How can you grow your candidate pool smarter and faster?
For any staffing business, referrals are the way to go. There is a lot of data out there to back this up – staffing firms that have a reliable system for getting and managing referrals have tapped into the top recruiting tactic: delivering the best ROI.
Why are referrals such a great choice? Here’s what we’ve uncovered:
Referrals: Why they matter
Referrals deliver great ROI
First of all, let’s talk about how you usually generate leads for your business. Typically, the most common lead gen methods used by staffing firms are quite expensive. For example, if you were to run a career fair, it will typically set you back up to $28,000, while entering one as an exhibitor tends to incur a substantial fee, too.
As for the results of job fairs? A Staffing Hub survey ranks them far down the list in terms of ROI. Most staffing firms report mixed results from job fairs. It’s a kind of “win some, lose some” situation, where some fairs deliver great results and others net nothing.
Some other more pricey recruitment methods, including AdWords and sites like ZipRecruiter, ranked the same as job fairs in terms of ROI. As you can see from the graph below, staffing firms are trying a lot of different methods, but but only seeing an ROI for a few. What ranks at the top? Referral programs.
Referrals rank so well for ROI because not only do they get results, they also deliver applicants that convert to placements faster. Referral programs that pay out only do so when a result has been delivered, meaning both the staffing firm and the referrer win.
A conversation around costs and ROI is important for staffing firms due to the competitive nature of the landscape. Staffing Industry Analysts’ Staffing Trends 2020 report indicates that staffing firms have a strong need to control costs in order to protect profits — now more than ever. This is especially necessary due to increased competition and new options for companies that are looking to hire, including technology solutions.
Having an effective referral program in place is one way that staffing firms can gain a competitive edge. They can source high-quality candidates at a low cost and can often claim better candidate results by doing so.
Referrals help you place better candidates
A few different reports (including this one from Bullhorn) have found that referrals lead to better candidate placements. A big reason for this is that referrals are “warm” candidates; they already know who you are and are more likely to pick up the phone or respond to an email when you reach out. This means less chasing after well-qualified candidates.
In general, it takes a lot of work to screen and place job candidates. In an example from the Bullhorn report, referrals were a company’s top source of job candidates and they managed to place more than 7% of those referred. In contrast, job boards were their second-top source of candidates and they placed just 1% of candidates.
Why is this? Referrals often tend to be further along in the job search process – ensuring that the candidate is qualified. They are referred by someone who knows the company and understands the skills and experience they are looking for. People tend to refer only those candidates whom they believe will be a good fit – there’s a sense of pride in making a connection that is valuable for both parties.
Being known for high-quality candidates and successful placements is the bread and butter of any staffing business. Getting back to how competitive the industry is, this is another factor that gives you an edge over others. You could say that having a process that delivers you good quality referrals can also enhance your reputation…
Referrals can speed your recruitment process
According to HR Technologist, employees hired via referrals come in 55% faster than those sourced through career sites. Here’s another example of how referrals can give you a competitive edge: when you’re on a tight schedule and have urgent staffing requirements to handle, referrals can deliver quickly.
Competition for talented employees tends to be tight. When someone with the right skills is available, they are often snapped up quickly, so if you’re relying on “old ways” of finding candidates (such as advertising or manual internal processes), you’ll often be left in the dust.
In terms of growing a staffing business, how valuable is it to have a reputation for delivering high-quality candidates quickly?
The fact is finding those excellent candidates through other recruitment methods takes a lot of time. For example, consider what happens with cold outreach via LinkedIn or other channels. How successful do you usually find this sort of sourcing to be? The industry average for “cold calling” of this type is just a 1-3% response rate.
At this rate, you spend yet more time mining for candidates because, let’s face it, a one-person-out-of-100 response rate does not form a candidate pool! Even if you’re following “best practices” for the cold approach, it’s pretty typical that most won’t respond. Think about how bombarded people are with emails and other forms of messaging these days – there’s a high chance they simply don’t see your approach, or they think you’re sending just another form of spam.
On the other hand, people usually refer those they already know are interested in the type of work you are recruiting for. These people may be actively looking for a new job already, so they’re much warmer on the approach. This means if you call or email, they’re already primed to respond.
Referral programs can deliver a better candidate experience
Have you ever made a referral, expecting to hear back from a company (or be paid out a promised reward), only to hear nothing? Have you been referred to someone yourself and had no response from them?
When these things happen, the overall impact is a poor experience, whether you’re the referrer or the person being referred. You can get the impression that the company is disorganized, disinterested, or even dishonest (especially if they offer a reward for successful referrals and don’t follow up on it!).
Candidate experience is one of the pillars of a successful staffing business. It doesn’t take long for word to get out that you’re the sort of company that doesn’t get back to people. This can leave a sense of non-transparency and a general idea that you don’t value people, or treat them with the respect they deserve. Make no mistake, people will actively look elsewhere rather than engage with a company that has such a reputation.
On the other hand, a well-run referral program can enhance the candidate experience. When your referral process is set up correctly, including automated tracking, and prompt responses, it delivers what your candidates and your referrers need: timely action! This says that you value people and respect their time. What’s more, it helps you stand out from the rest of your staffing competitors.
People just want to know where they stand, which is pretty much the same for anything else in life. Establishing and nurturing that trust is an important part of business growth.
In the staffing and recruitment industry, it’s vital to establish reliable pipelines for bringing in quality candidates. The referral pipeline is often overlooked, or seen as a bit of an afterthought, yet it has proven time and again to be a valuable source of good candidates.
The key here is that you need a well-developed referral process. It can’t be left as an assumption that people will refer, or as a manual process that your recruiters do when it occurs to them. The referral process should be transparent and automated in terms of tracking and follow-up as this ensures a consistent, positive candidate experience.
If you haven’t set up a reliable, automated referral system for your staffing business yet, we’d encourage you to check it out. It could be a game-changer for business growth.