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Picture of Verfasst von Nadine Palmetshofer

Verfasst von Nadine Palmetshofer

10 Myths About Employee Referrals

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According to Careerbuilder, over 80 percent of employers rate an employee referral program as one of the best ways to bring in top talent. It’s the reason why many companies are now digitalizing their employee referral programs and gamifying incentives. Even so, there are still many companies out there that don’t place enough importance on their referral program to see its full potential.  It may be due to myths about the referral universe. So here are 10 myths, debunked.

MYTH 1: It’s Hard To Get Employees To Participate

TRUTH: More employees participate in these programs when it’s easier for them to submit the referral information. When a digital program is incorporated, or even more so, a smartphone app for immediate accessibility, it helps increase participation rates and the number of workers who refer their colleagues. If the digital tool has gamification features and an employer adds internal competitive mechanics to the process, participation can generate over 75 percent participation rates.

MYTH 2: Employers Don’t Look At Referrals

TRUTH: Employers look at all referrals, whether they’re internal or come from outside sources, such as business partners or alumni. As mentioned in the introduction, their peak ROI comes from new hires that were referred and all TA teams know there are great benefits to be had by having a high referral hire rate. In many cases, referred employees can usually refer another person who also tops in their profession, making a referral program extremely advantageous when building high performing teams.

MTYH 3: Employees Are The Only Good Referrers

TRUTH: Staff members are definitely a prime source of employee referrals. As they regularly work within the company, they have a good sense of the positives of the position and the company itself. However, nearly half of referrals can come from external resources, and as long as you aim to include contacts who know your company well (such a business partners for example) you can’t go wrong with having such a broad-reaching referral network.

Firstbird four cheerful coworkers creative team working together in office using laptop

MYTH 4: Incentives Don’t Work

TRUTH: Incentives work extremely well, especially when the referral process is automated. The easier it is to make a referral, the more employees and external sources will do so. Add the additional value of incentives, whether they be monetary or non-monetary and your program will reach the maximum amount of participation.

MYTH 5: Great Work Environments Naturally Draw In Referrals

TRUTH: Many companies believe if they have a great employer brand, their employees will naturally hand in referrals. This is not true, however, and it’s important the referral program is front of mind for the employees throughout their workplace and is enthusiastically supported internally.

A digital employee referral program does much more for internal staff and recruiters and helps keep things simple yet fun for everyone. Not only does having a digital program bring in more referrals but it also helps with tracking of referrals, automated communication, and exciting reward options.

MYTH 6: The More Hired Referrals The Better

TRUTH: Not necessarily. Although we love referrals, and they should be your main source of hire, they shouldn’t be your only source of hire. Although it’s tempting to keep referral numbers high for ROI, it’s beneficial to have a mix of referrals, contractors, and direct-hire employees. Nevertheless, your amount of referred workers should always comprise a quarter to 50 percent of the workforce. (If you’re interested in more data around employee referrals, check out our Benchmark Study.)

Firstbird four multiracial cheerful happy colleagues discussing project in modern office

MYTH 7: Referred Employees Have A Harder Time Fitting In

TRUTH: This is simply not true. Think about it in these terms: a referred employee tends to come from someone who is familiar with the company environment and has most likely already been provided with many insights into what to expect. If the referral is internal, there’s a chance they’ve worked with the department’s staff. As a result, they have an easier time adjusting.

MYTH 8: It Takes Too Long To Hire A Referral

TRUTH: Again, it’s about familiarity. When a company sources candidates from job board sites they only have a resume and cover letter to gauge their experience. So, it takes longer to bring them through the hiring process because they need to go through assessments and interviews. On the other hand, over 50 percent of referrals are hired quicker because of source information (the referrer).

MYTH 9: Referrals Leave Quicker

TRUTH: Quite the opposite. When hired from job boards, only 20 percent of employees stay with the company that hired them. Conversely, referral retention increases to 45 percent when they stay with the company for more than two years. Overall, this helps increase a company’s revenue and retain its quality of service.

Firstbird multicultural diverse coworkers talking on project in contemporary office.

MYTH 10: Employees Refer Others Just To Get Incentives

Yes, there are workers and outside sources who refer workers to companies because of the incentives. However, they make up a small percentage. Rather, most employees see the incentives as a thank you by the company for suggesting a qualified candidate. In turn, they’re encouraged to help their friends and colleagues get into other positions. For many, the pride and joy of those referred is plenty of reward.

With these myths now debunked, there’s not a reason for a company not to institute an employee referral program with incentives. Through the productivity and retention of the referred employees, their ROI will be much greater. To the point, they’ll wonder why they didn’t set this program up earlier!

Check out our Benchmark Study >>

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