As a rapidly growing company, there are bound to be some problems that arise. One of the most common issues is communication breakdowns. With more employees and more moving parts, it can be challenging to keep everyone on the same page and ensure that everyone is aware of what’s going on. This can lead to misunderstandings and frustration, which can impact productivity.
Another problem that can occur is that of scaling. As a company grows, it can be challenging to maintain the same level of quality and service that was present when it was smaller. This can lead to dissatisfied customers and a drop in business.
Lastly, another issue that can plague growing companies is employee turnover. As the company grows, there will inevitably be some employees who are not a good fit for the new culture and who will choose to leave. This can be costly in terms of time and money spent training new employees.
Replacing these employees is essential, but you certainly want to reduce the costs. Through a referral program, you can reduce the cost of getting new applicants while also streamlining your recruitment process. Here’s everything you need to know about referral programs.
What are Referral Programs?
A referral program is a system in which employees incentivize employees for referring talented applicants to open positions at the company. The idea is that by incentivizing employees to refer their friends and acquaintances, you will be able to reduce your recruiting costs and time-to-hire while also increasing the quality of your hires.
There are a few different referral programs, but the most common one is the employee referral program.
Employee Referral Program
An employee referral program (ERP) gives employees a monetary or non-monetary reward when they give qualified candidates to a company. The amount of the compensation varies depending on the company, but it is typically a percentage of the new hire’s first-year s alary.
For example, if you refer a friend who gets hired and they have a starting salary of $50,000, you may receive a $2,500 referral bonus.
The main advantage of an ERP is that it allows you to tap into your employees’ networks. Your employees likely know people who would be a good fit for your company and looking for a job. By incentivizing them to refer these people, you can reduce your recruiting costs and time-to-hire.
Alumni Referral Program
An alumni referral program (ARP) is similar to an ERP, but it explicitly targets former employees of the company. The idea is that former employees already know the culture and values of the company and are more likely to refer candidates who would be a good fit.
The main advantage of an ARP is that it gives you a pool of pre-vetted candidates. In addition, because former employees have already worked for the company, they are more likely to refer candidates who would be a good fit and interested in the job.
Customer Referral Program
A customer referral program (CRP) is a system in which customers are given a monetary or non-monetary reward for referring a qualified candidate to an open position at the company. The reward amount varies depending on the company, but it is typically a percentage of the new hire’s first-year salary.
For example, if you refer a friend who gets hired and they have a starting salary of $50,000, you may receive a $500 referral bonus.
The main advantage of a CRP is that you can utilize your customers’ networks. Your customers likely know people who would be a good fit for your company and looking for a job. By incentivizing them to refer these people, you can reduce your recruiting costs and time-to-hire.
Why Should You Use Referral Programs?
Any referral program stated above has its distinct strengths and weaknesses. However, all of them have various advantages when it comes to hiring. The first advantage is efficiency.
The most obvious advantage of using a referral program is saving you time and money. However, when combined with the right systems and tools, this efficiency can go through the roof. For example, recruitment tracking systems can ensure that you can track your referral programs, while a robust recruitment automation tool can ensure that you process applicants faster. Both are essential if you want to upgrade your company’s hiring process.
Another advantage of referral programs is that they can help you save money on your recruiting costs. By utilizing the networks of your employees, customers, and alumni, you can reduce the amount of money you spend on advertising and headhunting.
The next advantage of referral programs is that they tend to increase the quality of your hires. Referrals are more likely to be a good fit for the job and the company. They are also more likely to stay with the company for a more extended period.
Referral programs offer several advantages when it comes to hiring. They are efficient, save money, and increase the quality of hires. So if you’re looking to upgrade your company’s hiring process, using a referral program is the way to go.
Barry Lachey is a Professional Editor at Zobuz. Previously He has also worked for Moxly Sports and Network Resources “Joe Joe.” he is a graduate of the Kings College at the University of Thames Valley London. You can reach Barry via email or by phone.