Are employee referrals an effective way to hire?

This question comes up a lot. The idea is to leverage your employees’ networks and get referrals to candidates they already know are qualified.

The advantages of referral-based hiring are obvious. Fewer unknowns, easier onboarding, and saved time.

But there are some big dangers from hiring by referral – often overlooked or ignored by both the experts and companies.


Here are 3 reasons using referral hiring can prevent you from finding the best candidates:

1. Limits your hiring pool

Let’s say there’s a pool of 1000 excellent candidates for your position in each of the 50 major US cities. And the people in your network know 418 of them, total. But 300 of those are happily employed elsewhere.

So if you rely only on your own network out of a fear of the unknown, you have shrunk a pool of 50,000 qualified candidates to 118, just because someone on your staff, or you, happens to already know them.

Is that a smart way to hire?

Relying on referrals limits your pool, and prevents you from even meeting the great majority of candidates who are highly qualified for your positions.

Assuming there is a “best” person for your job, what are the odds someone on your team already knows them? Pretty slim.

And please don’t misunderstand: We’re not telling you not to use referrals and networking as part of your hiring strategy. What we’re saying is, don’t ONLY use them.

With the competition for talent increasing, you have to expect that you won’t get your top choices. With a hiring pool limited by over-reliance on your network, you might not have anyone left to turn to if your top choices fall through.

Enlarge the pool. Have more choices.

2. Relies on objectivity from employees about their friends

referralJoe might be a great employee. But if Joe finds out about your referral bonus, and tells you about a friend of his who would be “awesome” in this position, how trustworthy is this referral?

Can you trust Joe to have the best interests of your company at heart?
Does Joe know what you’re really looking for in this person?

More likely is that Joe simply wants his friend to get a great job, and to pocket some extra cash. And his friend may be qualified on paper. But what about all his other qualities? Does he have the intangible but more important personality skills and competencies that you need for this position? Is Joe the right person to make that decision?

And what will Joe think if you don’t hire his friend? Will he resent you? Will he start thinking you don’t value his opinion?

By relying too much on referrals, you’re looking for objectivity where it’s least likely to be found. And you’re putting your good relationships with your current employees at risk.

And all the while, there’s a pool of talent out there that is looking for companies like yours.

3. You still don’t really know the person

People put their best faces forward, even to their friends. But unless they’ve seen them in action – in a work setting – how reliable is their recommendation, really?

When your employees describe their friends to you, they describe their better qualities, and gloss over their negative traits because they’re used to them.

So even though you’re getting a referral from a trusted employee, you actually don’t know much more about that candidate – what you really need to know – than you do from the top candidates in a big pile of resumes.

If they seem better than the ‘unknown’ candidate, that’s your confidence bias talking, not your hiring expertise.

If only there were a faster way to get through resumes that sifted out the top candidates…


The Three Things You Need to Know

Regardless of whether you’re getting referrals from an employee or friend, or finding job candidates in a pile of resumes, your biggest questions are the same:

  1. Are they the right person for this job?
  2. How can I find out for sure?
  3. How can I find out for sure without spending gobs of time?

Enlarge Your Pool.

Attract Top Candidates You’d Never Find By Referral.

Contact PainLess Hire, and Experience the Fastest AND Most Effective Hiring Process You Never Knew Was Possible

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