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Inicio  /  Blog  /  Referral Program: What is it and how does it work?

Referral Program: What is it and how does it work?

Vista Jobs article

More and more companies are turning to referral recruiting, a talent recruitment strategy that is booming for its valuable benefits and results.

What is a referral program or referral recruitment?
The main objective will always be the same: to find the best talent by taking advantage of the ability of current employees to recommend, from their group of acquaintances or friends, candidates they consider suitable for the vacancy and who they believe would adapt well to the teamwork and organizational culture.

While traditional sources are still the main providers of talent, referral programs, or referral recruiting, is one of today's growing trend sources..

Once the vacancy requirements are designed, the human resources area communicates and invites selected employees to apply for their candidates who apply to the evaluations and video interview and are selected or rejected. Existing employees refer specific people or share a job posting, for example, through their social media accounts.

In the case of a hire, the employee who made the referral usually receives rewards, depending on the outcome of the selection and the performance of the referral. This is an interesting incentive for employees to continue to refer good talent in the future.

Why are more companies choosing employee referral programs?
The main reason for relying on the employee recruitment approach is that referral programs have an excellent track record of successful hires. According to Bamberg University's "Recruiting Trends 2020" study, referred employees have lower turnover rates. Other data supporting the advantages of referral recruiting or referral programs are:
  • Reduction of recruiting and selection costs and times. The average referral program is 60% cheaper than using other sources.
  • On average it takes 25 days to complete the entire process, much less time than it takes to recruit candidates from other sources.
  • It helps improve the work climate, employees are likely to recommend someone when they themselves feel very comfortable in the workplace. Additionally, they would recommend people whose attitudes and knowledge they consider compatible with the position, the work team and the organization in general.
  • Experience in many companies shows that employees hired in this way are quickly integrated and quickly start their productive stage.
  • Lower personnel turnover. The commitment shown by those hired under this modality shows greater commitment and better integration with the work team, extending the duration of their working life.
  • Candidates find it more interesting to apply for a vacancy when acquaintances or friends recommend and speak positively about a company than when they do so by other more conventional means.
  • Candidates are 5 times more likely to get a job than through traditional methods.
  • 40% of referred candidates end up getting the job.

How to reward employees using a referral program?
The most commonly used is financial compensation, but other complementary or alternative benefits may also be considered, such as the following:
  • Days off or additional vacation pay
  • Free training
  • Purchase coupons, fuel or travel
  • Devices such as cell phones, tablets, among others
  • Recognition within the company, e.g., a mention on the website

An employee referral program is undoubtedly an effective source of recruiting excellent talent.

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