred.
Digital networks have made it even easier for people to reach out to their contacts and refer them to jobs that match their interests and skills. So it should come as no surprise that, aside from internal hires, employee referrals are the top-rated source for hiring.
And with 42% of employers experiencing higher turnover than usual, referrals are becoming even more valuable. Let’s take a look at why they could be the key to finding and securing high-quality talent amid the Great Resignation.
Place qualified candidates much faster than job boards.
Job boards have long been the go-to place to reach applicants — and they’re still where the majority of applications come from (82% on average). But, especially in the current staffing landscape, quantity isn’t better than quality.
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Job boards only have a 1.3% applicant hire rate. That means you’re probably sifting through hundreds of applications from candidates that aren’t a good fit for the job. By contrast, referrals have a 16.7% applicant hire rate, and referred applicants are 13 times more likely to receive an offer than applicants from job boards.
At a time when there are only 0.7 unemployed Americans per job opening, businesses can’t afford to place their bets on job boards, especially if they’re not yielding quality talent. You’ll get more high-quality candidates from referrals — 70% more than non-referrals — because good people know good people.
Focus on referrals to increase employee retention.
Unfortunately, the Great Resignation isn’t over yet — 41% of employees said they plan to search for a new job within the first half of 2022. The good news is that referred employees generally stay with a company longer. According to research, almost half (45%) of referrals stay for four years or more, and only 25% of employees sourced from job boards stay longer than two years.
It all goes back to the quality of the hire. Because someone they know has recommended referred hires, it’s not just another job to them. They didn’t come from a listing that happened to catch their attention. So referrals are more likely to be invested in the company and might even work alongside the person who referred them. Having more of these people on your team improves overall employee satisfaction and engagement.
Shift to referrals to reduce costs and time to hire.
The fact that referrals stay longer is worth noting from a cost perspective, too. Employers spend an average of $26,511 annually replacing workers who resign, so the fewer employees who leave, the better.
That savings extends to the hiring process. More than half of companies (55%) say that referred candidates are less expensive to hire than non-referral candidates.
They’re also faster to hire — candidates from job boards and career sites generally take 39 to 55 days to hire, but companies using employee referrals can drop that time down to 29 days.
Start paying candidates instead of job boards.
The price per post on job boards varies, but it can cost hundreds of dollars to share one job description on just one board. And it’s only getting more expensive. If these posts aren’t getting as many quality applicants, why not direct that money toward referrals?
The beauty of referral programs is that you can pay your employees, candidates and other contacts to send qualified applicants your way. Your money goes to the people you know and the people they know and helps build loyalty with your candidates.
As a bonus, referral program participants are doing some of the groundwork for your recruiters, freeing up time to focus on building relationships with candidates. They also become brand ambassadors, promoting the company within their networks. And that’s something job boards can’t do.
Find passive candidates you can’t find anywhere else.
Not only do referrals help you reduce job board spend, improve recruiter productivity and increase employee retention, they can also help you find talent that you would never have found through traditional recruiting strategies. My entire leadership team was built on direct referrals, and I wouldn’t be surprised if yours was too.
That’s why it’s critical during this period of rapid resignation to take some time and be more strategic with your sourcing efforts. And it might be time to consider implementing an automated referral management (ARM) platform that’s built for your industry.
If you don’t have a referral program yet, now’s the time to get started because getting your listings to stand out among millions of job openings is no easy feat. The helping hand of someone in a candidate’s network might be what you need to compete for and keep quality talent on your teams in uncertain times.
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Author: David Folwell, Forbes Councils Member
