Employee referral statistics are climbing ever upward as companies continue to rely on recommendations for sourcing top talent. Finding the right person to hire is always tricky and challenging, and recruiting by referral is often a good solution because of its ability to yield competent professionals.
Several studies have shown that it is more profitable and cost-effective to hire someone through a referral. However, recruiting the right person through this means is not all smooth-sailing and has its own set of problems sometimes. Thus, it is vital to have an effective referral system and know the facts that make it successful.
Vital Employee Referral Statistics 2021 (Editor’s Picks)
The success of referrals made them the go-to channel for employers looking for the best work candidates. Some vital referral statistics to know are:
- Employees who get referred are four times more likely to get hired than those who don’t.
- 82% of employers placed referrals above other options for yielding a better return on investment (ROI).
- 45% of people employed through referrals stay with the company for more than four years.
- Employers save $7,500 per a referred employee in productivity and sourcing costs.
- Sales jobs hire more than twice as many referred candidates as the next biggest referral-sourced field - engineering.
- The average bonus paid to an employee for a referral in 2019 was $2,500.
- Recruitment costs companies $4,129 per hire.
Employee Referral Program Statistics
Employee referrals happen quite often, as word of mouth has proven to be a reliable way to sell a product or hire a professional. Referrals tend to be an excellent way to hire trustworthy people.
1. 82% of employers rely on the employee referral program’s effectiveness.
When it comes to getting new staff, hiring statistics show that 82% of companies have integrated referrals into their recruiting strategy because they believe this method yields the best results and the best ROI. Today, referrals are one of the top three recruiting methods used by employers. Job boards and career fairs come in first and second place, respectively.
2. 15% of companies offer alternatives to monetary rewards for employees who refer a successful hire.
Companies with an employee referral bonus system sometimes switch out monetary rewards for incentives like vouchers and extra days off. Although this is not quite as common as cash bonuses, it has some advantages and still motivates employees to recommend people.
3. Human resource statistics show that employers save more money with referrals.
One reason why most employers are using referrals to source new talents is the reduction of hiring costs. For each person hired through a recommendation, a company saves over $7,500. They spend less time shortlisting, assessing, and interviewing applicants, as referred employees are already prescreened by the referrer.
4. 45% of referred employees stay with the company for over four years.
Recruitment statistics show that employees who join a company via referral are more likely to stay longer than those coming from career sites. Referrals are made by staff who already share the company values, so the person recommended is more likely to be in alignment with those values and stay as long as possible.
5. Referral rates show referred individuals are four times more likely to get hired than candidates from other sources.
Sometimes, it seems as though companies aren’t hiring at all, when in fact, they fill vacancies using a referral system rather than post openings on their website’s career page or a job listing site.
6. The chances of getting a job through a referral are highest when applying for a company with under 100 employees.
Traditional means of hiring remain functional, but job seekers stand a better chance of getting employed through referrals. This is especially true in smaller companies, where the employer is more likely to have a closer relationship with their employees and therefore trust their recommendations.
7. Candidates employed through employee referrals are 350% less likely to get fired.
Those who get employed through referral recruiting stand a greater chance of staying hired. They are five times as likely to keep their job compared to those hired through other means.
General Referral Recruitment Statistics
8. Employers who use referrals have a 46% retention rate.
Employers who use a referral program have a higher employee retention rate than those who only use career sites. Those who use the latter have a 33% retention rate.
9. Referrals boost the odds of a successful job match by 2.6% to 6.6%.
Out of the percentage of jobs found through networking, employers’ and applicants’ chances of getting matched increased by 2.6 to 6.6% because HR managers see referrals as a valuable recruiting tool. Those recommended are more likely to accept a job offer than those who come from career sites.
10. 71% of employers see cash bonuses as the most effective employee referral incentive.
There are several ways for employers to reward employees who refer people that turn to successful hires, but monetary compensation remains the most popular avenue. It comes in the form of bonuses, and almost three-quarters of companies use that instead of paid time off, vouchers, or donations on the employee’s behalf.
11. Employee referral statistics show recruiting costs $4,129 per hire.
Cost per hire is the average amount a company spends in a fiscal year for hiring employees. Traditional recruiting is often more expensive than referrals, and 55% of companies believe hiring through referrals drives costs down.
12. The average hiring time through employee referrals is 29 days.
According to human resources statistics, while it takes 39 to 55 days for candidates from job sites to get hired, referral applicants get started on the job within 29 days.
13. Companies with the best hiring results give referral bonuses between $3,000 and $5,000.
When employers give employees incentives, like monetary bonuses, the referrals they get tend to be of better quality. Employee referral bonus amounts range between under $1,000 to $10,000 in cash, with the best results coming from those who offer between $3,000 and $5,000 per successful hire.
14. 75% of companies use automated systems to manage referrals.
Companies use automated employee referral program systems to come up with suitable referrals. The system’s design allows employers to upload resumes and, using data analysis, recommends individuals who fit the company's image and culture for possible employment.
15. 41% of recruitment ideas for employers do not come from employees.
Most people assume that hiring recommendations come from only employees, which is false. About 41% of referrals received by companies come from external networks and contacts. Examples of external networks are customers, suppliers, influencers, volunteers, regulatory bodies, and competitors.
16. Referral employees produce 25% more profit for their employers.
Companies that use the referral system are more likely to turn a profit from an employee’s work than those that do not. It is one of the employee referrals’ advantages and the reason more organizations prefer this to traditional recruitment methods and job sites.
17. The average employee referral bonus in 2019 was $2,500.
A referral bonus is the money paid to an employee who recommends a candidate to their company. Note that merely referring a person does not qualify an employee for the bonus; instead, they only get the money after a successful hire. Also, after a company hires the referred person, they reserve the right to pay the bonus immediately or wait until the individual becomes a confirmed staff.
18. Sales jobs hire more than twice as many referred candidates as the next biggest referral-sourced field - engineering.
Figures from recruitment statistics place employment through referral for sales jobs at two times higher than those referred for engineering jobs. Salesmen and women stand a better chance of getting employed if they get referred by someone with knowledge of their skills and how good they are in closing a sale.
19. Photographers, customer support, and marketers have high referral rates.
When it comes to those who get employed through referrals, photographers, customer support staff, and marketers top the list after sales, engineering, and customer support positions. Applicants in these three industries get hired through word-of-mouth recommendations and reviews from those who have employed them in the past.
20. 70% of employers say referred hires fit their company’s culture and values better than non-referred hires.
Following the recruitment industry trends, it is clear that those recommended often fit the image, culture, and values of the hiring company. As the person referring someone else knows the values and needs of the hiring company, they would be more likely to suggest an individual who matches these values and needs.
21. Only 7% of the applications a company receives comes from referrals.
Before referrals became this significant, the best way to find employees online was through email applications or forms filled on career sites. Now, most staffing needs are fulfilled through recommendations, and nearly half (~40%) of employees come from referral applications, which make only 7% of all applications most companies receive.
22. 27% of companies use public praise and acknowledgment as a referral reward.
Outside of the bonus amounts reflected in several referral bonus statistics, public praise and acknowledgment are ways of encouraging employees to refer more people. Employers do this with shoutouts at company meetings. Around 27% of companies use this method alongside cash incentives.
23. LinkedIn recruiting statistics cite referrals as the number one way people look for jobs.
There are several ways employers source for new talents, but in today’s world, referrals top the list due to the advantages they provide. The main benefits are candidate attraction at a lower cost, and a higher conversion rate.
24. Employers expand the pool of candidates they have to choose from 10 times using referrals.
Employee referral program benchmarks tell us that not only does running a referral program within your company better your chances of hiring the right candidate, but it also expands the choices you have for hiring altogether. The talent pool at your disposal is bound to multiply if you use employee referrals. Employee networks here cover their friends and acquaintances, community groups, and those they connect with on different social media platforms.
25. 35% of employees recommend candidates to help their friends.
One of the reasons employees refer candidates to their employers is to assist their friends. Personal relationships are vital in the referral recruitment process. Employees are more likely to refer people they know outside the office, and who share the same work values with them.
26. Referral rates show 32% of employees recommend talents to help their company.
Nearly a third of employees who have referred someone to the company have done so to help it. When an employee works in a cohesive, healthy, and inclusive work environment, they are willing to help the company source new talent. Thus, as an employer, you should ensure your staff feels like they are working “with” you towards a common goal, and not “for” you.
27. Employee referral statistics show 26% of employees who refer candidates want to be seen as valuable.
Employees appreciate when their employers value them, and commend their efforts. While 6% of employees participate in their company’s recruitment process because of the bonus they stand to get, others want their employer to see them as an integral part of the team, who is indispensable.
28. 46% of job seekers with a personal connection to employees are more likely to accept InMails.
No one likes to receive InMails from organizations that they have no connection to. However, referral recruiting statistics show that job seekers are 46% more likely to accept InMails if they have a personal relationship with a company’s staff.
29. Two-third of referred hires recommend at least one person to their company.
It is clear from employee referral program statistics that referrals are unending in the business world and will continue to exist for a long time. Two-third of all the employees hired through recommendations refer at least one person to their current employer, and the circle continues.
Employee referral programs are an effective strategy in recruiting and keeping top talent. One of the benefits of employee referral programs is its cost-effective and profit-maximizing nature; what’s more, it remains the fastest way to find reliable candidates.
It brings pre-qualified individuals to your company, who are likelier to stay longer than those employed through job sites. Finally, rewarding those who refer the suitable candidates lets your employees know that you are interested in building a thriving workplace with their help.