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5 Benefits of Referral Hiring

Posted by Michael Bachman on Jul 5, 2017 10:00:00 AM

You may not even know it, but your workforce is holding the key to faster, better, more productive hiring for your organization. In many companies, referral hiring doesn’t make up the majority of the applications they receive, but it does account for the single-largest source of actual hires, 86% to be exact. Because referrals don’t bring in the quantity of applicants as other sources, it can be easy to overlook it as a way to transform your hiring. But, as we all know, quality is preferred over quantity any day of the week when it comes to hiring.

Take a look at these five facts that illustrate just how big of an impact referral hiring can make:

1. Employees who were referred from an internal source are proven to be a better fit culturally.

This can lead to higher productivity for teams, greater job satisfaction for the employee and their co-workers, and increased likelihood that the employee will succeed and advance in their position. There’s nothing quite like realizing a new hire is never going to mesh well in the company, but referral hiring can help you avoid making those types of mistakes.



2. Referred employees stay with the company longer than the average employee.

It could be due to the culture fit being right, or perhaps they had a better understanding of what they were diving into because they had a friend at the company, for whatever the exact reasons, referred employees typically stay with the company more than five years. This reduces downtime, keeps morale higher, helps with succession planning and reduces your recruiting and hiring costs overall. It's a no brainer, right?


3. Current employees who successfully refer a candidate tend to work at the company longer than average.

There’s a sense of empowerment that comes with feeling like your recommendations are taken seriously, and that could be one of the reasons that employees who refer candidates are known to stay with the company longer as well. This could also be a case of which came first, "the loyalty or the referral?" There’s no doubt that positive feelings about the company are reinforced when an employee makes a successful candidate referral, time and time again.


4. Referral hires yield a faster time-to-fill than career site hires.

In fact, referral hires save an average of 16 days over similar hires from career sites. This translates to less downtime, higher overall productivity, and of course, less money and time spent on each hire. One of the biggest pain points for hiring managers and teams is the amount of time it takes to fill a position with the right person. Simply put, referral hiring is the obvious solution.

5. Referral hires have a positive impact on company diversity. 

There’s a negative connotation about diversity in referral hiring, with many assuming it reinforces one type of hire throughout the company. However, research has shown that it actually has a positive impact on company diversity and is even more successful than the typical diversity career fair. It has been found to be the “most productive” source for diversity hires, even when compared to other diversity-specific efforts. In fact, at one point, Intel upped the referral reward bonus to $4000 for all females hired within the company.

At the end of the day, before you invest in outside recruiting channels and spend hours scouring the candidate marketplace for the right person, turn your focus inward. Engage the workforce you already have to help you do the heavy lifting when it comes to recruting. After all, your employees are your best ambassadors.It makes a difference both now and in the long term, as your company will save money, time and energy by bringing in the right people to drive your business forward.

Topics: employee referral program

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