Crowdsourcing Solutions

What Is The Power of Employee Referrals in Recruitment?


Employee referrals are the best way to get the perfect candidate on board. It also plays a major role in the high retention as well.

Employee referrals work better than outside hire and it is a proven fact now. It is believed that if your employee referral percentage is not high, then you are surely missing out on something huge.

The recruiters as well as the companies bring into play different resources to figure out the opposite candidate for the vacant position.

In most cases, the companies or the recruiters depend on the career sites or the job boards to look for the viable applicants.

But, if you look at the scenario now, then you will see that the companies are taking the employee referral quite seriously. They are utilizing this referral program to pull out the best candidates.

The key to select the perfect candidate depends on whom you know and whether they will be best suited for the vacant position or not!

power of employee referralsCurrent Employees – the Key Players!

Your present employees have knowledge of several people within their own community or social networks, who is looking for a job or who is trying to change jobs.

If you can tap into the resource tactfully, then you will be highly benefited as a company. The employees do a proper research on the past experience and the job skills of the candidate they are referring.

They do so because they want their referrals to get hired, so that they can earn some incentives as well.

If you look closely, then you will see that the conversion rates are much higher in case of employee referral. Here are some pointers that will help you realize the power of current employees –

  • They help in an enhanced hire volume
  • The quality of hire is also superior than other sources
  • The employment length after a year of initial hire is much greater in the case of employee referrals
  • The speed at which the whole recruitment takes place is much faster
  • The cost is also less compared to that of others
  • Diversity impact is quite positive

Employee Referral Programs – 11 Benefits:

There are several benefits that you can enjoy out of the employee referral program and here we are listing some of them.

1. High quality applicants:

It is seen that the candidates who come through referral programs are most likely to secure the vacant position as compared to the candidates who comes through other sources.

The employees know that there is no use of referring someone whose skill and education doesn’t match with the position that is on offer.

Half the screening job is done by the employees themselves, so you will enjoy a high quality candidate pool and the time and energy of the recruiter is also saved.

2. The impact is good:

The employee referral programs work best when you are looking for revenue generating and high impact jobs. This position gets filled up with quality hires where the requirement is high.

3. No wastage of time:

The current employees refer only those candidates who are suitable for the position.

Therefore, you won’t find any weak candidate during the interview. It will help you save time and energy both.

Moreover, when you get the best quality candidates, even the interview process and in total the hiring process is completed within no time.

4. Termination rates go down:

Employees will refer only those candidates whom they feel will be suitable for the position and will be able to adjust according to the environment.

So, when you hire candidates through employee referrals, you will find that the termination rates have gone down as well.

5. Minimal on boarding time:

If you are hiring through the employee referral programs, then you will find that the candidates require much less on boarding time as compared to others.

The current employees have already briefed them about the culture of the company, what their role will be and what they are required to do.

Therefore, the referred candidate will be a better fit and will achieve maximum productivity much faster than others.

6. Retention rates are higher:

When the current employees are referring someone they would want that candidate to bear their flag and work as efficiently as possible.

They don’t want to malign their reputation, so they wouldn’t refer anybody whom they feel won’t be able to perform despite having the skills.

Therefore, all this leads to the reference of the candidates who has the mentality to work for long in the company and also consolidate the corporate culture. In this way, the retention rates get improved.

7. Diminishing geographical boundary:

With the wide access of the internet, the employee referral programs have now crossed the geographical boundaries as well.

The employee referral programs, thus helps in global recruiting ability of the company.

8. Morale indicator:

If your employees are not happy with the environment of the company or their boss or their job, then most likely they won’t refer others. Employee happiness at workplace is very important.

Therefore, if your employee referral is low, then you must take it as a hint of bad morale in the unit.

9. The outcome is fast:

When you are recruiting through the employee referral program, then it will produce much faster result, which is almost immediately.

If your company has just started out with the employee referral program, then within a year’s time you will find the result has doubled itself.

10. Positive return on investment:

The referral programs are mostly data intensive these days, therefore, when you are depending on the employee referral program you shouldn’t fear about the complete failure at all.

If you have limited resources, then it is very important that you get a higher return on investment because you cannot afford to bet on something that might turn out to be a complete failure.

11. Reduced legal hassles:

You will hardly get into any legal hassles when you are recruiting through referral programs. It doesn’t generally generate any major complaints, thus helping you in better hire quality.


If you haven’t started on the employee referral program, then it is high time that you redesign the recruiting function and focus on the limited resource and time with immediate impact. It will lower the cost of recruitment and reduce the failure chances as well.