What is Employee Referral?

Employee referral has become one of the favorite and most productive methods for finding talent. Employee referral program is your best bet for improving the most important hiring metrics such as time and cost per hire, quality of hire and employee retention. So what is an “Employee Referral” exactly and how to do it #likeaboss?

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➡️ Before we dive deep into employee referrals, don't forget to download our Guide for Finding High-Quality Job Candidates.

Definition: What is an employee referral?

Employee referral is an internal method for finding job candidates.

By definition, employee referral is a structured program that companies and organizations use to find talented people by asking their existing employees to recommend candidates from their existing networks.

In return, companies offer their employees different types of employee referral rewards.

Importance of Employee Referral

The way we recruit has changed. Compared to just a few years ago, candidates now have far more power during the job search.

According to research and every recruiter and HR professional everyday work experience, the current job market is 90% candidate-driven. That means you don’t pick talent anymore. Talent picks you.

Consequently, finding and hiring ideal job candidates, especially those with in-demand skills, has become extremely hard, expensive, and time-consuming.

In trying to solve that problem, many modern recruiters have started involving their existing employees in the process of recruiting and hiring. Employee referral programs have soon become one of the favorite and most productive methods for finding talent.

What are the benefits of Employee Referral?

1. Improves quality of hire

Your current employees have a hands-on experience with your company culture, mission, and vision which means they can easily recommend candidates who make the best cultural fit for your company.

Also, it is a great (and sometimes the only) way to approach passive candidates. Since your best job candidates are passive job seekers, reaching them can make a world of difference in the quality of hire.

2. Increases employee retention rate

Employee retention is highly related to the quality of hire. The better the quality of hire, the better employee retention. It’s crucial to hire the best talent that makes a perfect fit because it is more likely that they will stay longer with your company.

If you hire someone who is not a good fit, they will leave sooner. Candidates that come from other sources such as job boards, don't know about you as an employee as much as candidates who talk to your current employees.


3. Reduces time and cost to hire

Getting referrals from your employees means you get quality candidates’ contacts straight to your inbox and simply ask them for an interview. Omitting sourcing and screening of applicants saves you a lot of precious time.

Since time to hire is shorter, the cost to hire also drops. You need fewer human hours to fill a position, and this automatically makes your hiring strategy more productive and efficient.

Employee-referral-time-to hire

4. Strengthens your employer brand

When you employee wants to recommend someone for an open position, they talk to those candidates first.

Since job seekers trust much more employees' words more than CEOs' or words coming from corporate brands, this is a great way to build up your company’s employer branding strategy and talent pool for future job openings.


Employee Referral tools

Features of modern recruitment marketing software offer solutions for more streamlined and automated referral programs. With tools like this, you can organize your efforts, and make it much more productive.

Sounds interesting? 🤔 Try our TalentLyft tool for free (for 14 days, no credit card is required to sign up, cancel anytime)! Once you are in the free trial, you can let our team know about your needs in the live chat. During the free trial, we will help you set up a winning employee referral program! 🙂 


Employee referral is also known as:

  • Employee referral program
  • Employee referral programs
  • Employment referral program
  • Recruitment referral

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