Referral use is increasing significantly and bringing a lot of satisfaction with its quality.

The use and success of referral is rapidly increasing in the current labour market. 17% of organizations now get over 20% of their hires through referrals. A big difference with 2022, when this was only 8%, according to recent research.

Victoria Egba on December 07, 2023 Average reading time: 3 min
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Referral use is increasing significantly and bringing a lot of satisfaction with its quality.

Now, referral seems to have become a cornerstone in every recruitment campaign. Employees who put forward potential candidates are becoming an essential source in recruitment. The result is shown in the recent Referral Recruitment Benchmark, which the Search & Co agency conducted among almost 750 organizations and was presented in the Gelderland factory in Culemborg.

The benchmark shows that 68% of respondents already have a referral program, while 20% say they plan to start this ‘soon’, and only 12% say they are not considering or will not do so. The three main reasons they gave are insufficient knowledge in-house, no time and too little budget. However, another striking fact was that 7% of respondents believed that a special referral program is unnecessary if people are proud of their organization. “Then they do this automatically, right?”

Reward every effort?

At 75%, a cash reward for a recommended and accepted candidate is still the most common appreciation for employees who refer a potential candidate. An amount of 500 to 1,000 euros is common (34%), as is an amount under 500 euros (35%). You see an amount above 1,000 euros in 28% of the organizations, with 3% even making 3,000 euros or more available.

Many organizations still think that offering a cash reward will generate the most referrals

However, more and more organizations seem to be using other forms of reward, such as gift vouchers, gadgets, bouquets of flowers and hotel stays. “Many organizations still think that offering a cash reward will generate the most referrals,” says Michael Boud, the researcher and organizer of the Referral Recruitment Event.

‘But the danger lies in the fact that it is an assumption and has not been investigated internally. What is striking in this study is that employees would prefer to decide for themselves what best to receive for their recruitment contribution.’

Often, after the probationary period

The 2021 survey showed that 40% of organizations would pay out the reward after the probationary period of the new employee. Now, it has risen to no less than 54% in this year’s survey — a significant increase. Somehow, Boud says he can understand that. ‘Many managers consider it responsible to pay out a sum of money, and in turn, it makes the employee responsible for the quality of the candidate presented.’ But there is also a great danger in it, he says. ‘The effort has already been made, and the employee has no influence on the hiring policy.’

Fortunately, he also sees that 20% say they will pay out the reward before the probationary period. At the same time, 9% pay out the reward immediately if a recruitment contribution has been made. A part also pays out half of the reward before the probationary period and the other half afterwards.

What’s striking in the research is that regardless of the time of reward, the organizations generally rate the candidates they receive via referral as very high. On a scale of 1 to 5, only 6% receive a 1 or a 2, and 27% score exactly average. On the other hand, no less than 51% receive a score of 4, and 16% even receive the very highest score.

Most successful programs

What are the most important success factors for a referral program? According to researcher Boud, It is, in any case, ‘a program where the organization rewards every recruitment contribution in phases as much as possible, including sharing on social media. It results in the highest employee participation.’ In addition, he sees value in programs where half the reward is paid out before and the other half after the probationary period.

‘The timing of the payment of the reward has the most influence on participation in the referral program. It is striking that paying out the reward in phases is popular among employees.’

Referral programs that reward an employee’s every effort ultimately prove to be the most profitable. ‘Of the organizations that use this, 24% score between 20 and 30% of all their hires via referral, while 32% say they even get more than 30% hires this way! We can, therefore, conclude that when the employee is immediately rewarded for the effort, it generates the most referral hires.’ However, that is good news because referrals are not only up to 50% cheaper than regular recruitment via social media, advertisements, or headhunters. Moreover, they stay longer on average, with 45% staying even more than four years.

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