why employee referral is best source of hire

Why Employee Referrals are the Best Source of Hire?

Every organization wants to hire the best talent out there and therefore spends great time and money on advertising jobs on multiple boards to source maximum applicants for a role. But do you know that there is one source which doesn’t require any significant advertising budget and yet returns better quality talent than other sources? Yes, that one source is called Employee Referral. What are the myriad benefits of hiring through employee referrals? Let’s examine.

What are employee referrals?

Employee referrals are the candidates sourced through an internal recruitment drive where current employees of an organization provide potential candidates for a vacancy using their social network. Recruiters sources candidates using their current employees, and in return offers them monetary or other rewards. An employee referral program is used to perform this entire activity.

The Importance of Employee Referrals

The growing talent war has forced organizations to try out innovative ways of sourcing. Today’s job market has given more power to candidates where they can choose and pick roles as per their eligibility and future aspirations. In a talent driven market, recruitment must change, and that involves making it a more personalized and long-term process. Recruiters do not have a magic wand to identify the best talent for any given role, but they certainly can use all the help that is provided. Employee referrals is a way of including the existing employees in an organization to identify and recruit quality talent. For many reasons, employee referrals have proven to be one of the best ways of sourcing.

Employee Referrals Advantages

There are numerous direct and indirect benefits of employee referrals. Here we list the top 5 which make it the best approach to recruitment.

Employee Referrals Increases Retention

Employee referrals are usually more reliable because they already have an idea of the company’s vision, work culture through your employee. Thus, they know what to expect and won’t be left scratching their heads once hired. Being familiar with the environment, the new employee won’t take much time to absorb and adapt to it and would stay longer than other employees.

Employee Referrals Improve Quality of Hire

The quality of talent is always high when hired through an internal recruitment method such as employee referral. The biggest reason is that your employee has already done the initial screening by considering if he is right fit for the job. No employee would put their reputation at stake just for the sake of a small monetary reward. Therefore, they will only be referring candidates once they are sure about their suitability and eligibility of the role. A poor referral reflects badly on the employee also, putting a question over their judgment skills. Most employees are wise enough to understand this and therefore provide only high quality candidates as a referral.

(Also Read: Purpose of Having a Dedicated Employee Referral Program)

Employee Referrals Reduce Cost to Hire

With no expensive advertising on multiple job boards, it is a given that employee referrals will cost you less than other sourcing channels. Plus, as a recruiter you will be saving a lot of productivity in screening the candidates as that’s already been done by the employee. This will also impact the hiring cycle positively, shortening it, which ultimately brings down the hiring costs further.

(Also Read: Top 5 Recruitment Metrics That Matter)

Hire more specialized candidates with employee referrals

When it comes to finding candidates with specific skills, nothing works like employee referrals. Employees have personal communication with their network and that’s how their knowledge about the candidate’s professional skills and capabilities is far greater than that of a normal recruiter. Sometimes, an ATS or any other screening system may miss those specific skills while screening, or the candidate themselves may not put it prominently in their CV. However, since the employee has a personal connection they would surely know about it and would recommend them for that position. Therefore, employee referrals are very helpful while sourcing for hard to fill positions.

 Employee referral Statistics

The data on employee referrals is the biggest reason why they are called the best source of hire. There are plenty of researches that have proved the superiority of employee referrals over other sourcing channels.


When we have strong evidences supporting the employee referrals as a recruitment method, it makes sense to invest in it and may be use employee referral software to get optimum results.