Employee Referral Programs for Recruitment Optimization


Referral programs in HR are a way to attract candidates with the help of recommendations from existing employees. Read ahead to find out why the employee referral method is thought to be so effective.

What Is an Employee Referral Program?

Recruiters use various methods to attract new talent to the company’s staff, including referral programs. In simple words: “Bring a friend - get a bonus.” According to a study from CareerBuilder, 82% of employers prefer employee referrals to responses on job portals. In recruiting, they can be used in combination with other search methods, such as posting vacancies on job portals and social networks.

An employee referral is a business program that encourages current employees to suggest talented friends or contacts for open positions. The program often operates on a bonus system in which invited employees are rewarded if the referred candidates are selected for the job. While employee referral can be an excellent way to improve professional networks, it must be done efficiently and fairly to be successful.

What Is a Referral Program’s Structure?

The referral program typically involves the following parties:

  • The company that is searching for employees
  • Referral - a user or employee who was attracted using the program
  • Referrer - the employee who attracted the candidate

There are two types of referral programs:

  • One-sided. The bonus is received only by the referrer who has attracted a new employee.
  • Two-sided. Both the referral and the referrer receive a reward.

Importance of Employee Referral

Referral programs increase employee engagement not only in work but also in the hiring process. Both the employees who recommended a candidate and the hired applicants themselves feel more involved in the process.

Furthermore, by involving existing employees in the hiring process, the employer allows them to influence the choice of people who they’d like to work with.

What Are the Benefits of Employee Referrals?

The great thing about referral recruiting is that the candidate is recommended by an employee who understands the company’s corporate culture. Besides that, an employee referral recruitment approach has a variety of advantages.

Personal Responsibility

One of the main advantages of referral recruiting is the factor of personal recommendation. It makes the selection process more efficient, as opposed to the standard search on job sites.

In many companies, employees are in an excellent position to recommend good candidates for existing vacancies. Having an internal knowledge of the workplace requirements and atmosphere can allow employees to think of friends or colleagues who would fit well into the existing model. Besides, a referral authorization can provide management with more information about a candidate’s character and abilities than a simple resume or interview can provide.

Since current employees know that they will inevitably be associated with the referred candidates’ performance, they are likely to present highly qualified people for consideration.

Faster Hiring Process

According to HR Technologist, referred candidates are hired 55% faster than candidates from job portals. LinkedIn has also conducted research that shows how referral programs can reduce hiring times.

Cost Efficiency

Employee referral programs help companies save money that they would spend on the vacancy’s posting, promotion, and agency commissions.

Increased Profits

Hired referrals generate around 25% more revenue for companies than employees hired from other sources. It happens because most referrals do not want to let the referrer down and are trying to live up to the expectations placed on them.

Decreased Employee Turnover

Referred employees tend to stay with the company longer than employees hired from job sites.


Job referrals have proved to be an effective approach to recruitment. It not only allows the company to save significant resources but also provides higher quality application inflow. To develop an effective job referral program, come check out what the Talenteria recruitment suite has to offer!