Home > applicant tracking, online applications, recruiting software, referral hiring, small business > Is Internal Referral Hiring The Best Way to Find Talent?

Is Internal Referral Hiring The Best Way to Find Talent?

referral hiring ATSThere’s a well known saying in the job market; “It’s not what you know, it’s who you,” and in today’s market that has never been more true. More than ever, it’s important for companies to not only keep track of who they hire, but also where they find their candidates. With so many variables involved, external resumes, various job boards, social networks, and referrals, having an effective applicant tracking system in place is vital when it comes to verifying which methods work best for your company.

A recent New York Times article profiled a large employer that receives nearly half of their new hires from employee referrals. According to this and other employers it is these recruits that are the cream that rises to the top of the crop.

But does knowing someone necessarily make a person a good candidate? In many cases it does. John Sullivan, an HR consultant that teaches management at San Francisco State University calls the job board, Monster.com, Monster.ugly and says that it carries a stigma. He also says sending a resume without a connection, preferably someone within the company, is like sending it to a “black hole.” While it does make things more difficult for the long term unemployed, it does bring in higher quality candidates. Those who spend time not using their skills do lose them, and often their network.

When companies do take the risk and hire someone who has been unemployed for an extended period of time, they often pay for it, because the employee may not be as skilled as they believe they are, and may not stay in the position either from their own admittance of their shortcoming, or because the employer recognizes that keeping them employed is no longer cost effective. Hiring a new person not only means paying their salary, but also paying for their training, background checks, and other assessments. In 2007, Training magazine reported that even established employees cost companies an average of $12,000 per year in training. That just increases for new or “rusty” workers. When over 600 CEOs were interviewed by Harvard Business School about hiring midlevel managers, they reported that it normally took more than six months just to break even.

While internal referrals are a good way to go, and do account for about half of new hires. Some hiring segments simply aren’t tracked effectively by most companies, notably contingent workers, such as temporary contract workers and freelancers, are often not tracked at all. While many companies don’t seem to make this a high priority, those who do include these workers as a part of their applicant tracking system find that they represented around 13% with the number expected to grow, Since these workers are hired for more focused tasks, employers are often able to identify a worker’s potential without making the investment of full on training. It also gets workers a chance to meet and network with others for future referral opportunities.

For many companies, internal referrals may be the way to go, however not all companies are the same. To find what works best in your organization it is important to track your own hiring process and evaluate the data specific to you.

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: