Writing for ERE.net in 2012, Dr. John Sullivan suggested that companies use an employee referral program to enhance recruiting. While it's not a substitute for an executive recruiter, when done well, this kind of program can be highly successful. But how can you tell if it's working? Dr. Sullivan has a few answers.
First, he recommends looking at several different pieces of hard data that prove the effectiveness of the program. These include your company's applicant-to-hire ratio, the cost you pay per hire and the average retention rate for employees who have stayed with the company for two years. If these are all higher with the referral program in place, it is worth it.
He also said that, with the internet influencing more processes, referrals are a less-risky investment.
"As referral programs become more data intensive, the critical success factors that are required for operating an effective one have become clear," he wrote. "Programs designed with these critical components almost always produce a positive ROI and have an extremely low probability of complete failure."
According to a research paper published this May, referrals influence as many as 50 percent of all hires. However, the same study found that over time, non-referred candidates had a higher salary trajectory, especially after five years of tenure.
You should weigh the pros and cons of using a referral program seriously before considering one. An executive recruitment service can help you make the most of available information to find the best person for an open position.
Finding people is easy, but finding the RIGHT people is not. YES Partners helps companies FIND the right people – for all company functions, across many industries and globally.