The Value of Employee Referrals

Employee Referrals: It’s All About Who You Know

Few recruiting tools equal the power of employee referrals. Companies and recruiters use a variety of resources to find appropriate candidates to fill their positions. Traditionally, companies draw from a pool of viable applicants on career sites and job boards. While this is still common practice, recruiters are noticing that employee referrals are still the best way to find the qualified applicants. It’s still about who you know—and your current network may hold the key to the perfect candidate.

Your current network has access to an incredible number of possible candidates with their social network accounts. For instance: if 100 employees each have 150 friends or followers on their social network platforms, that totals 15,000 reachable contacts.
New research by Jobvite found that 78% of recruiters find their best quality candidates through referrals.

Let’s look at which sources gather the most applicants at variance with which applicants are extended an offer:

 

While it’s difficult to compete with the efficiency of working with an agency, referrals are the next best thing—and much more cost effective. Looking at the chart above, 7% of applicants come from referrals. This small number accounts for nearly half of all hires.

 

Employee Referrals Onboard Faster

The same research shows that referral applicants start their position 55% faster than those who come through a career site. By comparison:

• Referral hires start an average of 29 days from application date.
• Job board hires start 39 days from application date
• Career site hires start 55 days after their initial application.

 

They Have Better Retention Rates

Not only are referrals hired and onboarded more quickly, but their average length of employment is over 3 years—which is almost double the placement retention through job boards. 46% of referrals stay for 3 years or more, while only 14% of those hired from job boards stayed.

They Want to Be There

Another advantage to hiring through referrals is that the referring party is genuinely invested in the success of the new hire. They will act as a mentor and guide the new hire to success in their position and company culture. The referring party will let the new hire know of the ins and outs of the company and ultimately, help them thrive long term.

While career sites and job boards still render the highest quantity of applications, they don’t stand up in comparison to quality. Employee referrals gather, by far, the highest number of qualified hires. Employers and recruiters should recognize the value of these applicants and consider expanding their networks and referral programs.

By utilizing social networks and tapping into current employees networks, recruiters can increase referral rates and in turn, the number of highly qualified applicants within their talent pools.