Employee Referral Program is quite popular when it comes to recruiting. It a strategy to tap into employee networks and widen your talent pool. Some companies are still in a dilemma about whether to have their own Referral Program or not. We have noted the Top 10 Employee Referral Statistics in order to help you make your decision.
Employee Referral have the highest ROI
Recruitment ain’t a cheap process. It takes quite a toll on the company’s finance as there are costs involved to recruit a new hire. Indirect cost includes the cost spend on advertising, website optimization, etc. Direct cost includes the cost paid to the recruiting agencies this can be anywhere from 10% to 20% of annual employee salary whereas in Employee Referral Programs the company agrees to pay 4% to 5% as the referral bonus. Thus, a successful employee referral program can save most of the cost
Reduce time to hire
The position tends to fill faster with referral as you are spending less time in posting, searching, getting details, and recruiting. According to the study conducted by Jobvite, referred candidates took 29 days to hire which is least compared to job boards and career sites. The human hours required for hiring are less and thus that time can be invested to increase the productivity or work on the company’s strategy.
Reduces cost per hire
The recruiting team does not spend much of its money in the marketing of job postings, posting ads on job boards, the cost involved in the traveling of recruiters, and other miscellaneous costs are saved. According to new data from Clutch, the leading B2B ratings, and reviews firm. Anna Papalia CEO of ShiftProfile says that for one consulting contract, she was responsible for recruiting and hiring $7.2 million in yearly salary but after implementing the employee referral program she saved her company upwards of $1 million. Hence it is one of the Top 10 Employee Referral Statistics.
Improves the quality of hire
For most employees, the biggest motivator to refer employees is not recognition or reward but the delight to help a friend in need. A high performer employee will focus on bringing a high performer employee to the tea,. According to a study by achievers, the chances of a referred candidate getting fired decrease by an average of 350%
Increase in retention rate
The software company Careerify found that referred employees are 23 percent less likely to quit than other hires.
Additionally, a study on employee referral programs indicates that employees hired via referral tend to stay with a company longer than those hired through other channels.
More than half (56%) of employee referrals who were surveyed for the study said they’ve been in their current role for more than five years.
Referrals are most likely to hire
According toEdelman Trust Barometer, employee voice is 3x more credible than the CEO’s when it comes to talking about working conditions in a company. As the referral is brought by a valued person- your employee, the company is more considerate about hiring the referral brought by the employee than a job board or a career site.
More likely to hire passive
Passive candidates are more receptive to their friends than recruiters. When an employee reaches out to his/her referral to vouch for their company and their workplace culture, that employee tends to vouch in such a way that it seems more convincing to the referral than a recruiter. According to the ultimate list of hiring statistics, 87% of active and passive candidates are open to new job opportunities and 70% of the global workforce is made up of passive talent who aren’t actively searching
More likely to accept the offer (as they know the employee)
A study by Glassdoor’s Chief Economist Dr. Andrew Chamberlain showed that referred candidates are more likely to accept your job offer. It does make sense as the pitching of your job opening is done by a trusted source which makes the referral more inclined to accept this offer pitched by your employee.
Good fit in the work culture
While referring a candidate the employee makes sure that the candidate is best suited for the company and fits the role perfectly. They know the expectations the company has from the new hire being an insider. Thus, the new hires are beforehand aware of all the responsibilities and work culture of the organization making them a good fit for the company which will contribute to the company’s success. According to a clearcompany article, 70% of employers felt referred hires fit the company culture and values better. Hence it is one of the Top 10 Employee Referral Statistics.
Most of the referrals are from external networks (alumni, clients, social connections)
As the employee is indirectly doing the candidate sourcing, the brand value of your organization is also increased. For example, an employee shares the job opening post to his social media platforms which will indirectly bring traffic to your organization as his connections will try to find out more about the company improving your brand visibility.
If you execute a successful Employee Referral Program you can enjoy all these benefits and as these programs often use interactive methods it is also better for employee engagement.
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