7 Critical Keys to Get More Referrals

You need to get more referrals. Trust us.

Whether you need to fill a job now or want to keep a pipeline of great job candidates filled, you need to get more referrals.

And here’s why: Applicants with referrals had a 50% chance of advancing past an initial résumé review compared to just 12% odds for external candidates, according to research from hiring software company Greenhouse. Plus, 30% of eventual hires are referred — even though people with referrals were just 5% of the applicant pools in the study!

“Though the preference for referrals is not new, it’s easy to see why companies turn to referrals as a signal as they become increasingly inundated with applications,” says Greenhouse’s Lead Research Scientist Bobby Cardos. Even better, “some evidence suggests that referred employees stay with a company longer, which makes for a compelling candidate.”

Too Many Candidates

The need for more referrals comes on the heels of some hiring changes. For one, the pandemic forced many companies to go remote or hybrid — and they found it was a better way to work. That lead to a wider talent pool: Companies don’t need to rely on local talent to fill roles.

From there, many organizations amped up their diversity efforts, focusing on attracting underrepresented communities. That too widened the talent pool — and number of applications.

Plus, there are more apps, software and AI used to navigate hiring, which makes it easier for companies to post and candidates to apply.

Now, many companies are getting too many resumes and applications, making it more difficult to manage the volume. HR and hiring managers are overwhelmed. So many want to focus on what’s worked in the past — referrals — and work from there.

3 Factors to Referrals

With a need for more referrals, it’s important to get great candidates in the door and the best hires through onboarding. Better referral hiring will likely lead to stronger teams.

“When a company invests in its hiring strategy, it’ll reap the benefits of a longer employee lifetime value (ELTV) and reduced costs,” says Daniel Chait, CEO of Greenhouse. “By making smarter hiring decisions with referrals as an aid, you’re also making an impact on someone’s ELTV and seeing the ROI on your hiring investment.”

But to get referral hiring right, you want to be aware of the most critical issues — and minimize the drawbacks. Here are three factors to consider:

Bias

Cardos puts it best: “The prevalence of referrals among hired candidates gives the impression that they are stronger than other candidates, but that reflects a bias that can be misleading. It’s important to make sure every candidate goes through the same interview process to ensure they have the relevant skills needed for the role.”

At Greenhouse, they use their own product to hide source and referral information. That way interviewers can focus on how well candidates meet qualifications without being influenced by whether a candidate was referred.

Diversity

Referrals can quickly and easily decrease the degree of diversity in your talent pool — and hinder your efforts to hire a diverse workforce. Employees tend to know, hang out with, and refer people like themselves. It’s an innate human bias that you want to be aware of and protect against.

In fact, a PayScale study found white men land more jobs and bigger raises through referrals than others because, in the end, they tend to be more connected to corporate decision-makers. 

“We’ve seen that referrals in the U.S. can lead to a more homogenous workforce,” Cardos says. “In all of our referral portals for customers, we remind those making a referral to ‘consider referring people from underrepresented backgrounds.'”

Quality Over Quantity

Referrals can produce a lot of applications. But, like those candidates produced through apps and software, they aren’t all quality applications.

“It’s less about getting more referrals and more about identifying high-quality candidates,” says Cardos. “Taking the typical route of offering bonuses for hired referrals may drive volume, but that could also dilute the quality of the referral pool, making it a less useful strategy.”

While any referral can be helpful, you’ll want to ask employees to keep in mind that who they recommend should align with the role, culture and expectations.

4 Ways to Get More Referrals

With data-driven evidence that referrals are a more effective way to find better candidates — and more loyal employees — you likely want to get more referrals.

Here are four ideas:

Reward for Referrals

Most HR pros and companies offer rewards for referrals — and increase the value if the candidate works out and stays. So this tip would be too simple if we let it go at that.

Cardos adds, “It’s important to make sure incentives are well-aligned.”

First, don’t just reward for quantity. Reward employees for quality of referrals — perhaps one level of reward for an interview, next level for a second interview, higher level of reward for hire, etc.

Then, you might try something like what Greenhouse does: “Bi-annually, we celebrate employees who submitted referrals during an all-hands meeting and enter them in a raffle. This provides visibility and recognition for all employees who’ve contributed to our talent pipelines, while making the choice to refer more about identifying great people who employees want to work with.”

Build a Sought-After Culture

Employees stay where the culture is good — and job candidates go where the culture is inviting.

So, “the best thing a company can do is create an environment where employees can be successful and enjoy their work,” Cardos says. “No one wants to refer someone to a company they themselves don’t enjoy working for.”

Talk with employees about what attracted them to your company culture — and what keeps them engaged with it. Then, ask them if they know others who would want to be part of that culture or who could add to it. That will help them recognize people in their personal and professional networks who could be good fits.

Build Employees’ Networking Communities

Help your employees network more, giving them opportunities to grow professionally and meet others who might be good job candidates.

For instance, send different teams or individuals to industry or community events to raise brand awareness and broaden their networks. The more they can positively interact with others, the more likely they can gain knowledge and potentially grow your talent pipeline.

Another way: Help employees find and join professional associations and networking groups. When you invest in the careers of great employees, and they interact with more professionals, you improve your reputation and employment brand.

Make Efforts for Diversity

As we noted above, with referrals, it’s a little more difficult to get a diverse pool of candidates. To improve referral hiring, you’ll want to make extra efforts to tap underrepresented groups.

Some companies reach out directly to their minority employees. But that’s not the only possibility. Cardos says, “We’re also conscious that focusing on referrals can lead to a more homogenous team and culture, so we also invest in strategies like direct sourcing or partnerships to help diversify the workforce.”