Utilizing Employee Referrals in Your Recruiting

I had a roommate in college who, like many students, put a lot of importance on his social life. He went to parties on the weekends — even the occasional weeknight — joined a number of organizations and went out of his way to meet as many people as possible during his four years of undergrad.

One day he was leaving for another meeting when I made a comment about how busy his schedule was. Just before walking out the door he turned around and said, “it’s not the grades you make, it’s the hands you shake.”People waiting for job interview

Despite sounding like an excuse to not take school work very seriously, the comment made a lot of sense; however, it wasn’t till after graduating that I fully realized the truthfulness of his statement. The most recent example was three and a half months ago when I was working on a freelance project from home and a chat window opened in the bottom right corner of my laptop screen with five words in it.

“Interested in a new gig?”

The message was from another friend of mine from college and the “new gig,” was a writing job in the marketing department at the company he worked for — Zoho.

A few emails back and forth, some research, two tryout articles and one interview later, I landed the job. And while I still believe you have to have the necessary skills and adequately prepare for the interview, it was the hand I shook back in 2007 that got my foot in the door.

It’s Not What You Know, It’s Who You Know

To some degree, this old mantra is very true. Think about all the jobs you have had in your life. From waiting tables to working as a lifeguard during summers at the public pool and even starting your career, there’s a good chance that you got one of those jobs from knowing somebody who already worked there.

Turns out, employee referrals is a common way of recruiting not only talent, but also trustworthy employees who fit your company’s culture. In fact, according to Jobvite, the online employee recruiting firm, employee referrals make up 40 percent of hires across the nation.

Referrals also speed up the hiring process. Jobvite also found from their research that it took an average of 29 days to hire an applicant from a referral — 10 days quicker than a job board and 26 days quicker than a recruiting site.

The Top of the Resume Pile

iStock_000017600891XSmallThe concept of “who you know,” is nothing new for the hiring process, but it has become increasingly more advantageous, especially during the recent recession.

In a January article from The New York Times, writer Nelson D. Schwartz says there is a, “fundamental shift in the job market…big companies are increasingly using their own workers to find new hires, saving time and money.”

For the global service firm Ernst & Young, employee recommendations make up 45 percent of nonentry-level jobs, a 28 percent increase since 2010. And like any job, getting to the top of the resume pile is one of the biggest challenges.

“A referral puts them in the express lane,” said Larry Nash, Ernst & Young director of experienced and executive recruiting, to The New York Times.

Additionally, a new study by three economists at the Federal Reserve Bank of New York also found that an employee referral was twice as likely to get an interview. And of the interviewees, the referral has a 40 percent better chance of getting the job.

Finding the Right Balance

Of course, not every hire comes from, or should come from, an employee recommendation. It’s about finding the right balance between recommendations and also potential employees through applicant tracking and recruiting software.

At Ernst & Young, their goal is for 50 percent of hires to come from employee recommendations. Other companies like Enterprise Rent-A-Car want to make sure they don’t get past that halfway mark to make sure others still have a chance.

“I think if you begin to creep up to 50 percent or higher, you start to worry about people not getting the opportunity to talk to us,” said Marie Artim, vice president for talent acquisition at Enterprise Holdings.

Using employee recommendations can be very beneficial for your business, but it really is a balance that is unique to your company. Find what works best for you and get the employees who will take your company to the next level.

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