Employee referrals continue to be the top source of new hires for employers, according to a new study by the software company SilkRoad. Employee referrals delivered more than 30 percent of all hires overall in 2016 and 45 percent of internal hires.
The study found that employee referrals have the best conversion rates from interview to hire, as well as a much longer tenure in their position. This makes employee referrals a very cost-efficient option for recruiters that can be leveraged to speed the time to hire top talent for hard-to-hire positions.
After referrals, internal moves make up 21 percent and recruiter-sourced hires make up 19 percent of the remainder of internal hiring sources.
The top external sources of hires isn’t surprising—the job search engine Indeed produced 65 percent of external hires, which is twice as many hires as all other top branded external sources combined.
However, Indeed suffers from inefficiency according to the study, along with other online job boards like LinkedIn and CareerBuilder. Indeed and LinkedIn will garner dozens of potential candidates to interview, but candidates from these sources are much less likely to be hired than recruiter or employee referrals. Many businesses will spend thousands of dollars on job listings that return little on their investment.
For most companies, external sources produce the majority of interviews with 62 percent. This includes online job boards, recruiting agencies, campus events, and job fairs. Internal sources account for 38 percent and include in-house recruiters, employee referrals, and company website career pages. This contrasts with the 52 percent of hires that came from internal sources compared to 48 percent from external sources, which also required, on average, four times as many applications from external sources to get to the interview stage and twice as many interviews for a job offer to be extended.
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