Why Online Job Boards are No Longer Enough: The Power of Employee Referral Programs

In a tight labour force market, sourcing candidates has become a real struggle, particularly for the health care and social assistance sector. Candidate numbers via online job boards are rapidly dwindling yet many organisations still favour these channels.

Not only are we seeing a huge reduction in active job applicants for care roles, but one might also question the quality of candidates still using these channels to get a job. The term “revolving door” comes to mind.

Benefits of Diversifying Recruitment Sources

Research suggests that diversifying recruitment sources can lead to better hiring outcomes, such as:

• A more diverse pool of candidates and thus
• More diverse hires
• A better company cultural fit
• Broader candidate reach
• Higher quality candidates
• With longer tenure

Some examples of recruitment sources are online job boards, agencies, employee referral, social media, community outreach, flyer drop, vocational institutions and migration programs.

The power of your employees

Employee referral programs have been found to be one of the most effective ways to find top-notch candidates. Research published in the Journal of Business and Psychology found that employee referral programs were the most effective recruitment source for finding candidates who were a good fit for the organisation. Additionally, research published in the Journal of Applied Psychology found that employees who were referred by someone they knew were more likely to stay, resulting in lower turnover rates and greater retention. As an added bonus, the referring employee also had longer tenure!

Moreover, employee referral programs have been found to be cost-effective. A study published in the Journal of Labour Economics found that employee referral programs had a lower cost per hire compared to other recruitment sources. Monetary referral rewards also go directly back to employees and thus become an investment, instead of an external spend.

Employee referral is also an ongoing source of new staff, as for each new hire, organisations can tap into a whole new, often local, network. It’s the low-hanging fruit of recruitment sourcing, yet completely under-utilised in many organisations.

How to turn referral from a drip to a drizzle

“It’s too cumbersome to manage!” is a phrase often uttered when talking about employee referral programs. And it is indeed, when using a spreadsheet. So 20th century. There are modern solutions that streamline the referral process and make it fun and rewarding for employees, either integrated in a recruitment system or via a dedicated app. Organisations using an employee referral app, such as Care Friends in Australia and the UK, are creating a culture of referring and get up to 30% of new hires via this high-quality source. On average, these referrals have tenure more than double that of staff sourced via other channels, making referral an important source to add to your mix.

Questions to ask yourself now

To overcome the challenges of a tight labour market by diversifying recruitment sources, organisations need to ask themselves a few important questions: What is the breakdown of our current recruitment sources, the number of hires and retention by source? Are we overly reliant on a single recruitment source, and how can better leverage our existing employees to help us recruit?

If you are finding that you’re not yet getting more than 15% of new hires via referral, then you have at least one new recruitment source to tap into.

With nearly two decades of experience in Human Resources, Marleen Galligan is a seasoned professional with a diverse skill set that includes recruitment, change management, training, marketing and communication, EVP, and psychometric assessments. Leveraging her educational background in psychology, Marleen provides valuable guidance to clients through a range of services and tools, including their Employee Referral app, Care Friends, to help turbocharge the power of employee referral and their Psychometric Assessment tool, Care Advantage, to effectively screen candidates.

Sources

Seek.com.au

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Dineen, B. R., Noe, R. A., & Shaw, J. D. (2008). What leads to the referral of job candidates? An exploratory field study. Journal of Applied Psychology, 93(1), 50-59.

Holm, H., Eriksson, T., & Åkerman, N. (2018). Examining the effectiveness of employee referral programmes: A quasi-experiment. International Journal of Human Resource Management, 29(17), 2459-2478.

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Slaughter, J. E., & Zickar, M. J. (2006). Referral source and applicant reactions: A study of fairness perceptions and organizational attraction. Journal of Business and Psychology, 21(3), 313-328.

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www.carefriends.com.au