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The Network Effect: Why Referral Networks Are Helping Today’s Businesses Thrive

What do you do when you need to hire a new employee quickly? You could start writing job descriptions for internet applicants, but there’s a better option: Reach out to your current employees first.

Referrals are a big asset for today’s businesses. They save time and money, and companies are more likely to end up with an employee who fits their culture. Here’s why and how you should put referrals to work for you.

Why Hiring Referrals Helps Your Company

Finding a new employee is usually a time-intensive procedure. You or your hiring managers have to go through the long process of casting your net, picking the promising candidates out of the pile of resumes you receive, and interviewing people — and this doesn’t even guarantee that you’ll end up with an employee who’s the right fit. Hiring a referral is often a better option for three reasons.

  1. Hiring a referral is usually quicker and simpler than posting job ads. If you can fill an open position through a referral, you won’t have to go through the process of collecting applications from other people. This cuts down on time and labor, freeing you and your team to focus on other things.
  2. You’re more likely to get a new hire who is a good fit for your company. Collectively, your employees likely know a lot of people. They’re also familiar with your company: how it runs, its unique quirks, and important ways it sets itself apart. This makes your employees some of the best people to identify potential new hires. When you hire based on referrals, your pool of candidates will most likely be higher quality, and you’re less likely to make the costly mistake of hiring the wrong person.
  3. Hiring referrals boost morale for your current employees. Most employees want to feel like they can make a positive difference at a company. Growing the company and bringing in new team members is one way to bolster confidence in the business and in employees’ own jobs. When you ask for and hire a referral, it encourages your employees to think about the benefits of working at your company and boosts positive recommendations for your company as a whole. This can help maintain a positive overall attitude at your workplace.

How to Find and Vet New Referrals

If you want more referrals at your company, ask for them. Here are five ways you can create a thriving referral culture at your company.

  1. Make sure your referral system is easy to use. Employees will be more likely to use your system if doing so is a simple process. Review the system you use to make sure it’s streamlined and hassle-free.
  2. Frequently remind employees about your referral program. If you introduced a referral program a while ago and haven’t said anything about it since, most people have probably stopped thinking about it. Make a point of reminding your team every so often about your referral program. Most importantly, make a company-wide announcement when a new position opens up so people can think about whether they know anyone who could be a good fit.
  3. Create incentives. Consider giving employees a referral bonus, additional paid days off, or some other type of reward when you hire someone they recommended. Give your team a personal reason to be invested in your referral program.
  4. Follow up. When an employee submits a referral, thank them. As much as you can, keep them updated on their recommendation’s status. If you decide not to hire the referral, let your employee know you still appreciate their help, trust their judgment, and look forward to more opportunities to talk to their network in the future. That way they won’t be discouraged from submitting another referral next time an opening is available.
  5. Make sure your employees know how successful referrals can be. If you have referral success stories at your company, take the time to highlight them to your employees. People will be more likely to make the effort to refer their contacts when they’ve seen real-life examples of why it’s beneficial for everyone involved.

The Takeaway

It’s easy to overlook the power of referrals. However, if you want to strengthen your company, it’s worth the effort to ask your employees for personal recommendations when a position is open. Vetting a few handpicked candidates is easier than sifting through dozens or hundreds of applications. Once you start or update your referral program, you’ll find that your company can hire people more easily — and with more confidence.

To support today’s gig economy, staffing agencies are empowering their temporary employees to be brand agents. When they leverage solutions like AkkenCloud’s Inbound Referral Management, they can reduce sourcing costs by 75 percent and automate the referral management process. The staffing agency reaches passive candidates, their employees earn referral fees, and they both leverage the power of their networks. Everyone wins.

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