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Employer Brand | Employee Referrals

Your Employer Brand: Is Employee Referrals a “Litmus Test”?

How do you measure the power of your employer brand? Is it possible to assess its value in quantifiable terms?

As it turns out, you can evaluate your employer brand by taking a close look at how your employee referral program is performing.

Obviously if your program is weak because you’re not focusing enough effort on creating one with appropriate incentives and transparency in communication, you’ve got work to do there first.

But if you are following most best practices for such programs and you’re not seeing results, it could be that you need to improve your employer brand.

As Georgene Huang’s article at Forbes, “Why Employee Referral Programs Are The Litmus Test For Your Employer Brand,” explains, “every employee has the potential to shape the narrative and brand of her employer for someone else’s job search.”

Absolutely! There is no better employer branding channel than employee stories, word of mouth and reviews.

How employer brand and referrals work hand in hand

Referrals can deliver higher quality candidates at a lower cost with less turnover.

According to Undercover Recruiter, 46 percent of referred employees stay at a company for more than three years compared to only 14 percent of those hired through job boards. And reports referrals may cost as little as $1,000 per hire compared to up to $18,000 per hire through more traditional sources.

Yet some organizations don’t allocate resources to such programs even though some companies fill 25 to 30 percent of their jobs through employee referrals.

In that Forbes article, Georgene interviewed Jennifer Newbill, director of Global Employer Brand at Dell Computer, who says that the performance of an employee referral program provides “a litmus test” for an organization’s employer brand. If employees express dissatisfaction with their experience, it’s not likely the reflection of excellence in employer branding.

Ms. Newbill also reinforced the importance of leadership for employee referral programs, explaining that at Dell, management recognizes that employees may be far more effective than recruiters in sourcing highly qualified candidates.

I think she explains the essence of this relationship between employer brand and referral programs as she points out, “Brand is a narrative, and our narrative is our people.”

Best practices for success: A symbiotic relationship

A successful employee referral program can be very intricate, especially at a large organization such as Dell, which Ms. Newbill says receives tens of thousands of employee referrals per year. One of her best practices is to embrace transparency and set realistic expectations – that not every referral candidate can expect to be called by a recruiter.

I’ll add a few more best practices to consider:

  • Be quick: Don’t delay recognizing and acknowledging referrals and when you hire a referred candidate
  • Be personal: Don’t send automated emails. Take the time to write a note to thank a specific employee, an excellent tactic for enhancing morale
  • Consider rewards for all qualified candidates: Yes, successful referrals of those hired should be rewarded, but consider rewards for referrals of highly qualified candidates you were not able to hire
  • Extend your program: Former employees, retired employees, and even customers can be a rich resource for talent

In the end, there’s a unique symbiotic relationship between employer brand and your employee referral program. The more you improve your employer brand, the more likely it is your employee referral program will generate better results.

And in turn, the more you adopt best practices for incentives, communications, and promoting your employee referral program, the more likely it is that your employer brand will be well respected so you can land top talent more quickly and at a lower cost.

Prachi Gore

Prachi is responsible for building our demand generation machine used to generate pipeline that fuels SmartRecruiters' rapid growth. Prachi has been building demand for the last 10 years and has worked with innovative brands to build teams, scale demand generation operations, and create awareness in unestablished markets.