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HIRE Education: Instituting an Employee Referral Program at Your Restaurant

According to the Bureau of Labor Statistics, there are almost 2 million food and beverage servers employed in the United States. But in 2022, the restaurant employee turnover rate is at an all-time high, with less than 25% of employees likely to stay in their job for more than a year. This leaves restaurateurs in a constant cycle of finding, hiring, and retaining staff. In a time when staffing a restaurant can be tougher than ever, one of the quickest, cheapest, and most reliable ways to find dependable and hardworking employees is through referrals.

A great referral program can not only turn your entire workforce into a team of recruiters, but research shows that finding restaurant staff through the referral process is more efficient and generally produces a higher quality hire and a lower turnover rate.

Finding employees through a referral program offers several benefits over other hiring methods. Here are just a few.

Helps employers tap into an underutilized pool of talent

If you’re only advertising jobs on online job boards or posting positions at local universities or businesses, you’re only reaching a small group of people looking for work through those channels. When employees post about a job on their own social media accounts, it will be seen by a large variety of people.

Additionally, the post will also get in front of those who may not be actively searching for new employment opportunities but could be inspired to switch jobs if the right opportunity comes along. And because the average employee will have 150 contacts on social media networks, the pool of talent expands exponentially with the number of staff members you employ.

Attract employees that are a better fit

When employees post job openings, it functions as an endorsement for working at your restaurant. Folks are more likely to trust a job posting when it’s made by someone they know than one that just appears on a career site. Research shows that referred employees tend to be a better fit for the job. In fact, employee referrals have the highest applicant-to-hire conversion rate.

Acts as a positive reward system for current employees

A key component in any employee referral program is it can work as an incentive for your current staff to participate. Create a reward system that offers monetary compensation with a preset threshold. Set clear thresholds that the referred candidates must meet before the referring employee is eligible for a reward. A newly referred employee must stay on the job for 90 days, for example, in order for the referring employee to receive compensation.

Maximizes visibility

Having employees announce a job posting to their online connections makes the numbers work in your favor.

Consider these statistics:

On average, most people have 7.6 social media accounts and the average person has about 150 friends on Facebook. If 10 of your employees share a job post on Facebook, 1500 people will see it.

The average Twitter user has about 700 followers. For every 10 employees that share your post, 7000 people will see it.

Faster hiring process

Instead of creating a job posting online, going through piles of resumes and online applications, and vetting them all, you can jump ahead to the interviewing process when considering a referred candidate. According to Linkedin, it only takes 29 days to hire a referred candidate. That’s 10 days faster than it takes to go through the hiring process on a job posting and less than half the time it takes to hire a candidate through a career site.

Cheaper than traditional hiring methods

In addition to significant time savings, hiring a referral is a more cost-effective method of filling positions than traditional hiring tactics because you don’t have to pay traditional recruiting costs for advertising on a job board or through an agency.

Because the onboarding process is faster, bringing on referred hires means you’ll have a staff that’s fully functional, and working at full capacity quicker. This seamless process translates into better customer service, which means more revenue.

Faster onboarding

A referred candidate is faster to hire and train than a traditionally sourced candidate because not only do new hires already have a friend (who’s not their supervisor) to turn to and ask questions as they onboard, this helps them to get integrated into the culture, making the onboarding process faster and run much smoother.

Higher quality hire

Quite possibly, the most important statistic is the quality of hire that referral programs offer. While that’s not always easy to measure, studies have shown that a referred hire will find greater job satisfaction and stay at their job longer than a non-referred hire, making for a higher quality employee.

Better retention rates

Employee referral hires are more likely to stay past the 90-day time period when turnover is the highest. Referred hires tend to have greater job satisfaction because they have insight into the company’s culture, are aware of the role’s expectations, and have a built-in support system as they already know at least one of their co-workers before they start. This translates into better retention rates.

Retention Rates for Referred Hires

46% stay over 1 year

45% stay for more than 2 years

47% stay for over 3 years

Employee referrals are the most useful way of finding the best candidates for the job and the proof is in the numbers.

  • Replacing an hourly employee can cost nearly $6,000 for a restaurant.

  • New hires who are recruited through an employee referral program produce 25% more profit for their companies than new hires who are recruited the old-fashioned way.

  • The average person has 150 contacts on Facebook and 700 on Twitter, which translates to thousands of views for every job post on social media.

  • Employee referrals have a 40% applicant-to-hire conversion rate

  • Applicants hired from referrals start working after just 29 days compared with 39 days via job boards and 55 via career sites.

  • 46% of referral hires stay over 1, 45% stay for over 2 years; and 47% stay for over 3 years.

  • 67% of employers say the recruiting process is shorter with referral hires

  • 51% of employers say it is less expensive to recruit referrals.

Building a good employee referral program is a great way to find the employees you’ve been searching for.

Here’s how:

Make a plan

The first step to any new referral program is to figure out your goals. What do you hope to achieve? How do you want the program to grow and over what period? Who will be involved?

Having a clear vision of what you want to accomplish will help you focus on what matters most and clearly communicate the value of a referral program to your team.

Offer incentive

Getting your staff excited about the program is step one because an employee referral program won’t work if your team doesn’t feel like there’s anything in it for them. Whether it be a better team culture, talented new team members to make their work life easier, gifts, or cold, hard cash, incentivizing your employees to take part in your referral program is the best way to source high-quality candidates.

When you think of all the money you’re saving by using a referral program instead of recruiters or job boards, investing in your team instead of spending that money on traditional recruiting resources makes sense.

When it comes to rewards, cash is always king, but if money is tight, there are other creative ways to motivate your staff to participate in your referral program.

Here are a few ideas.

  • Extra vacation days

  • Weekends off for a month

  • Shift preferences

  • Amazon gift cards

  • Entry into a raffle for a large prize. Think Apple Watches, Fitness Trackers, Ear Buds, or gym memberships.

  • Concert tickets

  • Tickets to concerts or sporting events

  • Movie tickets

Be sure to set guidelines and thresholds and communicate these with your staff. Delayed incentive structures that require a minimum time of continuous employment (90 days, 1 month, or another set number) to receive the reward help to motivate the crew to source only high-quality candidates.

Define the roles

With every open role, give your employees a clear understanding of the job description. This goes beyond sharing a standard job description with your team. List the skills, behavioral qualities, experience, and/or education requirements you’re looking for.

Outline the type of work the new employee will be doing, who they’ll be working with, who they’ll report to, what their schedule might look like, the potential for future raises and promotions, etc. Describe the big challenges your team is facing right now and how you hope this person will solve them. Talk about new qualities you want to add to the team culture.

In an industry that revolves around service and relationships, a referral program helps to maintain an atmosphere of camaraderie while making the hiring process faster, less costly, and more efficient.

By Eileen Strauss


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