Why employee referrals are crucial to hiring top talent

Your people are your future, and they are your company’s most important asset. Make sure you get your hiring process right, or your business doesn’t stand much chance of succeeding. There’s a severe skills shortage. Almost three quarters of businesses in the US have a difficult time finding qualified workers, and more than half cite worker shortages as a bigger concern that federal regulations.If you’re a recruiter with roles to fill, that’s the last thing you want to hear.
Your people are your future, and they are your company’s most important asset. Make sure you get your hiring process right, or your business doesn’t stand much chance of succeeding.

So how are you going to fill those roles if there are no candidates with the necessary skills on the market? You need to get smart with your hiring methods. If you go down the traditional route of posting a generic ad on the usual job boards, or your website and company LinkedIn page, you will get a ton of resumes that you’ll have to sort through, most of which–at best– won’t have the relevant skills, or–at worst–won’t even know what job they’re applying for.

Instead of wasting your time doing that, you need to invest in employee referrals.

Why should I invest in employee referrals?

You have a huge untapped pool of candidates available that you probably don’t even know exist, as some may be passive, and other active: the friends and former coworkers of your current employees. There are a number of reasons why you should use employee referrals as your primary recruitment method.


According to research, employee referrals are the recruitment method that provide the highest quality applicants.

Source: GetApp

The reasons behind this are:

  • Candidates come already vetted and recommended
  • You have more of a guarantee of the kind of work they are going to produce
  • It’s more likely they will fit in with the company culture.


The same research pointed out that employee referrals also provide the shortest time to hire. On average it takes 29 days to hire a referred candidate, compared to 39 days to hire a candidate through a job posting or 55 days to hire a candidate through a career site.

This is because instead of relying on the limited time and resource of your recruiters or HR department, you turn your whole company into recruiters and vastly expand your talent pool. You also save time sorting through a huge pile of resumes and you can normally skip the initial screening stage.

Despite all these reasons, the primary source for companies finding candidates is through direct applications.


If you’re a small business with limited resource, you don’t want to be throwing your money away on agency recruiters or paying for expensive job boards that don’t provide a return on investment.

Even if you provide a bonus to employees when you successfully hire someone they recommend, it’d still be cheaper than having to pay agency recruiters a percentage of a new worker’s salary.

Improved loyalty

Almost half of referred hires stay in their job for at least a year, which compares to 33% of people hired through career sites, and 22% hired through job boards. This also has an impact on cost, as you won’t have to spend more time and effort finding a replacement, and retraining them in the skills that you have lost.

How do I create an employee referral program?

If you want to reap the benefits of hiring through employee referrals, you need to create a program that formalizes the process and adds an incentive for your workers to refer high-quality candidates.

Here are some steps you need to take to create a successful employee referral program.

Get feedback from employees

If you want employees to get referrals then you need your program to work in the way that is best for them, which means you have to ask them how they would prefer the process to work. This could be sharing a pre-approved status update on LinkedIn or other social networks, or you could use a recruitment CRM to automatically scan your employees’ networks, and allow them to send direct messages to candidates that match the profiles.

Keep it simple

If you make your employees jump through hoops just to refer a candidate then you’re setting yourself up for failure. Make it as simple as filling out a quick form with details such as how you know the person, why they are right for the role, and links to their LinkedIn profile and/or resume. Make sure to keep the employees that have take the trouble to refer candidates updated on the progress: tell them if they aren’t right for the role and why, or let them know if (and when) they have been invited for interview.

Make it clear what you’re looking for

Don’t waste your employees’ time. Make sure you are clear on the skills and experience you are looking for before asking for referrals. This should ideally include “essential” and “nice-to-have” skills and experience, as well as what you are not looking for. Once you’ve done it, make it available as a resource that your employees can refer to at any time, or send to their contacts.

Add incentives

No matter how simple you make the process, it’s still extra work for your employees. This means you need to reward people who make the effort. This could be a monetary bonus, or an extra day of vacation, remote working one day a week, and so on. Make sure you formalize the reward, make the terms and conditions clear (for example, they get the reward when the new hire has been a the company for three months, and then communicate this clearly to your whole company so everyone is aware of the existence of the program.

Overhaul the application process

One way to annoy your employees and put a halt to any referrals is through an over complicated job application process. If they go to the trouble of referring someone but the get the feedback that the process was long, or something went wrong and they lost all their work, then they are unlikely to refer someone again, and you will have lost a high-quality candidate at the same time.

Have you implemented an employee referral program? Let us know your experience in the comments below.

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