do employee referrals work

Do employee referrals work? [All you need to know + a few tested tips]

Companies have jumped through hoops to attract, hire, engage, and keep the best talents. They gave all sorts of recruitment strategies a go and asked all types of questions, hoping they’d bump into a proven remedy that would boost their results. Here’s a topic that’s becoming more and more popular these days: Do employee referrals work?

Spoiler alert: Yes, they most certainly do! However, if you want them to lead you toward the outcomes you’ve always wanted, there are a few steps to take and some tricks you must learn. Moreover, there’s a whole new tactic for you to check out – reaching out to a massive crowd outside your firm that will recommend expert candidates.

In this comprehensive guide, we will explore the meaning of employee referrals, their effectiveness, advantages, disadvantages, and provide tested tips for setting up a successful referral program. Plus, we’ll introduce you to the game-changing concept of external referrals using recruitment affiliate software.

What are employee referrals?

Before we move forward and review the perks (and possible disadvantages) of this popular practice, we should talk about the basic definition of an employee referral program.

In short, this term stands for an organized hiring system many companies put to use with the aim to source and hire skilled candidates – efficiently and fast. It means that employees recommend their former colleagues or friends who possess the necessary skills to join their team and get the job done. Plus, the candidates they refer are usually a great match with the company’s culture, core values, and mission. In other words: employees’ recommendations are used to fill any hiring need quickly and effectively. 

Are employee referrals effective?

Guess you pretty much know the answer by now. Firms around the world have relied on referral programs to smash their recruitment targets, and for a very good reason! In fact, here are a few awesome statistics you should read if there are any dilemmas regarding this hiring tactic:

  • High Employee Approval: An astounding 82% of the workforce enthusiastically supports and promotes this hiring practice.
  • Outstanding Return on Investment (RoI): Over 80% of companies rank employee referrals above other recruitment methods.
  • Incentive Power: 71% of employers recognize referral bonuses as a powerful way to engage their teams in essential processes.

Here’s another key question: Do referred employees stay longer? Moreover, employees referred by colleagues are 350% less likely to be terminated, and 45% of them tend to stay with the company for at least four years.


A few key perks: What are the benefits of employee referrals?

The main advantage that comes to mind is usually related to finances. So yes, referrals do save money, but that’s not nearly the sole perk you’d get. In fact, there are quite a few gains that will have you wondering why you waited this long before coming up with a referral program. 

  1. Reduced Time to Hire: Traditional recruiting methods often take around 60 days, but reliable referrals can halve this time, saving both time and money.
  2. Enhanced Candidate Experience: A smooth recruitment process contributes to a positive candidate experience, which is crucial for a company’s brand and reputation.
  3. Improved Quality of Hire: Employee referrals typically result in better overall performance and productivity, positively impacting retention rates.

First of all, you will undoubtedly cut the time to hire. According to research, more traditional recruiting methods lead to a process that lasts about 60 days. But, with reliable recommendations, you will cut this period in half. Now, aside from saving yourself lots of cash by preventing the costs of an empty seat to pile up, plus minimizing other hiring expenses, there’s another perk that’s closely related to the short & smooth recruitment process. It’s candidate experience, the ultimate ingredient to a successful company. And you’ll learn how all good brand and reputation tactics depend precisely on this factor.

And lastly, improved quality of hire (that’s bound to happen) means better overall results, performance, and productivity. Simultaneously, it has a tremendous impact on your retention rates. 

Downsides you could face: What are the disadvantages of employee referrals?

Do employee referrals work? Dang right! But still, there are a few tricky situations to beware of. Here’s an obvious threat to your company’s healthy environment – biased recommendations. Sure, whoever chose to recommend a peer for an open position must have had good intentions. But, you do remember what good intentions are used to pave, right? So, as a result, your not-so-potential hire may not be as qualified as the referrer suggested. 

Now, here’s one more potentially dangerous aspect to take into account. What happens if you’ve hired a referred candidate and suddenly they choose to quit? Will the referee leave as well? That’s a risk you would be taking. 

Still, there are a few proven formulas that will diminish these risks and lead to a successful referral. First of all, make sure that the person who’s about to recommend a candidate is fully aware of all the basic requirements, must-haves, and daily duties. Also, be sure to communicate the actual benefits your company plans to offer and negotiate the salary before any sort of misunderstanding pops up. 

Do employee referrals work? Absolutely, but it’s up to you!

So by now, we’ve seen some fantastic benefits of an employee referral program. And we’ve also covered some negative scenarios and backlash-inducing situations that could happen. However, if you play your cards right, you will get nothing less than massive advantages – and win big time. So get ready to read a few simple and tested pieces of advice that will help you get precisely where you want. 

Tested tips on how to set up a referral program

As we said – keeping everyone in the loop and being completely transparent is always the best policy. But before you do any of that, it’s paramount to be clear regarding your true needs and expectations. These things take time. Do your homework meticulously, canvass your business and its necessities, and then act accordingly. Because afterward, all you must do is follow these easy steps:

  1. Transparency: Keep your employees informed and let them know whenever there’s a change, or as soon as you have some valuable feedback,
  2. Recognize Top Referrers: Learn who your most efficient sources of referrals are and recognize their good work,
  3. Offer Incentives: Set up various different systems that will show appreciation to your referrers and offer them both financial and non-financial incentives,
  4. Streamline Process: Find the tools that can help you simplify and speed up the whole process while helping your staff stay well-informed about their candidates and expected outcomes.

Finally, you should never be afraid to experiment. Because once you embrace new approaches, recruitment trends, and the technologies that change the staffing industry, you’ll reach your goals much faster

Which brings us to the ultimate way to recruit & retain the best candidates in a snap – recruitment affiliate software

Bonus piece of advice: Expand your referral program

If your objectives include cracking the code on how to hire developers easily, referrals are definitely the best way to go. Because according to the stats, more than 60% of tech talents are satisfied with their current jobs and don’t go visiting job boards aiming to find the next firm. However, they might react to a nudge from someone they trust. 

But what could be even more effective than internal referrals? You can guess it – this section will be about the limitless source of qualified hires. And it’s based on external referrals. Meaning: both referrers and referees can come from any place. And that entails having a more massive talent pool than ever before. Now, let’s see how it works.

External referrals offer an exciting opportunity to tap into a broader talent pool. This approach involves seeking recommendations not only from within your organization but also from external sources. It’s a game-changer in talent acquisition, and here’s how it works:

  1. Diverse Sources: External referrals allow you to cast a wider net, reaching out to professionals beyond your immediate workforce. This diversity can lead to discovering candidates with unique skill sets and experiences.
  2. Expanding Your Reach: Instead of relying solely on internal connections, you can access a multitude of potential referrers who might have insights into top talent you wouldn’t otherwise discover.
  3. Increased Flexibility: External referrals offer the flexibility to connect with candidates who are not part of your organization’s immediate network. This can be especially advantageous when seeking specialized skills or niche expertise.
  4. Rich Candidate Pool: By embracing external referrals, you create opportunities to connect with candidates who are content in their current roles and might not actively seek job opportunities. A trusted recommendation from an external source can pique their interest.

Key points about a recruitment affiliate software 

Recruitment affiliate software is a unique tool that helps companies expand their teams and boost their results easily – with the help of top industry experts and seasoned recruiters. The drill is straightforward: you just have to register and fill out a few fields. The info you must offer to referrers includes a full job description with clear requirements and a bounty that you’d set. And so, once you post a job and add the necessary details, your journey towards a successful hire begins. Spoiler alert: it will feel effortless. 

The perks you’ll unquestionably get include a shorter recruitment process, a bigger pool of qualified candidates, and lower costs of hire. Also, you’ll be feeling a favorable impact in the long run. Because – better retention rates, increased employee engagement and satisfaction, and the chance to be recognized as an employer of choice will undeniably follow.  

Here’s how it works:

  1. User-Friendly Registration: Getting started with recruitment affiliate software is hassle-free. Simply register and provide essential job details, including clear requirements and a bounty for successful referrals.
  2. Effortless Candidate Sourcing: Once you’ve posted a job and shared the necessary details, the software takes the reins, initiating your journey toward a successful hire. The process feels effortless, thanks to the software’s capabilities.
  3. Tangible Benefits: Using recruitment affiliate software results in shorter recruitment cycles, access to a more extensive pool of qualified candidates, and reduced hiring costs. Additionally, it contributes to improved retention rates, enhanced employee engagement and satisfaction, and positions your company as an employer of choice.

Learn to make employee referrals work like magic

Do employee referrals work? There’s no doubt about it! They’re highly efficient, cost-effective, beneficial for candidate and employee experience – and so much more! That is, if you follow the right steps and do things the way you should. And don’t forget: if you just love the amazing benefits that come from internal referrals, it’s absolutely essential to expand your ground. Imagine what it would be like if you had countless recruiters and industry professionals working on your success. Well, that’s what using recruitment affiliate software is like. So step up and stay ahead of the game!