5 Reasons Employee Referrals are the Best Source of Hire

As recruiters, we can look fondly upon the times when a department could put out a job ad in a magazine or a newspaper and stacks of ideal resumes just seemed to fly onto our desks. All you had to do was interview a handful of promising candidates and select the right one to be loyal and stay at your company for quite some time. Until you wake up and face the real world: hiring the right people is time-consuming and costly enough. Don’t let bad hires cost you even more.

Companies are continuously seeking effective recruiting sources in a time characterized by talent shortage and demographic changes. Small businesses especially find themselves with increased difficulties in identifying cost-effective sources of hire.

Employee referrals can be the most useful way to find the best candidates for your company. Many studies have revealed that employee referrals are the most successful source of hire. There are many reasons why your employees should become your new recruiters but we nailed down the most illuminating ones for you. Keep reading for the five things that make referrals the best source of hire.

#1 The hard facts

A recent study reveals 3 out of 7 referrals are successful. 73% of the companies who have a referral program confirm that the overall cost-per-hire is significantly lower than any other recruiting source. 67% of recruiters stated that the recruiting process was shorter than any other source of hire. Numbers don’t lie—recruiters utilizing referrals are empirically more successful and more efficient in hiring talent.

#2 The insider information

Before the candidate is referred to the company, he or she is provided with extensive information about the job, the team and the company. Clearly understanding the job requirements and the work environment allows the candidate to make a more thorough decision. This will not only lead to a higher satisfaction of the candidate, it will also lead to a higher retention rate.

#3 The quality

The candidate referred to the company presents a much higher quality inherently because he or she was pre-screened by the referrer (at no cost to you!). In fact, most referred candidates are passively engaged in the job market and are not actively looking for new employment at the time the referral is made, so you’re getting unique access to top talent.

#4 The element of trust

An employee wouldn’t just recommend anybody. There is an element of trust that guides the entire referral process and guarantees that the reputation of the referrer will not be damaged. The candidate trusts that he or she is being referred to a worthwhile opportunity, and you can trust that the candidate is worth pursuing.

#5  The emotional connection

Through pre-screening and the assessing about prospective fit, an emotional connection is established even before the actual referral is made. Through the referrer, the candidate immediately creates a bond with the company and establishes loyalty to his/her (hopefully!) future employer.

There is no reason a company should not take advantage of their employees’ networks. Quite frankly, there are many advantages for employees as well when hiring someone out of their trusted network. Who wouldn’t like to build their own team?

What was your experience with employee referrals and do you encourage your employees to refer? Comment, add and share your experience!

About the Author: Mona Berberich is a Digital Marketing Manager at Better Weekdays, a Chicago-based company that has developed a platform to help HR leaders source, screen and develop talent based on job compatibility. She is a researcher and writer covering HR, career growth, talent management and leadership development. She can be found on Twitter or Google+.

  • Jay

    Great article and so true. A referral already has a “reference” attached. If you trust the referrers work chances are the candidate will have the same work ethic.

    • Spot on, Jay. If you refer someone to your employer, your reputation is pretty much at stake. Something else that wasn’t covered in too much detail here was the way you reward an employee for a successful referral. Any thoughts on that?