Rethink Rewarding Referrals
Does your company offer a referral bonus for employees that recommend friends from their network for internal postings? For those of you that answered Yes – how do your bonuses stack up? Did you say No? I have some numbers for you that may have you rethinking rewarding referrals.
I’ll start with this – Employee Referrals are the number one source of hire. I’ll repeat, referrals from people on your team beat out all other sources of external hires. According to this recruiting infographic, Employee Referrals have the highest applicant to hire conversion rate – only 7% apply but this accounts for 40% of all hires! And as a BONUS, applicants hired from a referral begin their position quicker, have greater job satisfaction, and stay at companies longer. Do you have trouble hiring quality sales people? They are the most hired position from Employee Referrals. Counting your pennies? 51% of employers said it was less expensive to recruit via referrals.
Think about it like this. If your company has 100 employees, and each of them has 150 friends (many will have way more on social networks!), that means you have 15,000 contacts that are potential prospects for your job openings. I’m no mathematician, but these numbers have me convinced. Why wouldn’t I encourage more employees to consider their network and make recommendations for people they think should join the team?
Now that I have you convinced, let’s review the market to see how much money is involved in these referral bonuses. Staffing Industry Analysts surveyed 7,000 people to discover that referral bonuses tended to fall into two categories: bonuses of $100 or less and bonuses of $500 or more. 41% of offered bonuses were $100 or less, and 46% were $500 or more, comprising 87% of all offered bonuses.
The survey also found that the more workers get paid, the more they receive for a referral bonus. At $10 an hour, bonuses are at a median of $50, while $20 an hour receive median $200 referral bonuses, and $30-60 an hour are offered much higher bonuses of $500. So, those of you that said Yes, where do your bonuses stack up?
SIA confirmed that employee referrals rank among the most effective recruiting tactics according to staffing firms, but appear to be seldom used; only 28% of temporary workers report being offered such a bonus. Are you rethinking rewarding employees that make referrals for new hires with referral bonuses? I think you should.