6 Reasons Why Referrals Make Great Hires

by: Natalie Winzer, iHire
April 14, 2016

Abstract picture on notebook paper showing the importance of referrals and employee networks

If you value quality over quantity when it comes to hiring, consider sourcing candidates from employee referrals. From time and cost savings to improved morale and retention among your existing workforce, the benefits of utilizing referrals are numerous.

  1. Wider Reach (Including Passive Candidates): Suppose today’s working professional has at least 100 contacts in their network. That means that even a small company of 50 employees has the potential to reach 5,000 individuals outside of traditional recruiting tactics. In that group, there may also be passive candidates who are perfect for the job but not actively looking. Those hard-to-reach individuals are likely to be more responsive to a colleague’s recommendation than a recruiter or job board.
  2. Faster Hire: When your associates share open jobs directly with their networks, the entire hiring process is expedited. You spend less time finding and prescreening candidates; referred individuals spend less time vetting out the position and your company. According to a JobVite study, it takes approximately 29 days to hire a referred candidate, 39 days to hire a candidate from a job board, and 55 days to hire a candidate via a career site.
  3. Better Culture Fit: Company culture can be difficult to define in a job ad. Since no one knows what it’s like to work for your organization better than your current staff, it makes perfect sense to have them identify those in their network who would be a great fit.
  4. Higher Morale & Retention: When an employee referral is hired, the referrer experiences a boost in confidence and sense of value. They helped a friend land a new job while also contributing to company growth. Following an internal study, Tesla Motor’s HR team found that their associates who made successful referrals have higher retention compared to those who never refer. Additionally, JobVite’s study found that 46% of referred hires stay with an organization for at least one year, while only 33% of those found through career sites and 22% of those found through job boards stuck around as long.
  5. Stronger Performance: Referrals are eager to do well and live up to the recommendation of their peers who vouched for them, resulting in an inherent sense of accountability on both sides. They are able to onboard faster with an already established culture fit and the existing social connection(s) they have within the organization. Additionally, your A-Players are likely connected to other top performers with the same desirable traits.
  6. Cheaper Hire: As mentioned above, referrals are hired faster, fit well within the company, and have higher retention rates, mitigating the risk of new hire remorse. Additionally, recognizing employees for their successful referrals can be done inexpensively or, with some creativity, at no cost.

Ready to tap into your employees’ networks for great candidates? Use our email template to announce openings and encourage referrals.


Undercover Recruiter – Why Employee Referrals are the Best Source of Hire

Boryana Dineva, Lauren Holbrook & Arnnon Geshuri – Data: Referrals Strongly Impact Retention and Depend on Employee Performance

Paul Petrone – Here is Why Employee Referrals are the Best Way to Hire

Dr. John Sullivan – 10 Compelling Numbers That Reveal The Power Of Employee Referrals