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Employees + Referrals = Better ROI

Posted by Alistair Neal

23-Feb-2015 14:00:00



Budget constraints always seem to be challenges for a recruitment team. They are pressured to find the best talent with the least amount of overhead. To help solve this problem, which tools or practices do you implement for your team? Referral programs have the highest ROI over any other recruitment source. They take the leg work off of the recruiter’s shoulders and pass it to high performing brand ambassadors within the organization who better understand the personality and functionality traits of what the position needs. Financially and practically, putting an employee referral program into action makes sense… But here’s why:


Let’s talk about numbers

I don’t need to tell you why employee referral programs are a great asset to your organization. Just take a look at the numbers:

  • It takes an average of 15 referrals to acquire one new hire.
  • 69% of organizations have an employee referral program.
  • Employee referrals are the number one source of new hires, amounting to 26% of all external hires.
  • 82% of employers said their employee referral programs generate the best ROI above other recruitment sources. 

The average number of applicants per job posting is nearly 300, which seems like an insurmountable number when filling a position through a referral only takes 15 candidates to find the best one. That is one-twentieth of the candidates. That is a massive chunk of time recruiters can use for strategic planning, instead of purely sourcing candidates. In fact, current high performing employees are the best sources to find new talent. That effect trickles down the referral ladder as well. According to the American Journal of Sociology, referred employees are more likely to refer other candidates as well.

These are the two most important statistics of the bunch because employee referrals have the highest return on investment and it takes less time for recruiters to sift through them. 


Here’s why they work

With 54% of organizational leadership concerned with challenges in employee recruitment and retention, implementing an employee referral program is an ideal solution. Employee referral programs don’t take much recruiting budget because they rely on employee brand ambassadors. Referral programs cut recruitment time because you’ve outsourced your recruitment department internally so employees are already pre-screening candidates.

High-performing employees know the skills and qualifications it takes to do well in a position. Therefore, a formal employee referral program increases not only the size of the talent pool, but the quality of hires as well. Great talent involved in an employee referral program typically refer candidates of similar caliber. So, a high performing employee will bring a number of high performing candidates to the table. For example:

“Social media research has revealed the average employee will have about 150 contacts on social media networks. Let’s think about that. If you have just 75 employees, that translates to 11,250 contacts. While not even the majority of those contacts will be possible candidates, there is a large potential here for a very decent talent pool.”

Your recruitment team needs a helping hand, but with a tight budget, it’s not always possible to hire another recruiter. However, there are tools and practices you can adopt to help ease the burden of 300 applicants per job posting. An employee referral program is the ideal solution to your recruitment problems.

High-performing employees will often refer candidates of the quality while cutting your recruitment expenses. Get the best ROI with your recruitment strategy and implement an employee referral program to see the number (and quality) of candidates in the talent pool increase.



It’s time to implement the tools your team needs to enhance their work and to find the best people for the job. 

Say Hello to Your New Workforce!

Topics: Employee Referrals , Employee Referral Programs