Employers are inundated with quality candidates these days, whether through online job postings, submissions through their corporate websites, or unsolicited contacts from prospective employees. So, what's the best way to cut through the clutter and grab a company's attention? Their employee referral program.
According to a recent New York Times article “big companies are increasingly using their own workers to find new hires, saving time and money." At large firms such as Ernst & Young, employee referrals account for 45% of nonentry-level new hires, while Deloitte sources 49% of their experienced hires in the same way. A recent study by the Federal Reserve Bank of New York found that “referred candidates are twice as likely to land an interview as other applicants. For those who make it to the interview stage, the referred candidates had a 40% better chance of being hired than other applicants." Lastly, Jobvite's research shows that:
- On average, every employee has 150 social media contacts. For employers with 100 staff, this equates to 150,000 candidate sources.
- Employee referrals have the highest applicant-to-hire conversion rate, accounting for 40% of all hires.
- Applicants hired from a referral are brought on board faster than candidates through job boards or career sites – an average of 29 days versus 39 and 55, respectively.
- Referred hires report greater job satisfaction and remain on the new job longer – 46% more than 1 year, 45% more than 2 years, and 47% more than 3 years.
- 67% of employers and recruiters state that the recruiting process is shorter with referred candidates; 51% say it's less expensive.
- 69% of all US employers compensate for their employees for referrals and 30% plan to invest more in their employee referral programs in the future.