By: Bernard, Technology Recruiter

Challenges in Recruitment

Attracting the best people and making the right hiring decisions are some of the most challenging aspects of recruitment. People are the assets of the company. When good assets are acquired, they yield good results. One bad hire could be costly both in terms of time and financially.

Hi! I’m Bernard, a technology recruiter at Opn. Being a technical recruiter is one of the most challenging aspects of the recruitment profession. Its challenges are multifaceted. As a technical recruiter, you are exposed to constant competition from other companies that may have more capacity than your company to attract and hire the best technical talent in a market where demand surpasses supply, and the quality of the remaining talent is highly questionable. That is one aspect of the challenges. Another challenge is the complexities of dealing with both internal and external stakeholders. On the one hand, you are responsible for understanding what your hiring managers are looking for, and on the other hand, you have to manage talents who may not be eager. However, this blog post isn’t about the challenges of technical recruitment but rather the importance of a referral program and how we utilize it to mitigate recruitment challenges and make better hiring decisions.

I have always believed that success in recruitment is always about the strategy, irrespective of the difficulties and competitiveness associated with it. The question remains, how do you sail seamlessly through its complexities? Referrals. Yes, establishing a referral program is one of the major ways to be successful, particularly in in-house recruitment.

The Importance of a Referral Program

In today’s competitive tech talent market, companies are investing more financially in recruitment and branding strategies to stay at the top of talent attraction. Oftentimes, companies that are financially affluent and have huge branding and recruitment budgets have a higher propensity and are more susceptible to attracting the best talent far more effectively than their counterparts who may be constrained by financial limitations. However, this may not be sufficient in the long run because this particular strategy is primarily financially motivated. Unless the company has an unending stream of revenue, it may struggle to sustain its lucrative branding and recruitment strategies for an extended period of time.

For companies looking to stay competitive and may not have the financial resources to budget large amounts for this purpose, perhaps they will need to devise a referral program to increase employee engagement and satisfaction, the quality of hires, and boost the company’s branding through word of mouth. Employee referrals are recommendations made by current employees for candidates to apply for job openings within the company. Referrals are deemed successful if high-performing and quality employees refer individuals similar to themselves to their companies.

Benefits of a Referral Program for Companies

Initiating, introducing, establishing, and sponsoring a referral program offers numerous benefits to companies. Before delving into its benefits, it's essential to acknowledge both its intrinsic and extrinsic impacts on companies. What are its intrinsic and extrinsic impacts? On the one hand, it maintains a company's culture, increases the chances of making good hiring decisions, enhances job satisfaction, fosters organizational commitment, boosts employee engagement, and strengthens constituent attachment, all while decreasing attrition and turnover rates. On the other hand, its extrinsic impacts include a cost-effective hiring strategy, promotion of employer branding, enhancement of the quality of hires, and improved performance.

Examining the Intrinsic and Extrinsic Impacts of a Referral Program

Numerous studies have examined both the intrinsic and extrinsic impacts a referral program can have on companies and suggested a variety of positive outcomes. These include fostering a positive company culture, enhancing employee satisfaction, improving job performance, and strengthening commitment to the company. In essence, when employees feel positively attached to their company, they are more inclined to refer their peers to join them, and talented individuals tend to attract others who excel in their roles.

Another example of the intrinsic and extrinsic impacts a referral program has on companies is the quality of hire. Hiring is time-consuming, given the average time of 30 days or more to fill a role, based on the contractual notice period of employees. Time to hire and time to fill a role are familiar metrics among recruiters used to measure how quickly a successful hire is made. Recruiters are aware of how impactful a good referral is to these metrics. Employees understand the importance of a good referral as it reflects back on them in the long run. It is also noteworthy to mention that referred employees are less likely to quit, which, in turn, reduces the cost of hiring. It is said that a strong company culture produces a happier, more productive workplace.

Furthermore, elucidating the intrinsic and extrinsic impacts a referral program has on companies is crucial for recognizing how important it is to keep employees engaged within the company. A recent Gallup survey indicated that disengagement is expensive and could cost companies a significant amount of money, with 52 percent of employees reported as disengaged. Conversely, companies with engaged employees often have evidence of a well-documented referral system that enables them to hire better-suited candidates. It is evident that referral programs yield tremendous results that enhance recruitment outcomes. It should be a priority for every company to establish a system whereby high-performing employees can refer individuals and be duly rewarded.

Conclusion

The importance of a referral program cannot be overemphasized. It benefits companies of all sizes by attracting highly qualified talents and promoting employee engagement, which in turn sustains the company culture. However, to maximize these benefits, companies need to encourage their best employees to recommend their peers.

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