Finding qualified candidates is never easy, but your best resource may be right under your nose…sitting in the next office or cubicle or working in your shop.
Last month, in my IdeaXchange blog, “Setting up an employee referral program,” I not only detailed the four steps necessary to set up such a program; I also provided the data that shows why this is such an important initiative to undertake. Here are just two of the important points:
- The retention rate for employees recruited through referrals is 2.7 years vs. 1.5 years for those recruited from job boards
- The time for making an offer for a new hire through a referral is 20 days vs.39 days for those found through job boards.
The 2017 Sources of Hire Report from the Chicago-based talent management software company, Silk Road, reinforces this situation. The research included data from 14 million applicants, 329,000 hires, and 655,000 interviews. The report illustrated the problem of finding good people, noting that 46 percent of employers were having difficult filling positions in the previous year, 2016. That was up from 32 percent in 2015. As the economy strengthens and unemployment rates drop, this situation will only grow worse, whether you are looking for diesel technician, warehouse employees, IT staff, accountants…literally just about any occupation.
But it is clear from this reports numbers that your employees are still your best recruiters. The report notes that employee referrals remain the top source of hires. In fact, the report estimated that employee referrals as the top source or hire increased by 5 percent over the prior year. Although external sources provide more interviews than internal sources, 62 percent vs. 38 percent; the success rate to hire is clear, with internal sources resulting in 52 percent of hires vs. 48% from external sources.
One specific statistic stands out. Nearly 50 percent of interviews came from the job site, Indeed, while slightly more than 20 percent came from employee referrals. Yet in this comparison, 30 percent of hires came from referrals vs. slightly less than 30 percent from Indeed.
There are other numbers that emphasize the success of a good employee referral program when it comes to conversion rates:
- It takes 33 external applications to result in one interview, but only nine internal applications to result in one interview (In this statistic, the internal sources also include current employees who look to move up and recruiters.)
- It takes 3 external interviews to move to a single hire, but only 2.1 internal interviews to make one hire
Although the report covers a great deal more than this single issue, including campus recruiting, offline vs. online recruiting, and more, it is clear that looking to your employees as a great resource for new candidates is essential. And as I noted in my earlier IdeaXchange blog, to be most effective, you need to set up a good employee referral program, one that includes written and clear company policies, ways to track results and rewards employees that refer good hires.