The current labour shortage is affecting recruiting across all industries and all types of positions. Where some companies are looking to hire candidates with extremely specific skills, employee referrals could turn out to be a viable solution for accelerating and optimising the recruitment process. It’s not about recruiting en masse anymore, but rather recruiting the right person by mobilising the company’s network of employees. How are companies leveraging employee referrals? Really how efficient is this talent acquisition channel?
Key figures for employee referral
A 2017 study by the French agency for the employment of executives (APEC) revealed that 7 out of 10 recruiters said they essentially relied on employee referrals to hire staff. This figure reached 89% in 2019 (according to a Qapa survey).
In fact, 64% of recruiters believe employee referrals lead to higher-qualified candidates. Employee referrals provide simplified access to relevant profiles, reduce the risk of making a mistake, and help save time (and resources) in the recruitment process. A study by myRHline found that up to 40% of new hires resulted from employee referrals, making it one of the most reliable recruiting channels.
Advantages of employee referrals
In Qapa’s 2019 survey, recruiters highlighted 5 key advantages of leveraging an employee referral system:
- Faster time-to-hire (89%)
- Cheaper cost-per-hire (76%)
- Higher-qualified candidate profiles (59%)
- Better alignment between candidates and company value proposition (43%)
- Faster training and onboarding (19%)
Employee referrals yield higher-quality applications
Referral-based recruiting opens the door to more relevant profiles. You only need 10.4 recommendations of candidates to secure a hire, compared to 100 through job boards (source: Taleez). On average, 1 in 4 hires arises out of an employee’s recommendation (source: APEC).
Employee referrals speed up recruiting
With employee referrals, recruiting processes advance more quickly: 20 days on average, against 60 through conventional recruiting channels.
Employee referrals generate less turnover
Several studies have found that referrals reduce turnover – finding the right people is easier, and they integrate better into the company. 47% of referred employees were still in their roles 3 years after being hired (compared to 39% for employees who applied through a career site, and 14% through job boards) according to a Jobvite study.
Employee referral fundamentals: what the numbers are saying
Employee referrals are a popular channel in recruiting. They allow companies to recruit candidates through their own network of employees instead of through job sites and other external sources. Employee referrals are essentially recommendations.
They are an especially powerful tool for approaching candidates who are neither active nor visible on the labour market – sometimes called “passive” candidates.
Employee referrals and rewards policies
65% of companies promise bonuses to employees who draw in new talent. This bonus doesn’t exceed € 1,000 for 63% of those companies who do offer a reward (survey by Qapa).
For the remaining 35%, rewards for referees include gift boxes, themed weekends, goodies, extra days off, charity donations (source: myRHline).
Which profile types get referred the most?
Employee referrals serve especially to hire more elaborate candidate profiles, which is why only 2% of referrals result in hiring junior profiles.
In terms of industry distribution, referrals represent a whopping 68% of hires in the IT sector, 53% in the engineering and R&D sectors, and 46% in the transportation industry (source: APEC, 2017). So all in all: relatively rare profiles and particularly tough to find through other sourcing channels.