Everything You Need to Know About Implementing an Employee Referral Program

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Everything You Need to Know About Implementing an Employee Referral Program

When you have a solid team together, sourcing new hires from within can be a great recruiting method. Because your employees may have other contacts in the industry already, they may have recommendations that are well-suited for your organization. For that reason, employee referral programs can be a great way to find new talent. Below you will find some of the pros and cons of implementing an employee referral program.

Benefits of Implementing an Employee Referral Program

When you take the time to source new employees through the recommendations of your current staff, there are a number of potential benefits, including improved retention rates and reduced cost. Here are a few to consider.

  • Your business will save money on recruiting costs. Whether you save money on paying for ad placement, spending hours on recruiting, or partnering with a firm, using a referral program will help reduce costs.
  • Your employee has a valuable opinion. Oftentimes, employees are tapped into talent pools you may not have access to. Their referral may be a perfect fit for the job that would not have come across your path otherwise.
  • Retention rates can improve. If the referrals you receive are good, retention rates can improve over time.
  • As an employer, your reach will expand. You will now be in contact with someone else plugged into the industry with potentially more employee referrals.
  • It can make the recruitment process faster. When you receive an employee referral, it takes a lot less time than receiving applications, vetting references, and interviewing candidates.

Finally, it can also help your employees feel more empowered in their jobs because their opinion is valued in the workplace. This can help boost morale, improve productivity, and help your company’s bottom line.

Cons of Employee Referral Programs

That’s not to say that things can’t go wrong when using an employee referral program, though. Sometimes the referrals you receive won’t be exactly what you are looking for. Here are some potential downfalls you might face.

  • There is potential for feelings of favoritism in the workplace. When you accept an employee’s referral, others could feel as though you are showing a preference. This can hurt morale and productivity.
  • The personal relationship has been the new hire, and the person who referred them can impact workflow. If one of the employees leaves the company, it is possible the other may depart as well. Additionally, if their relationship dissolves, it can hurt productivity and morale.
  • Hiring a referral may keep you from other good potential candidates. If you don’t take a look at any other potential applicants, you could be limiting yourself.
  • The referring employee may not know much about the person’s work ethic. Sometimes employees refer friends who they have never worked with, and it turns out they aren’t the same type of worker they are.
  • Your employee may feel negatively about you not accepting their referral. If you have a program in place and their referral isn’t accepted, they may feel you don’t like them or begin to have bad feelings towards the company in general.

We Can Help You Find Quality Candidates

Employers can find quality candidates for their organization by working with a recruitment agency like Top Notch Personnel. Contact our recruiters to see how we can assist you in your hiring strategy.

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