Are You Taking Employee Referral Seriously Yet?

If quality of hire is your top recruiting priority, you need to start giving employee referrals the respect and attention they deserve.

There is, quite simply, no getting away from the statistics on this one. Time and again, employee referral has been shown to be the undisputed standout source of quality hires.

Here it is in LinkedIn’s Global Recruiting Trends 2017 report, leapfrogging job boards and social networks to take the top spot in a survey of nearly 4,000 talent decision makers.

via LinkedIn

And the trend stretches back at least as far as 2010, when Career Builder’s Referral Madness whitepaper found 88% of employers naming employee referrals their number one source of quality hires.

So why do employee referrals still seem like the unloved branch of the talent acquisition family?

Why does referral only account for 9% of recruiting budgets? And how did a 2015 ICIMS report find that over 1 in 3 employers have no documented employee referral process in place at all?

Evidently it’s time to once again make the indisputably compelling case for employee referrals. Here are our top 5 reasons to put more effort and resources into making your people your hiring ambassadors.

1. Referred hires are happy hires

People don’t recommend things they don’t like to their friends. This truth goes to the core of why referrals are so effective.

Referred hires come to you pre-loaded with a positive mindset about the company – one that lasts beyond their hiring date. They’re apt to onboard more smoothly, having joined you pre-equipped with a workplace buddy. And according to the aforementioned ICIMS poll, 9 out of 10 referred employees are satisfied in both their role and the company culture.

2. Referred hires are loyal hires

All the evidence shows that referred hires stay longer. One Jobvite study put two-year retention rates for referred employees at 45%, compared to 20% from job boards.

Meanwhile the ICIMS survey found 56% of referred hires staying for 5 years, with job satisfaction increasing year-on-year in that time.

3. Candidates trust referrals

Here’s another metric where referrals come out top. ICIMS found 76% of job seekers rating employee referrals as a very or extremely important research tool – far higher than any other resource. This should come as no surprise. As Matt Charney puts it:

“Referrals are, essentially, an employer net promoter score – effectively, it’s that Glassdoor question of ‘would you recommend this as a place for your friends and family to work?’”

In other words, an employee referral the most powerful reputational endorsement you could ask for (and all while your employee is doing your pre-screening for you. Handy.).

4. Referrals save you time

No job search or company research. No cold application to prepare, submit and be sifted. It makes perfect sense that referred candidates would reach you quicker. And so it proves. Jobvite found that on average, a referred applicant joins their new employer after 29 days, compared to 39 days for job board joiners and 55 days for career site candidates.

5. Referrals save you money

Bersin by Deloitte put the average US cost-per-hire at $4,000 in 2015. Set against this, even a hefty £3,000 bonus for each successful referral is a significant saving. When you factor in the lower turnover rates that referred hires bring, referrals start to look every bit as attractive financially as they are from a quality of hire perspective.


So how’s your employee referral programme looking? If you’re still one of the 37%, hopefully this article has given you some serious pause for thought. And if your programme still hovers somewhere round the 9%-of-budget priority mark, maybe now really is the time to look again at this most underrated of talent sources.

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