Talent Sourcing

The Benefits of Employee Referrals in Talent Sourcing

Published on April 7th, 2023


As a recruiter, you're always looking for ways to find the best candidates for your open positions. While there are many different methods of talent sourcing available to you, one that often gets overlooked is employee referrals.

In this blog, we'll take a closer look at the benefits of employee referrals in talent sourcing and how to include them as a part of your recruitment strategy.

What are employee referrals?

Employee referrals are a form of talent sourcing where current employees recommend potential candidates for open positions within the company. Referrals can come from a variety of sources, including colleagues, friends, and family members. When a current employee refers a candidate, they typically submit their resume and/or contact information to the hiring manager or recruiter. From there, the referred candidate will go through the standard hiring process, including interviews and background checks.

The benefits of employee referrals in talent sourcing

1. Employee referrals can increase retention rates

An immense benefit of employee referrals is that they can lead to higher retention rates. When you hire someone who has been referred by an existing employee, they already have a connection to the company and are more likely to feel a sense of loyalty and commitment. This can make them more likely to stay with the company for the long term. In fact, research has shown that employees who are referred by someone else tend to stay with the company longer than those who are hired through other methods. Around half of all referrals (45%) continue employment with the company for four years or more, whereas only a quarter of all employees sourced from job boards stay with the company for longer than two years.

2. Employee referrals can improve diversity and inclusion

Diversity and inclusion are important issues in today's workplace, and using employee referrals in talent sourcing can help you improve in these areas. When you rely solely on job postings or outside recruiting firms, you may end up with a less diverse pool of candidates. However, when you use employee referrals, you're tapping into a network of people who may have different backgrounds, experiences, and perspectives. This can lead to a more diverse and inclusive workforce, which can bring many benefits to your company. It also increases the talent pool available to you by letting you tap into methods of talent sourcing that are unavailable to other companies as it is directly related to your present workforce. According to a study conducted in the US on the efficacy of employee referral programs, it was revealed that companies can gain access to a talent pool that is 10 times bigger than their present one by utilizing referral  programs and encouraging referrals through their employees’ networks.

3. Employee referrals can save time and money used in talent sourcing

One of the biggest advantages of using employee referrals is that it can save you both time and money. When you rely on job postings or outside recruiting firms, you can spend a lot of time and money on advertising, sorting through resumes, and conducting interviews. With employee referrals, however, your current employees do a lot of the legwork for you by recommending candidates they know and trust. This can significantly reduce the amount of time and money you spend on the recruitment process. According to ,you can save  $3,000 or more in productivity and sourcing costs per employee hired through the referral program. In terms of time spent in hiring the average employee referral reduces the time to hire by nearly two weeks!

4. Employee referrals can improve the quality of candidates

Not only can employee referrals save you time and money in talent sourcing, but they can also lead to higher quality candidates. When your employees refer someone they know, they're vouching for that person's work ethic, skills, and personality. This means that you're more likely to get candidates who are a good fit for your company culture and who have the skills and experience you're looking for. In fact, research has shown that employee referrals tend to be more successful hires than those made through other methods. According to a study conducted by Dr. Sullivan, 88% of employers said that referrals are the #1 best source for above-average applicants.

5. Employee referrals can boost employee morale

Finally, using employee referrals in talent sourcing can have a positive impact on your existing employees. When you give them the opportunity to refer their friends and colleagues, you're showing them that you value their opinion and trust their judgment. This can boost their morale and make them feel more engaged and invested in the company. Additionally, when one of their referrals is hired, they may feel a sense of pride and satisfaction in knowing that they played a role in bringing that person on board. If the employee referral program includes incentives based on the hire then the employee gains monetary compensation as well which further boosts morale.

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Now, how do we use employee referrals for talent sourcing?

  • Create a formal employee referral program

To make the most of employee referrals, it’s important to have a formal program in place. This will help ensure that all employees are aware of the referral process and feel incentivized to participate. Consider offering a referral bonus to employees who refer a candidate that is ultimately hired.

  • Communicate the types of candidates you are looking for

When promoting your employee referral program, be clear about the types of candidates you are looking for. This will help employees understand what skills and qualifications they should be looking for in their networks. Provide a list of open positions and their requirements so that employees know exactly what kind of candidates they should be referring.

  • Encourage employees to refer diverse candidates for effective talent sourcing

Diversity and inclusion are important factors in building a successful and well-rounded team. Encourage your employees to refer candidates from diverse backgrounds and with different experiences. This will help to ensure that your organization is inclusive and that you are able to tap into a wider pool of talent.

  • Promote the program regularly

To keep your employee referral program top of mind for your employees, promote it regularly. This can be done through company-wide emails, posters in the office, or even during company meetings. The more you promote the program, the more likely your employees are to refer candidates.

  • Provide feedback to employees who refer candidates

When an employee refers a candidate, make sure to provide them with feedback on the status of the referral. Let them know if the candidate was selected for an interview, or if they were ultimately hired. This will help to build trust with your employees and encourage them to continue referring candidates in the future for continued talent sourcing. Similarly if the referee candidate is not hired, you must provide feedback to the employee referring them as to why. This will help them to understand why the candidate was not a good fit and how they can improve their referrals in the future. It will also help to reinforce the importance of the employee referral program and keep employees engaged in the recruiting process.

  • Make the application process easy for referred candidates

When a candidate is referred by an employee, make sure to streamline the application process for them. This can be done by providing them with a direct link to the job posting or by setting up a separate application process for referred candidates. Making the process easy for referred candidates will help to ensure that they follow through with the application.

  • Follow up with referred candidates to ensure that talent sourcing is complete

Once a candidate has applied through your employee referral program, make sure to follow up with them in a timely manner. Let them know if they have been selected for an interview or if their application has been declined. Providing timely feedback to referred candidates will help to build a positive reputation for your organization and encourage more referrals in the future. Failing to do so can result in a missed opportunity to hire top talent. Make sure that your hiring team is aware of any referred candidates and is taking steps to move them through the hiring process quickly.

  • Measure the success of your employee referral program

To ensure that your employee referral program is successful, it’s important to measure the effectiveness of your talent sourcing efforts. Track the number of referrals you receive, the number of candidates who are ultimately hired, and the retention rate of employees who were referred. This will help you to identify areas for improvement and make adjustments to your program as needed.

What should you avoid when using employee referrals for talent sourcing?

  • Relying too heavily on employee referrals

Research shows us that as of 2022, employee referrals programs account for around 30-40% of all hires in the US. Therefore it is easy to see that employee referrals can be an effective way to source candidates, but relying too heavily on them can be a mistake. If all of your hires come from employee referrals, you may end up with a homogenous workforce that lacks diversity of thought and experience. It’s important to supplement employee referrals with other recruiting strategies to ensure a well-rounded pool of candidates.

  • Ignoring the importance of diversity

One of the key benefits of employee referrals is that they often result in high-quality candidates who are a good fit for the company culture. However, if your workforce lacks diversity, even the best candidates may not bring the diverse perspectives and experiences that are essential for a successful organization. Be intentional about encouraging employees to refer candidates from diverse backgrounds and experiences.

  • Neglecting to reward employees for referrals

Talent sourcing via employee referrals would be more effective if employees who refer top talent feel that their efforts are valued and appreciated. If you want to encourage employee referrals, be sure to offer a referral bonus or other type of reward to employees who refer successful candidates. This will help to incentivize employees to actively participate in the employee referral program.

  • Failing to consider referred candidates objectively

It can be tempting to give referred candidates preferential treatment, but doing so can be a mistake. Referral candidates should be held to the same standards as other candidates and evaluated objectively based on their skills and experience. Make sure that the hiring team is aware of any biases they may have and is taking steps to evaluate all candidates objectively.

Talent sourcing? We can help you do so with ease!

We at HireQuotient understand the importance and need for effective candidate sourcing. With access to over 600 million candidate profiles across the globe and a concise pre-screening procedure, HireQuotient can help you finish your candidate sourcing in days rather than weeks with the use of automation. Utilize our job description builder to quickly create the ideal job description when you decide to hire candidates and access and communicate with HireQuotient’s vast pool of candidates via our targeted mass outreach procedures. This has saved over 70,000 hours for recruiters and with our pre screening you can sort out candidates and find the ideal candidate in under 5 minutes!

HireQuotient integrates with LinkedIn through our new product EasySource, which allows you to sort between the multitude of candidates available on LinkedIn based on the categories that are important to you. Systematically filter candidates based on the job title or location of the work to quickly obtain candidates that are needed on short notice. Get a list of candidates sorted according to the relevant experience, skills or education demanded of the job or role in question. We also make it possible to filter candidates based on the industry, course and authorization for work in the US. Therefore you get access to an immense pool of candidates, boiled down to the ideal candidates for your needs. 

HireQuotient also provides an entire plethora of skill assessments that you can employ in gauging the skill of your employees. Our repository is constantly updated with the latest industry relevant tests and assessments pertaining to all non-tech related positions. The questions are created by dedicated subject matter experts in the relevant industries and are categorized based on the difficulty levels so that you can effectively assess the candidate you choose to hire.

All of this is available in a few clicks of your mouse, so check out the company website to book a demo or get on a call with our experts here at HireQuotient to learn how we can help you integrate LinkedIn for talent sourcing in your hiring practices, assess and hire candidates of all roles for your company.

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Radhika Sarraf

Radhika Sarraf is a content specialist and a woman of many passions who currently works at HireQuotient, a leading recruitment SaaS company. She is a versatile writer with experience in creating compelling articles, blogs, social media posts, and marketing collaterals.

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