At Pacesetter we pride ourselves on employee retention, but that doesn’t mean we never have hiring needs. Business expansion, retirements and, yes, some general turnover means we need a way to find the right person, at the right time.
One of the best ways we’ve found to meet our needs is to actively solicit referrals from our associates. As we’ve mentioned previously, over the last 3 years more than 70% of our new hires here at the corporate office are referrals. In fact, in the I-Rep area alone, five out of the six members on my team are all referrals!
The real key is that these referrals aren’t random buddies. They are former associates and contacts that left a lasting, positive, impression on our current associates which is why they are such a great match for Pacesetter. From day one when I was hired at Pacesetter, I knew that this was a place where I would want to stay for the long haul. Sure there are other companies that have great benefits and values, but how many other companies are there where the CEO knows not only your name, but they know your spouse and children? Aviva told me that Pacesetter would become like my second family and it really has. Pacesetter is a company that practices what it preaches. I daily feel positively challenged and supported. Pacesetter is a company that I can believe in and put my “Stephanie Stamp of Approval” on. Because of this, I have actually referred three of my friends that are now part of the Pacesetter family. In turn, they have also started bringing in referrals!
There are two strong reasons to rely on referrals, both with financial implications: upfront hiring costs and bad-hire costs.
Upfront Hiring Costs
There are multiple specific costs associated with the hiring process: advertising; in-house recruiters’ salaries or third party recruiter fees; travel expenses; and sign-on bonuses, just to name a few. For certain higher-level positions, there may also be employee relocation costs.
Referrals, even if you have a referral bonus program like we do at Pacesetter (CHECK!) eliminate much of the advertising and recruiting costs, and could give you solid, local, candidates.
A Forbes magazine article, discussing successful job matches, points to a Glassdoor study which found that candidates who were referred to a company, by an existing employee, had the best chance of receiving and accepting a job offer.
This is important information because turnover is expensive, both literally and in terms of keeping the company culture positive.
If a newly hired associate is not a good fit, and quits after a short period of time, then the hiring process and associated costs begin again–not to mention the costs of time and labor lost while onboarding and training the first hire.
A 2012 study by the Center for American Progress found that for workers earning less than $50,000 annually—which covers three-quarters of all workers in the United States–the typical cost of turnover equates to about 20 percent of salary. The same cost applies to positions earning $75,000 a year or less, which includes 9 in 10 U.S. workers.
Yet, the Glassdoor study found that, though they are the most powerful hiring tool, employee referrals account for just 10% of overall activities that lead to a job interview.
The fact is, people who already work with you know the company the best, and know the best people to fill positions at the company. Add that to the lower-cost and higher-retention and it’s clear, referrals are the way to go!