HR News & Trends, Recruiting and Staffing

Need Any More Proof? Job Referrals Are REALLY Important

employee_referral_image

You have heard this many times, I’m sure, but it never hurts to hear it again: job referrals are the best source of job candidates and new hires.

I’ve heard people like my friend Gerry Crispin and his partner Mark Mehler talk about this a lot, and you probably have too, but online recruiting platform Jobvite has just published its Jobvite Index 2012: Employee Referrals. The numbers, which analyze employee referral activity amongst Jobvite‘s 600-plus customers, shouldn’t be surprising, but they do help reinforce what we know about the value of job referrals.

Here are some of the highlights:

  • 44 percent of new hires are employee referrals, more than double the industry standard.
  • Employee referrals get hired 55 percent faster than candidates from company career sites.
  • HR executives rated referrals the #1 source of quality candidates, ranking an 8.6 out of 10.
  • 69 percent of employers offer a referral bonus to employees.

The larger value of referrals

Some may quibble about these numbers — is Jobvite‘s universe of companies big enough to accurately reflect the larger trends that are going on? — but I think that’s besides the point since the issue in my mind is the reconfirmation of the larger value of referrals to the recruiting and staffing process.

It’s clear how important this is when Jobvite notes that, “Employee referrals help employers find new talent by broadening the reach for any opening. While an HR manager often has more than 500 contacts, getting more staff members involved in hiring exponentially improves the process. For example, if a company has 100 employees and each employee has an average social network of 150 friends, the potential reach for an open position becomes 15,000 people.”

Jobvite is touting May as National Employee Referral Month (it’s also National Brain Tumor Awareness Month, Jewish American Heritage Month, and National Smile Month, in case you were keeping track), but what is most interesting is this in-depth informational graphic that digs into The Value of a Referral. It has a lot of good data worth digging into (to get a larger version that’s easier to read, simply click on it the graphic twice).

“All the data Jobvite’s collected shows employee referrals make the best hires,” said Jobvite CEO Dan Finnigan in a press release announcing the latest Jobvite Index, and he’s absolutely right about that.

If you aren’t focusing enough on referrals as part of your recruiting process, well, you’re missing out on the very best way to build your future workforce.

John Hollon is Vice President for Editorial of TLNT.com, and the former Editor of Workforce Management magazine and workforce.com. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices. Contact him at john@tlnt.com, and follow him on Twitter at http://twitter.com/johnhollon.
  • Gerry Crispin

    Nicely said John. There is a lot going on with referrals these days and I’m the first to look a bit askance at any content created by vendors with an agenda but, Dan and Jobvite have been working this angle for some time and I buy their 44%. I see the broader range of data as bi-modal- normally distributed around 15-20% and 40-45% depending on lots of variables that Master Burnett and others have been researching (I’m just an observer)

    I’m a fan of any tool that increases the ability of a jobseeker to initiate a referral. In contrast to your article above where you detail the social network strength of an employee generated referral path, it is the job seeker who (with an ounce of intelligence) will realize he/she can rapidly go beyond their existing social network and search out anyone with even the most tenuous affinity (same school, professional assoc., prior firm, community, etc.) and reach in to get an employee to refer them. Jobvite, Jibe and a dozen or so referral related start ups with various twists trying to get attention in the recruiting space are worth a look.

    The problem is that firms are unwilling to share their data with jobseekers (that 44% could be even higher). Only TIVO openly publishes their referral data (48%) on their career site. (Maybe if a firm like Glassdoor actually published some of the specific claims, then jobseekers might get how critical it is in improving their chances and employers might begin examining the Quality of the referral (i.e. was it someone they actually worked with previously) as a valid indicator of future performance, retention, etc.

    • Vert

      Jobvite, Jibe and a dozen or so referral related start ups with various twists trying to get attention in the recruiting space are worth a look.

      What an interesting thought…

      plagiarismdetect

  • Paul Basile

    I am reminded of the adage that if you have a hammer everything looks like a nail…  There is no doubt that referrals are preferred; but why?  Really: why?  In part, because the recruitment world doesn’t find and select candidates very effectively or efficiently. I just heard (again) the Moneyball story – it is a recruitment story, after all – confirming the same key point. If we used data much more effectively and honestly (i.e., sans prejudice), we would improve hiring success hugely.  Absent that, the lower incidence of inappropriate candidates coming through even tenuous referrals (“don’t know her but we went to the same school…”) seems logical: referrers rarely (or at least less commonly) refer a totally inappropriate person compared to standard recruitment processes via job boards and other routes.  Referrals should continue and be promoted - but that’s not solving the main problem.  Simple math will confirm that we should find many, many more compelling candidates in the world at large than we do in the networks of even the greatest champion referrer networkers.  Until the recruitment world embraces data analytics and assessments as it should, we will no doubt remain agog about referrals. Let’s get over it.