Is Your Employee Retention Plan Missing this Important Piece?
While low unemployment rates signal a strong economy and positive employment prospects for job seekers, for HR and recruiters they often signal a headache. A rebounding economy is good news for everyone, but low unemployment rates often mean higher employee turnover and a lack of qualified job seekers to fill the positions they leave behind. Now that 2017 is off to a strong start, many HR professionals are finding that their employee retention plans need a boost to counter the effects of low unemployment rates. In fact, the Department of Labor recently reported that employee turnover has reached its highest peak since 2008!
Back in December, several industry experts predicted that employee retention would emerge as the biggest concern for business leaders in an increasingly competitive marketplace for talent. In the “war for talent,” they write, companies need to strengthen their retention efforts to keep high-quality employees happy and maintain their competitive advantage. Better compensation, career mobility, workplace culture, and development opportunities are all vital pieces of the retention puzzle. But there’s another, less-discussed tool that HR departments can use to improve retention for both new and existing employees.
Employee Referrals Support Retention Efforts
A strong employee referral program (supported by a culture of engaged employee referrals) contributes to employee retention in several key ways. For existing employees, referrals offer the opportunity to make a positive impact on workplace culture and increase the sense of company loyalty. When it comes to new employees, research has consistently demonstrated that referred employees are faster to hire and stay in their new position longer than employees hired through other means. Here’s how employee referrals support retention efforts:
Referrals Increase Loyalty
As Entrepreneur reports, “Most business owners and managers think retention is based on compensation issues–wage and salary levels, incentives, and golden handcuffs–when in reality the drivers go much deeper into the human psyche to the actions and attitudes that make employees feel successful, secure and appreciated.” How better to demonstrate your trust in your employees and your appreciation of their loyalty than to enable them to effect institutional change and growth through referring new employees?
The people who make up a company are its most vital and transformative asset. When existing employees have a direct hand in referring new employees, they’re able to help guide company culture. Not only do their referrals impact their company’s DNA, they have an immediate impact on their own day to day work experience. An employee who feels empowered to refer qualified contacts who they feel will make a positive contribution is an employee who buys into their company’s future success and feels appreciated and successful as a result.
[Related Insight: How to Turn Your Employees Into an Army of Recruiters]
Referred Employees Stay Longer
Not only does a robust employee referral program increase the loyalty of existing employees, it’s been shown to result in more loyal new hires. If your goal is to impact employee retention from the foundation upward, consider these statistics provided by Undercover Recruiter: 47% of employees hired through a referral stay in their new position for over 3 years, as opposed to 39% of those found through a career site, and only 14% hired through a posting on a job board. In addition to staying longer, referred employees are hired faster, on average taking 10-25 days less to hire than employees found through other sources.
Why is this? As Jen Dewar writes for Lever, “Great employees intuitively know who in their networks would be a great fit for your organization and can help their referred hires settle in and become successful, helping them stay longer.” When you empower employees to act as front-line recruiters in the war for talent, they provide pre-vetted candidates who they know to be qualified, motivated, and a good fit for established company culture. Their referrals, in turn, feel valued as a result of the referral and work harder to “live up to” their referrer’s expectations. It’s a winning situation for employees, referrals, and HR and recruiters alike.
[Related Insight: Pre-Vetted Job Candidates Save You Time & Money]
Reinforce Retention Efforts with Employee Referrals
Have you made employee referrals part of your retention plan? When integrated alongside raises, incentives, and development opportunities, referrals strengthen retention efforts from the ground up. It’s a holistic approach to talent acquisition that benefits everyone.
At JobShakers, we understand the challenges facing today’s HR and recruiting professionals. That’s why we’ve built a modern, technology-enabled platform that streamlines the referral process and makes it easier than ever to implement a thriving employee referral program. If you’re ready to reinforce your retention efforts and build loyalty among new and existing employees, contact us today to learn more!