Effizienz & Effektivität von Empfehlungsprogrammen
Effizienz & Effektivität von Empfehlungsprogrammen
Introduction
If you're wondering how to evaluate the effectiveness of your employee referral program, you're in the right place. In this post, we explore how to measure the efficiency and effectiveness of an internal referral program, examine the typical activity rate of employees, and analyze the cost savings achieved through such programs.
1. Understanding the Measurement of Efficiency and Effectiveness in Referral Programs
Assessing the efficiency of an employee referral program depends on two main factors: the number of referrals generated and the quality of those referrals. To measure efficiency, look at how many of your new hires came through referrals and how many referrals each employee gives on average.
Effectiveness is judged by the quality of referrals. It's crucial to analyze how many of the referred candidates were actually hired and how their performance compares to other recruitment sources. Long-term indicators like employee retention and the productivity of referred employees can also serve as useful barometers for effectiveness.
2. Properly Evaluating the Power of Power Users
Interestingly, we often find that a relatively small group of power users makes the most significant impact. Typically, about 5% of employees account for up to 30% of successful hires through referrals. This highlights the importance of identifying these power users and properly motivating them to remain the backbone of your referral program.
Participation rate remains important as it provides 1) an indicator of whether the program is fundamentally accepted and 2) increases the chance of reaching all power users within the company.
It's difficult to predict the rate of power users in advance. Depending on the company, industry, management, and culture, we see rates ranging from 5 to 15%. Therefore, it's crucial to understand the why and the hygiene factors of employees and address them.
3. Expected Cost Savings from Referral Programs
Referral programs can lead to significant cost savings for your company.
- Faster Time-to-Hire: Referrals often speed up the hiring process as they have already had a quality initial contact, possess an internal advocate, and generally fit the company culture better during the first screening.
- Higher Employee Retention: Referred employees tend to stay longer with the company than those who had no prior personal contacts within the team and independently became aware of the company. This reduces the costs for future hires and training of new employees.
- Lower Expenses for Job Ads: The more qualified candidates come through referrals, the lower the necessary budget for job ads and similar expenses—or you can use the gained potential for additional campaigns!
- Reduced Costs for Headhunters: By building a qualified talent pipeline or talent pool, you will need to rely less on expensive external recruitment services in the future.
Continuation: 4 & 5. Setting Goals for Your Employee Referral Program & Early Involvement of the Right Stakeholders
You can read sections 4 & 5 in our free Community Whitepaper here.
Jürgen Ulbrich
Jürgen Ulbrich has more than a decade of experience in developing and leading high-performing teams and companies. As an expert in employee referral programs as well as feedback and performance processes, Jürgen has helped over 100 organizations optimize their talent acquisition and development strategies.
