Employee referral is a recruitment method used to identify and obtain potential candidates using existing employees’ social networks.

The method is acknowledged as being cost effective for businesses (even though an employer will typically reward the referring employee with a bonus) and quite efficient. And as such, we’re seeing more and more of it happening across the board.

Apart from reduced costs and motivated staff, there is a range of benefits associated with the recruitment method.

Better quality candidates

According the theundercoverrecruiter.com, the average employee will have 150 social media contacts – 100 employees means around 15,000 possible candidates. When employees are recommending their personal contacts internally, it tends to be because they know them well or have worked with them before. It’s as if they have already done a trial run with the candidate and knows their qualification and skillsets are up to scratch. As Bill Boorman would say your network is your net-worth.

Decreased hiring time

It is estimated that applicants hired from a referral begin after about 29 days compared to 39 days via job boards and 55 via career sites. As said above, it’s as if the referring employee has done a lot of the legwork for you – it’s much easier to get in contact with the new candidate and there is less need for screening.

Conversion-to-hire rates are higher

Research by Jobvite had a look at which sources gather the most applicants and which get hired. Career sites and job boards will often get the most applications, where as the conversion-to-hire rate falls behind referrals.

“While only 7 PERCENT OF APPLICANTS come from REFERRALS, this small number ACCOUNTS FOR NEARLY HALF OF HIRE (40 percent).”

 Referrals stay longer

 There is something about being referred that makes employee satisfaction greater than those who are hired through other sources and I feel it’s probably something to do with company culture. Statistics show that 46% of referrals and 39% of career-site hires stay three years or more.

Referral systems are another great example of how social media is influencing the recruitment industry. Unfortunately for recruiters, this can mean that they are being used less when companies set up their own internal programs, however, it can also work in our favour.

Recruiters have the ability to create very strong professional relationships with their candidates, and when your strategy plan is in line, it’s possible to gain the same access to a large pool of social networks.

A good referral system should have the following characteristics:

• Recognition of successful referrals
• Prompt rewards
• Regular promotional incentives.