Imagine for a moment that you were interested in watching a good movie on TV one evening, so you posted on social media for suggestions. You’re likely to get good ideas from your friends. They have an incentive, because of your existing relationship, to want to help you. But you aren’t likely to hear from people you don’t know that well.
Now imagine you offered monetary rewards, one amount for a suggestion, and then an additional reward to the person that suggested the movie you ultimately decided on. Not only would you get even more suggestions from friends, but you would also start getting suggestions from their friends, and from perfect strangers hoping to get paid for their referral.
That’s the power of Preferhired. The rewards you offer to our network of referrers help generate interest in your job and can net you a large number of qualified candidates. But how much should you offer for the different reward levels?
Consider What You Would Have to Pay Using Other Methods
Referral hiring is generally far less expensive, and far more successful than the standard methods companies use to find qualified candidates.
Since you determine your rewards, with Preferhired, you decide what the service costs you. It’s up to you how high you set your incentives to have candidates referred. If you think you can offer less and still find quality candidates, you have that option.
However, the higher the incentives you promise, the more likely it is that referrers will send candidates your way, and the more candidates you see, the more likely it is that the perfect candidate will be presented to you.
So when you’re setting your referral rewards you’ll find you’re trying to balance two competing motivations. You’ll need to find the right midway point between spending as little as possible and spending enough to properly incentivize referrers to take your posting seriously.
Thankfully you can change reward levels at any time, so if you set your incentives too low initially, and find you aren’t generating enough interest you can always raise them up. And if you find historically you get plenty of interest each time you post for a job opening, you can consider offering lower rewards on future openings to save yourself some money.
But if you have no previous experience determining reward levels on Preferhired and are having a difficult time working out a reasonable starting price, we generally recommend considering what it would cost you to find a great candidate through other channels, and then use that as a baseline for the most you might be willing to spend, and scale things back from there.
Hiring Costs Using Other Methods
There are a number of ways employers currently search for qualified candidates. One of the most popular is to post your job on any number of online job boards. Each job board has slightly different methods for billing employers, and some, can be free (though not particularly effective).
Other employers may utilize the services of third-party staffing firms, or pay a premium to a head hunter. These tend to be more expensive than job boards, but also usually deliver higher-caliber candidates faster and more reliably.
When you’re trying to determine a maximum referral reward for your Preferhired postings, consider what you’d likely pay to fill a position using a job board or the fees you’d pay to a staffing agency. Examine your actual costs. If you’ve hired for more than one position, take an average and use this as your maximum spend. You certainly don’t want to, and should never need to spend more on a Preferhired search than you might spend using other methods, but these higher spends give you a useful ceiling.
Finding the Balance
Once you know your maximum spend, consider what referrers might find motivating. You want to make sure you set your rewards low enough that you can generate a good return on your investment, but not so low that referrers ignore your listing in favor of job posts that offer them better pay for their efforts.
If you set your rewards too low you aren’t really risking anything since you only pay referrers for candidates. No candidates, no cost. Of course, you’re in this to find a great candidate, so you want it to cost you something.
Your best bet is to scale back from your maximum spend to a level that seems motivating to you and then monitor your post over time. If you aren’t getting the interest you’d like, increase your rewards.
To a degree finding the right reward levels for your job descriptions, in your areas and in your industry requires a bit of trial and error. But using prior spending levels for other hiring methods can at least establish a range for you, which gives you a place to start.