Skip links
The Power of Employee Referrals: Why They Matter and How to Make the Most of Them

The Power of Employee Referrals: Why They Matter and How to Make the Most of Them

Employee referrals have long been recognized as a valuable source for finding top talent. In fact, according to a study by Jobvite, employee referrals have the highest applicant-to-hire conversion rate at 40%, compared to just 7% for job boards and 2% for career sites.But why are employee referrals so effective, and how can you make the most of them for your company? In this article, we’ll explore the power of employee referrals and provide tips on how to create a successful employee referral program.

Why Employee Referrals Matter

Quality Candidates

One of the main reasons why employee referrals are so valuable is because they often result in high-quality candidates. Employees are more likely to refer someone they know and trust, and this can lead to a higher success rate in the hiring process.

Referred candidates also tend to have a better understanding of the company culture and values, as they have been recommended by someone who is already a part of the organization. This can lead to better cultural fit and higher retention rates.


Employee referrals are also a cost-effective way to recruit new employees. Traditional recruiting methods such as job boards and career sites can be expensive, and the cost can add up quickly. Employee referrals, on the other hand, often come at little to no cost, making them a budget-friendly option for companies of all sizes.

Faster Hiring Process

With the current job market being highly competitive, companies are looking for ways to speed up their hiring process. Employee referrals can help with this, as referred candidates tend to move through the hiring process faster. This is because they have already been vetted by the employee who referred them, and they are often more motivated to secure the job.


How to Make the Most of Employee Referrals

Create an Employee Referral Program

The first step in making the most of employee referrals is to create an employee referral program. This program should outline the process for employees to refer candidates, as well as any incentives or rewards for successful referrals.

To create an effective employee referral program, consider the following:

  • Clearly define the roles and responsibilities of employees in the referral process.
  • Set clear guidelines for the types of candidates that are eligible for referral.
  • Determine the rewards or incentives for successful referrals.
  • Communicate the program to all employees and provide regular updates on its success.

Make it Easy for Employees to Refer Candidates

To encourage employees to refer candidates, it’s important to make the process as easy as possible. This can include creating a simple referral form or providing employees with a referral link to share with their network.

You can also create a referral program flyer to promote the program and remind employees of the benefits of referring candidates. This flyer can be shared in the office or through company-wide emails.

Offer Incentives

Incentives are a great way to motivate employees to refer candidates. These can include cash bonuses, gift cards, extra vacation days, or even a referral leaderboard with prizes for top referrers.

When deciding on incentives, consider what will motivate your employees and what is feasible for your budget. It’s also important to regularly review and update your incentives to keep employees engaged and motivated to refer candidates.

Communicate the Benefits of Employee Referrals

Many employees may not realize the benefits of referring candidates, so it’s important to communicate this to them. Let them know that their referrals can help the company find top talent, and that they will be rewarded for their efforts.

You can also highlight the success stories of past employee referrals to show the impact they have had on the company. This can serve as motivation for employees to refer their own connections.

Track and Measure Referrals

To make the most of employee referrals, it’s important to track and measure their success. This can help you identify which employees are making the most referrals, which types of candidates are being referred, and the overall success rate of the program.

Tracking and measuring referrals can also help you identify any areas for improvement in your program. For example, if you notice that certain departments are not making many referrals, you can work on strategies to encourage their participation.

Real-World Examples of Successful Employee Referral Programs


Google is known for its innovative and successful employee referral program. The company offers a $2,000 referral bonus for successful hires, and employees can refer up to 15 candidates per year.

Google also has a unique twist on their referral program – if an employee refers a candidate who is not a fit for their current role, but is hired for a different role within the company, the employee still receives the referral bonus.


Zappos, the online shoe and clothing retailer, has a highly successful employee referral program that has helped the company grow from 90 employees to over 1,500 in just 10 years.

The company offers a $3,000 referral bonus for successful hires, and employees can refer up to 10 candidates per year. Zappos also has a “Zapponian of the Month” award, which recognizes employees who have made successful referrals.

Who is Responsible for Employee Referrals?


While HR and recruiting teams are typically responsible for creating and managing employee referral programs, the success of the program relies heavily on the participation of employees.

To ensure the success of your employee referral program, it’s important to involve employees in the process and make them feel like they are an integral part of the hiring process.


Employee referrals are a powerful tool for finding top talent and can lead to a more cost-effective and efficient hiring process. By creating a successful employee referral program and involving employees in the process, you can make the most of employee referrals and see the benefits in your company’s growth and success.

Read more from our Blog