Guest Post By AnyGood? Product Manager, Robyn Allen.
According to a February Bloomberg article, the number of employed people in the UK rose by 180,000 in the last quarter, exceeding all forecasts. The UK now has an unemployment rate of 3.8%, the lowest it has been in four decades.
Simultaneously, Staffing Industry Analysts have shared statistics saying that there were approximately 810,000 job vacancies listed in the UK in the same quarter. Although this was an increase on the quarter before, it is 50,000 fewer than the previous year.
This begs the question: if the UK is experiencing the highest rate of employment in four decades, but there have been significantly fewer job vacancies… How have so many people found work?
There is a logical answer
At AnyGood?, we believe one possible explanation for the increase in employment rates but the decrease in vacancies listed could be the increasing number of businesses opting to try employee referral software. If roles could be filled internally, through recommendations, where exceptional, high quality candidates are personally vouched for, what need would there be to advertise externally?
With almost one million vacancies shared in the UK last year, traditional recruitment is surely still seen as the norm. But why don’t more businesses and employers base their hiring strategies on employee referral schemes?
The Benefits of Recommended Candidates
The benefits of using an employee referral scheme for recommended candidates are well known. Referred candidates are cheaper to hire: the average margin charged by recruitment agencies on permanent placements in the UK is 14.7%, whereas the cost of employee referrals can be set and managed internally. In addition, referred candidates are usually of a higher quality. Why would an employee risk their reputation (and therefore careers) by putting someone forward who is not suitable? This in turn saves time: in order to put the most relevant, qualified candidates forward, the referrer would pre-screen anyone they’re likely to recommend, meaning hiring managers, HR departments and recruitment consultants can confidently miss this step. It can also be asserted that referred candidates are more easily persuaded: who would you trust… a cold call from a recruiter you don’t know, or a friendly familiar person?
As well as reducing time to hire and allowing HR to become more efficient, existing employees would become more engaged. According to the Institute for Employment Studies, having employees involved in decision making can be a key driver in increasing engagement and in turn, workplace satisfaction.
So employees are more engaged, candidates are of higher quality and management are able to use their time more efficiently. It seems like a no-brainer, right? The list of benefits seems endless, for any sized organisation. However, although the benefits of an employee referral scheme are well documented, it does not automatically mean each employee referral scheme is well executed or even effective.
How AnyGood? Can Help
As great as they sound, employee referral schemes aren’t simple to implement. Designing the process, ensuring the correct rewards are offered, and maintaining employee engagement are just a few of the challenges employers face when looking to spend less on recruitment agencies by moving to an in-house referral scheme. When you add the risk of hiring in the same image of your current employees resulting in a subsequent lack of diversity… Employee referral schemes become exceedingly complex and intimidating to manage.
We have gained significant experience in managing personal recommendations for roles with over five years’ research in multi-sided marketplaces, behavioural psychology and platform engagement. Using an innovative, lean approach we have built our own tech platform to facilitate professionals recommending each other for roles.
We’re ready to share what we’ve learnt, adding value on a consultative basis. Our dream is to make referred candidates the norm, not job vacancies posted and reposted again into an endless online void.
Don’t believe us? Get in touch here to hear more about how we can help you take advantage of your employee’s networks.
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Photo by Oleg Magni