Last updated: 10-1-2026
You know that your employees are just as valuable as your customers, if not moreso. Your team is the front-line of your business: executors of strategy, builders of customer relationships, and keepers of your employment brand. The latter also means your employees are an amazing source for recruiting new talent.
Think of your personal networks. From your social media reach to your personal and professional circles, when you share a job opportunity with your network it probably reaches hundreds of people. This same reach can be multiplied by empowering your employees to share job opportunities in their own networks. Through a simple employee referral program you can quickly broadcast openings using your own internal recruiting force … all before spending a dime on job board postings!
Employee referrals are one of the largest sources of hires – 39% according to a recent study – for companies who actively communicate opportunities to their current employees and encourage referrals. The impressive applicant-to-hire rate for referrals is largely due to the quality of candidates you’re likely to receive from a referral as opposed to a job board. There is compelling evidence that shows A-Players refer fellow A-Players. After all, talented, motivated people usually surround themselves with talented, motivated peers. By empowering your high contributors to refer from within their network, you’re building a strong talent pipeline.
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An employee referral program rewards employees for referring candidates from their own networks. In CareerPlug’s own analysis, applicants who applied from a referral were eighteen times more likely to be hired than applicants from a job board.
In short: Job boards produced 88% of all applications but only 29% of hires in CareerPlug’s own analysis. An applicant who applied from a referral was 85 times more likely to be hired than an applicant from a job board. If the goal is fewer resumes and better fits, referrals are the highest-leverage channel available, not a nice-to-have.
OUR EXPERIENCE WITH EMPLOYEE REFERRAL PROGRAMS
In our own analysis of applicant-to-hire rates by source, our experience shows us that applicants who apply from job boards are more likely to be sending out dozens of applications in short order, with less consideration for their qualifications for the role or less interest in the specific job. An applicant who is referred to a job is much more likely to be excited about the position and to be a good match.
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SEE CAREERPLUG IN ACTIONBenefits of an Employee Referral Program
Here are a few more benefits to employee referrals:
- Faster Time to Hire – A recent study showed that it takes an average of 29 days to hire a referred candidate compared to 39 days to hire a candidate through a job site.
- Lower Cost per Hire – No recruiter fees. No expensive sponsored job posts or advertising. And due to the faster time to hire, you cut internal costs as well.
- Smoother Onboarding – A referred employee will usually have more insight into the company and its culture when they start than someone who applied through a job posting. And they have the person who referred them as a resource to ease their transition!
- Higher Retention Rate – Referral employees stick around longer. As they have been pre-filtered by their referrer for cultural fit and performance, it’s no surprise that referrals have a lower turnover rate than other hires.
Getting Started with an Employee Referral Program
- Share Your Opportunities: Communicate open positions to your employees and get them excited to share with their network.
- Track Referral Applicants: Use unique job posting URLs and referral form fields so that you can track sources and provide invaluable insight into your hiring process.
- Keep Referers Informed: Your employees are doing you a favor by sending talent; replay them by communicating openly as their referral moves through the hiring process.
- Reward Referral Hires: Motivate employees to consistently refer great candidates by providing a referral bonus when you hire their referral.
At CareerPlug, we made it easy for our clients to take advantage of employee referrals by integrating employee referral communication and tracking into our hiring software.
Reward Referrers Like Your Best Customers
Hotels have different tiers for customers based on stays, airlines have different tiers based on flights. So why can’t your employee referral program have tiers based on the number of referrals? Referral tiers are a great way to increase employee engagement among successful referrers.
Just like you might see for hotels and airlines, you can offer successful referrers rewards based on the number of referrals. This is a great way to increase employee engagement and improve referral rates, especially among successful referrers.
An example of this might be having rewards for 1 referral, 3 referrals, 5 referrals, and 8 referrals. The more referrals hired, the bigger the prize! This works especially well for entry-level, hourly positions where applicants may not need as many skills to become qualified candidates.
Frequently Asked Questions About Employee Referral Programs
What is an employee referral program?
An employee referral program is a structured program in which a company encourages its employees to refer people from their networks to open positions in the company. The referring employee usually receives a reward, such as a bonus payment, if someone they refer is hired. Employee referrals are considered an internal recruitment method.
How much can an employee referral program save on hiring costs?
Referrals hired can save you $3,000 or more per year in onboarding costs.
Ready to turn these recommendations into a repeatable hiring process?
CareerPlug gives your team the tools to put this employee referral program guidance into action without adding more administrative work.
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