Why the best candidate for your next opening may be closer than you think.

Employee referrals are statistically more likely to result in better hires, but one study found that only 10 percent of contenders for a given job were found through a referral.

Recruiters in today’s marketplace could save time and money by taking advantage of strong professional networks within their workforce. Creating a referral pipeline requires strategic planning and cultivation, but the rewards are worth the effort.

Here are 3 reasons to consider a stronger emphasis on employee referrals in your own company and how to get started.

1. Referrals Bring in Better Candidates. Research shows that it takes 10 fewer days on average to hire a referral applicant than a non-referral applicant, saving recruiters valuable time in their search for a suitable hire. They are also more likely to adjust to the new workplace quickly, as they already have a contact onsite to help them become acclimated.

Almost half of employees hired through referrals stay longer than those hired through other avenues, which reduces the risk expense of hiring an employee who has short-term objectives and commitment. Because employees understand their workplace better than an outsider, they are able to refer more qualified workers to the open position. Their reputations are at stake for referrals as well, so they are likely to be more cautious and selective when making recommendations.

Referrals are cheaper, faster and tend to result in better employees. So how do you go about getting them?

2. How to Encourage Referrals. In order for an employee to suggest a job candidate, they must be aware that a position is open. Communicate with employees about job openings and ask if they have recommendations. This is particularly important in industries that need workers with highly specialized skills, or in competitive hiring fields.

Offering incentives for referrals that result in a hire is a common way to motivate employees to refer a candidate. Your current team may be worried about the risk involved in referring a job seeker if they don’t work out, and incentives can abate some of those worries.
3. How to Cultivate Future Referrals. You can continuously build the referral pipeline among your employees by communicating with them about incentives. Maintain interest by conducting contests periodically, such as a raffle for a vacation or bonus prize benefitting employees who’ve provided referrals.

Revisit past applications when a position opens and get in touch with a candidate who has demonstrated interest in your company in the past. Stay in touch with applicants that were not hired to see if they match a future opening. Keeping an open line of communication with these potential hires will make it easier to tap your resources when a position becomes available.

Hiring through referrals successfully requires a strong emphasis from the company on their importance, as well as prompt communication with employees when positions are open and an emphasis on the perks. With a little effort, you can save time and money by building a referral pipeline that works for you.