The Pros and Cons of Employee Referrals

Although 30 to 50 percent of employees use referrals to get jobs, an employee referral is not a guarantee of a great hire. Think carefully about the pros and cons of these recommendations before deciding how much weight to attach to one. Each situation is unique, and hiring decisions should only be made after a careful analysis of each potential employee's strengths and weaknesses.

The biggest advantage of an employee referral is the reassurance that the applicant is an honest person with real credentials who is likely capable of performing the job responsibilities. An employee making a referral is usually aware that candidate's future job performance could reflect on him, so few referrals are made blindly. This assurance reduces the amount of research needed on a candidate before offering him an interview and considering him as a serious candidate for the position.

On the other hand, even well thought-out referrals can lead to tension. If the candidate does not get the job, the person who made the recommendation might become upset. If the candidate gets the job and performs badly, this can cause friction between the referrer and the new employee. If you encourage employee referrals, remind your staff that these recommendations have limited influence, and that final decisions are made on the basis of professional credentials and expectations regarding performance only.

Another benefit of employee referrals is that they create a larger pool of applicants for a position. This may include people employed at other organizations as well as candidates from outside the industry or other cities. This larger pool might include the perfect person for the position who would have been unaware of the opening if not for the internal connection.

Unfortunately, even with a larger pool or prospects, placing too much weight on employee referrals often leads to a homogeneous workforce. People tend to know and support others who are similar to themselves. Too many employees with similar backgrounds limits innovation in your company by reducing the number of different perspectives brought to bear on your projects. Keep diversity in mind when hiring from to limit this effect.

An applicant with an employee referral has an instant affinity with your company. If hired, he is likely to feel a closer connection to his new company and become engaged at a quicker rate than someone without that association. Employee engagement correlates closely with employee retention and reduces your turnover rate.

However, don't let the potential benefits of a referred applicant cause you to overlook other, better qualified candidates. Limit your bias by looking at each one as objectively as possible. Compare candidates based on their qualifications and experience, and consider using a hiring committee or interviewers without knowledge of the employee connection.

Make sound hiring decisions by using a variety of criteria as you evaluate job candidates. Employee referrals are just one piece of information to help you select the right person for the job. Make use of them to increase your job pool and streamline the hiring process while taking steps to minimize bias and work toward diversity,

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