To hire through referrals, or to go out into the wide world to find new employees, that is the question. If you're considering hiring for one of your insurance jobs, is an employee referral the best way to go about this process? What do you need to know to make a referral program successful?
A Referral Program Usually Yields High-Quality Candidates
Referrals from your employees are usually quite successful. This is because your employees have an excellent sense of your organization and are able to articulate this to prospective employees as well. Those individuals can then determine whether they're a match with your culture and your specific needs.
Employees who refer those prospective hires are often invested in their success, so they are more likely to mentor the new employees. According to Recruiter Box, the success of referred employees is partially due to your employee's "understanding their referral’s strengths and weaknesses, but also because they know the referral’s performance could reflect back on them." People don't tend to refer others who would be a poor match.
Referred employees also tend to stay in their positions longer. According to Paul Petrone, "46 percent of referred hires stuck around for at least one year after they were hired, which was far above the 33 percent of people hired through career sites and 22 percent hired through job boards."
Better employee retention saves your agency money and helps to ensure the continued growth of your business.
Do Your Due Diligence
Hiring through a referral is quicker than hiring through a job posting. You skip a number of steps (like posting the position and vetting the candidates, for example). However, you also need to do your due diligence when hiring through referral. You have an intimate knowledge of your insurance jobs, and the referring employee may not know all of the ins and outs of the position. You still need to ask the right questions and check references, preferably a reference outside your organization.
Consider Conducting a Full Hiring Process
Should you look for candidates through a hiring process in addition to asking for referrals? According to Paul Petrone, hiring a referral is both cheaper and faster than hiring through a full hiring process. Petrone notes: "You don’t have to pay traditional recruiting costs to source them – an advertisement on a job board, agency fees, etc. – and, because they are faster to hire, it also means spending less on your internal labor costs."
However, remain open to the possibility that you may need to go through a full hiring process if there are not a lot of well-qualified referrals. This process can benefit your organization by creating a larger pool of qualified candidates.
Look for Diversity
One downside to an employee referral program is that people refer people they know, so your employee base could end up being less diverse than you'd hoped it might be. In this case, you may decide to conduct a full hiring process, talk to others within your industry for new referrals, or reach out to people on LinkedIn. Your organization's strength is not just in its culture but in its ability to adapt, and having a wide variety of skills and backgrounds on your team helps you become a better insurance agency.
Create a Formal Employee Referral Program
If you're thinking that referrals are a potentially successful way for you to hire, consider creating a formal employee referral program. This program encourages employees to forward others to your organization. In return, the employee receives a bonus. This can be an incentive for employees to talk about your business in a positive way, to post about your business, and to spread the word on social media.
Are you growing your independent insurance agency? If so, talk with us. At American Agents Alliance, we're here to help you create a successful insurance business. Contact us today to learn about our Alliance Convention and our many membership benefits.