Best Employee Referral Software - June 2019
A complete guide to the best employee referral systems
Employee referrals are typically the best source of hire for companies. Referral candidates quickly move through the interview process, stay longer, and get ramped up faster.
While employee referrals can happen organically, or through the built in module in the ATS, it usually makes sense for companies to also partner with a dedicated employee referral tool in order to boost the number of referrals they are getting, as well as manage tracking, rewards, etc.
In this guide we’ll give you the insights you need to understand the employee referral landscape, a few vendors we think you should look at, and advice on implementing a successful program. Enjoy!
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In this guide you’ll find: Best Employee Referral Vendors, Benefits of Employee Referral Software, ROI Calculator, Common Pitfalls, Pricing Information
Teamable pioneered using your employee/alumni/advisor networks to boost referrals, and allow your recruiting team a new avenue to source talent already connected to your company. Their longevity means they have lots of data on potential referrals, as well as a great handle on how to implement this solution across your organization. They acquired another company in this space, Simppler, in 2017.
This solution is tailor made to help recruiting teams boost internal referrals through intelligent and automated suggestions that are pushed to employees. Their matching, tracking, and rewarding functionality drives adoption within the organization, along with results you can measure in your ATS.
Worth Checking Out: Teamable has an incredible customer list that keeps growing: Spotify, Allstate, Lyft and many others.
As the domain name implies, these guys have been in the referrals game for quite some time. That means they hook into all the various ATS’s and rewards programs out there. They’ve found their customers referral hires increase 15% on average (so if your hires are 25% referrals now, you can expect 40% after implementation). Notable customers include Crocs, ZipRecruiter, and DeVry University.
Worth Checking Out: They will work with you on a consulting basis to get everything up and running.
Drafted started as a marketplace that allowed anyone to refer people to a given company. They’ve morphed into a referral tool that allows your recruiting team to source from your employee’s networks. A key strength is their matching algorithm which has mapped over 40k jobs, translating to better referral suggestions to your employees.
Worth Checking Out: Take a look at Drafted’s network which allows your reach to expand beyond your employees.
RolePoint has historically been a leader in this market. They’ve recently merged with JobVite and a few other tools and so it’ll be interesting to see how the solution evolves with that HCM suite. However, it’s worth noting they integrate with the majority of ATS/HRIS vendors currently. Their customer base includes McKinsey, UPS, and LinkedIn.
Worth Checking Out: RolePoint’s professional services team ensures you have a successful implementation, and continuously engage your employees.
Benefits of Employee Referral Technology
HR and talent acquisition teams are looking to add an employee referral solution because it can be a game changer for your recruiting efforts. Here are the key benefits of referral technology, see below for how we translate these benefits into an actual return on investment calculation for your CFO.
More Top of Funnel: Simply put, getting more referrals drastically increases the top of your recruiting funnel fast. Right now you are no doubt getting employees to recommend their friends via your ATS or whatever system you currently have setup. Imagine getting 3x that amount of candidates simply by putting in the right process, reminders, rewards.
High Conversion Rates: For every 10 employee referrals, you probably get 1 hire. Contrast that with the number of applicants you need from a job board or even your career site to get a hire. Referral candidates convert to employees at a much higher rate. This decreases time to fill, as well as the amount of hours you spend screening candidates.
Better Retention: Job seekers who are brought to the recruiting team via employee referrals have a much better understanding of the job they are getting into. This translates into better retention, especially for roles where churn is an issue: nursing, retail, transportation, etc.
Employee Engagement: Anytime you can get your employees involved in the recruiting process is a win. Employee referral tools make the workflow simple and rewarding for employees who get to help their friends, their company, and typically get a reward for themselves as well.
Return on Investment from Employee Referral Software
We believe that whenever you are going to ask for money, you should be prepared to back up your thinking with a model of the returns from your spend. Here is a short model that details how we think about the ROI from implementing an employee referral platform. Feel free to tweak it to meet your own goals.
Essentially, we’re going to drive more hires through employee referrals, at a lower cost than our typical recruiting channels. This means we are saving money on each of these hires. What’s not contemplated in this exercise (but feel free to model it if you’d like):
Referred candidates typically ramp faster
The benefits from decreased time to fill
Referred candidates stay longer
Pro Tip: Put a time on your calendar right now for 6 months out that reminds you to go back and look at this model again. What did you get right, and what did you get wrong? Understanding this will allow you to get better as a practitioner and allocator of capital within your organization!
Common Pitfalls and Misconceptions about Employee Referral Programs
When we talk to our expert council of HR and talent acquisition professionals, there are a few things that come up again and gain when it comes to buying and implementing this type of software.
Implementation goes at your pace: Implementing an employee referral program can take a week. But, it usually takes longer. Let’s face it, most people in recruiting are super busy filling reqs and don’t have the headspace to take on new initiatives. So, we highly recommend giving someone on your team time to spearhead this initiative and make sure it gets done quickly. Or, partner with a company that has a robust professional services org to help you.
Metrics matter: Make sure that you are tracking where candidates are coming from in your ATS. If you aren’t, then it may become hard to understand how much value this tool is actually creating. Most of these vendors make it super easy to do that, but you still need to make sure it’s working.
Understand cost per hire: The easiest way to say “yes” to this solution is to realize it’s going to lower your cost per hire. But, do you know your cost pre hire currently? Make sure you have a handle on your overall cost per hire (and ideally the cost per hire for all your different roles/channels) so that when it comes time to renew the contract, you know whether or not this channel is bringing down your costs!
Employee Engagement: While the vendors listed above all have built in workflows to get your employees engaged in your hiring, you still need to think through your general philosophy on rewards, as well as how this will all be messaged. Our advice is to get hiring managers onboard with a short presentation on why employee referrals is worth investing in, and then have the hiring managers re-enforce messaging to employees on a regular basis to keep your hiring pipeline full of high quality referrals.
Dive In: Companies that are tentative in rolling out their programs typically don’t see high returns. If you tell employees this is a pilot, they are going to be much more hesitant to use the product, and you won’t get the ROI you’re looking for. Go all in, even if it’s for a “pilot” for one segment of your organization.
Be Proactive: Referrals are great when your employees offer them. But, the companies who are most successful with these programs have recruiters who are reaching out to their colleagues and asking for intro’s. Use these tools as a sourcing database that has an 80% response rate from candidates vs whatever you’re currently getting on cold outreach.
Integrations Matter: Make sure the vendor you partner with has easy to setup and maintain integrations with your ATS and HRIS - you don’t want to spend time each money downloading and .csv files.
Don’t get tripped up on these common hurdles, make sure you are thinking strategically about how a tool to boost employee referrals will be implemented and measured.
Employee Referral Software Pricing
Generally speaking, referral technology is priced based on the number of employees in your organization. We like this as the value you get from the offering is very closely tied to the number of employees you have. More employees means more referrals, and a decreased cost per hire and time to fill.
Here are some general guidelines you can use to understand how much this type of software will cost you. Please note the pricing depends on which vendor you choose, which modules you want, and how fast your organization is growing. Some of these vendors also have implementation fees on top of the annual subscription (not necessarily a bad thing, especially if you need hands on help to get started).
Employee Referral Software Pricing:
|Number of Employees||Annual Cost||Cost/Employee/Month|
Again, the pricing you’ll get from a given vendor depends on the specific needs of your organization, and your ability to negotiate.
If you’re looking at buying employee referral software, you’re probably going to get demos of a few different solutions. We recommend staying organized by keeping track of the features that matter to you, and how each vendor can currently deliver on each. The below spreadsheet will help you stay organized throughout your demos, so that you can pick the right referral platform.