6 Reasons Why Employee Referral Program Is Important To Hire New Talent

Employee Referral Program

The job of recruiting personnel is never the same over a span of period. While the recruitment process includes many generating candidate leads, these people develop new skills like analyzing, observance power, and quick judgment. While switching over to different methods, the preferable method is candidate recommendations from their existing network and employed workforce. 

Recommendation, if it works, can never go out of trend. If it helps people achieve something they wish for, they never forget to take one. And this applies to businesses also. Whether it is workforce or customers, recommendation always helps build a network of friends and mentors that would be helpful in the future. The employee Referral program revolves around the same workflow. This method helps organizations in many ways, which we will be going to discuss later in this article.

Let’s first understand what Employee Referral means.

What Is an Employee Referral Program?

To be simple, an Employee Referral Program is a hiring approach wherein employees are also made a part of the process. Every employee has their own network of friends, who might also be job seekers. According to LinkedIn, employee candidate references are 4x more likely to be hired than other methods. (source)

Similar to the general tendency of recommendation for most products and services, the organization’s employees are asked to suggest qualified and professional candidates from their connections. As employees are already aware of the behavior and eligibility of people within their network, it becomes easy for them to recommend for the vacancies. In return, employers offer them monetary rewards. 

organizations world-wide use referrals for their recruiting strategies.


The image above shows how organizations worldwide use referrals for their recruiting strategies.

An employee referral program is more beneficial in outsourcing and paying job boards to help find candidates. It connects all employees in assisting the organization in building up a powerful team and encouraging more encouragement.

Reasons Why Employee Referral Program Is Essential In the Recruiting Procedure.

Like the other HRMS process, recruiting is an integral part of any organization. Recruiting includes many approaches to finding recruits, of which referral recruiting is more prominent, and we have included the reasons for it being that important later in this article.

Internal referral offers a large pool of candidates in less time than anything else. It helps connect to many skilled laborers who are a perfect fit for the job. This is why references are considered to be important. Here are the prominent reasons for the Employee Referral Program to be important for an organization’s talent hiring.

Easy To Enhance Employee Engagement

The main idea behind the referrals is to get employees involved in an important organizational process for a more meaningful purpose. Involving all the employees in this program instills a feeling of belongingness and empathy with the company. 

Finding a worthy candidate for a job role can make them feel empowered by helping the organization with an important task. At the same time, they also help their connections find a better place to work, which will become a win-win situation. And referrals are more likely to fit into the company’s culture than others. (source)

To support this approach, the company also offers recognition and awards to those employees for their contribution, which motivates them and makes them work longer for the organization.

Helps Increase Organizational Network

When employees recommend one of their excellent friends for the vacant job position in their company, the employer is being offered a chance to increase its own network of experienced and capable humans who can later be mentors. 

Having a wide network helps during recruiting and marketing strategies to find new candidates and customers. 

Hire Swiftly For Elusive Roles

It is challenging to find a candidate who fulfills all the assigned duties in many job roles. Such professionals are limited in quantity in the market, and you may not be able to find them through websites, boards, or outsourcing agencies. But there is a fine way to get through this by taking recommendations from your existing employees.

You have more options to find a suitable candidate among your workforce’s network. Due to similar backgrounds, people connect on social media and job sites like LinkedIn. 

High Chances of Employee Retention

Looking for two years in a row, the retention rate of an employee recruited using referrals is 45%, while for those recruited from job boards is only 20%. A huge difference!

As mentioned above, the referrals are culture-fit. Additionally, they have a general idea about the company’s missions, visions, benefits, career scope, etc., of which the candidates recruited from the social sites and job boards have less knowledge. This also helps them in identifying future advancements while working with the company. Being aware of the culture and work-life, referrals took less time to adapt to it and work contribution for a longer time.

Helps Achieve Greater Returns On Investment

Of all the major hiring approaches, this one is supposed to offer the highest ROI, as 82% of the employers stated. Talking about overall ROI, this approach to finding suitable candidates results in:

  • Improved Recruitment Quality

The employees who recommend applicants from their network know their qualifications, corporate attitude, past employment, etc., based on which employers can identify the perfect fit for their organization.

  • Reduced Hiring Costs

Recruitment is a type of activity that is always ongoing as employees resigning opens up a vacant position in the department. Recruitment is thus expensive for any organization. However, referrals help them cut down the costs that should be paid to job boards, websites, and agencies. 

  • Reduced Hiring Time

Apart from reducing costs, this technique can also help you save enough time. Unlike traditional approaches, employers do not have to invest their time in screening, assessing, and pre-questionnaire processes. Due to their known connection with the applicant, employees can determine most of the candidate’s crucial qualifications and assurance that you can trust them

Can Boost Your Employer Branding

The most important reason for employee referral is that it helps increase your company’s brand among various networks. ‘Word of mouth plays an important role in this. 

The employees who recommend various applicants from their network represent their working atmosphere and culture. This applies to all your employees’ networks. If you have completed your job fairly, you can compel the applicants to know more about you. This opportunity might also turn these candidates into employees. And an attentive employer branding gathers more people’s attention than traditional hiring methods.

Wrapping Up

The above benefits show that Internal Recruiting is the biggest recruiting tool and trend while hiring skilled and professional workers. You may come up with many recruiting methods, but unlike others, this method creates a stronger bond between you and your employees. You can leverage their networks to find the best suitable employee for your organization who easily and quickly adjusts to your workflows. Besides this, offering the responsibility of searching for candidates in return for appraisals can encourage your existing workforce.

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