Businesses waste millions of pounds on recruitment by not using staff referrals

Businesses are throwing away millions of pounds on recruitment by not encouraging their employees to refer people they know, research has found.

A study by recruitment outsourcing provider Capital Consulting found that only 18% of the 2,396 staff surveyed work in organisations that encourage them to recommend their friends, but 24% knew someone they could refer straight away.

Referral schemes encourage staff to recommend someone they know to an employer by offering a financial or other type of reward for referrals that result in successful recruitment. The study estimated that a company hiring 250 staff per year would save £80,000 if just 10% of these were referrals and a £250 reward was paid for each. If every company listed on the London Stock Exchange did this, the total saving would be more than £260m.

Coors is the UK’s second largest brewer, with brands including Carling and Grolsch. In 2006, 24% of its new recruits were introduced to the company by staff referrals. Dawn Butler, Coors’ resourcing manager, said: “Our existing employees live our values and understand our business better than anyone else, so they are best placed to recommend suitable individuals to the company.”

According to the study, referred candidates have already been vetted by an employee, are usually a better fit with the company and job, and have a better understanding of the business.

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