At some workshops I recently conducted for a somewhat sizeable company, I asked the workshop participants who had got their jobs at the company after being referred from a colleague or former colleague.

Up to 50% of all the workshop participants acknowledged they had gotten their jobs after being referred. I later learned that the average amount of time the participants had worked for the company was about 10 years or more.

I have been led to believe that up to 65% of applicants across Australia gain employment through the hidden job market (i.e. those jobs not advertised in any way or not made available through recruitment agents). If the workshop participants I was working with proved to be a bit of an indicator, then this percentage wasn’t too far from the truth.

It was pretty impressive that the company did not seem to have a formal employee referral scheme, hired a significant portion of a workforce comprised of stable long term employees, and along the way saved buckets of money on the cost per hire.

With small to medium sized companies there is generally not a lot of spare capacity, and often not the staff to cross train or to develop a good succession plan with. Invariably, if a staff member resigns that needs to be backfilled a fairly rapid response is required to secure a new suitable employee.

There are surely benefits in encouraging employees to refer candidates for specific vacancies, but with the limited number of employees in an SME, you cannot obtain nearly as many employee referrals that you could obtain say in a larger organisation.

However, there may be particular skill sets that an organisation generally needs to be profitable in their core business.

There are benefits in making the general requirements you potentially need should one of your employees leave known to those working for your company. This could lead to a database of potential applicants you can refer to at a moments notice.

The subsequent development of a basic Employee Referral Scheme where you simply provide the internal referrer with a token of your appreciation should their efforts lead to a new hire could very well be a great return on investment with just a little bit of your time and effort.

Your staff may be keen to fully participate in making what they think are good applicants known, by the sheer fact that should someone not be appointed in a reasonable period of time they may be busy doing more work than they normally do because you have a vacancy that has to be filled.