Why Referrals Work: A Few Words on Social Recruiting
Recommendations are part of our everyday life. We recommend a good film, a trusted doctor, an interesting blog. More than that: the more serious the decision ahead of us, the more we rely on recommendations from people we trust. It is no different with one of life's most serious choices: where we work.
Job referrals happen in two ways. Internal referral systems are addressed to a company's employees, whom the employer invites to point to people who could successfully fill vacancies. Companies customarily offer rewards for successful referrals. Depending on the employer's preferences, these can be financial, in-kind, or purely symbolic. Another model is engaging people from outside in referrals: clients, agents, or subcontractors. They too expect a certain form of thanks for their activity.
There are also two distinct sources of referral applications. You can either create an internal system plugged into the company intranet or CAREERS page (such solutions are offered globally by the leading provider RolePoint and, in Poland, by ShareHire Insider) or use an external platform where users can both apply for jobs and refer others to them (notable examples include BountyJobs, MeshHire, or Zao; in Poland, ShareHire.pl is already up and running).
According to research by Zielona Linia, the Polish Employment Services Information Centre, 72% of respondents told people close to them that they were currently looking for a job, and 68% of them found employment thanks to a friend's referral. That is good news for candidates. Employers, in turn, are reassured of the value of referrals by the American HR industry player Jobvite. According to its research, referred applications, while accounting for barely 7% of all CVs that companies receive, are responsible for as much as 40% of hires.
How can this statistic be explained? The simplest way is to point to the range of benefits that referrals offer everyone involved in the process. It should be noted that a good referral program (but also a well-designed social recruiting platform) must take into account the needs and interests of the employer, the employee, and the referrer alike.
Companies obtain applications without engaging a recruitment agency. The role of job boards also declines: instead of refreshing or bumping an ad, it is enough to keep the community of referrers engaged with mailings, social media posts, etc. This means lower costs, and in two ways. On the one hand, the company pays less for publishing job ads; on the other, for handling them on an ongoing basis. The recruiter sees candidates who have already undergone the social pre-selection that always comes with referrals. This means shifting the emphasis from the quantity to the quality of CVs.
The psychological mechanism behind this is easy to explain. A person who recommends a friend for a job, especially if they are an employee of the company themselves, takes responsibility for the person they pointed to. The referrer also has knowledge about them that cannot be gleaned from a CV or cover letter. A company also gains significant benefits from non-employee referrals, i.e. those submitted by contractors, clients, or others more loosely associated with it. Involving them in the recruitment process engages them in the life of the business they are helping – especially if the employer offers a reward for a successful referral.
What do candidates themselves gain from referrals? First of all, easy access to new job offers – without searching, they discover interesting employment prospects. The fact that a friend drew their attention to a given job ad also reassures them that the company they will be applying to is credible. If the friend is an employee themselves, they can be counted on to prepare the candidate well for the job interview. The onboarding of the company's new hire will also be easier thanks to the existing relationship with the referrer. Jobvite's research shows that referred employees typically display greater loyalty (measured in years of tenure) than candidates sourced through job boards.
Referrers' motivations vary, but they too should see value in recommending others for jobs. Some are driven by an altruistic desire to help; others count on a reward for an effective referral; still others – for instance young HR professionals – see it as a way of building their professional story. Considering that the most common reward for one successful referral on ShareHire is PLN 1,000, and the highest as much as PLN 3,000, it is easy to imagine that people who refer frequently and methodically could make a living out of it. They can do something for themselves while helping others. That alone shows that referring really is worth it.
