TIN #115 - The Power of Employee Referrals: Why Your Company Needs to Leverage Networking
How Employee Referrals Lead to Better Job Matches and Lower Turnover
Hey there!
A few issues ago, I talked about five benefits companies get from teaching their employees to network.
Today, I’m focusing on one of those benefits: Employee Referrals.
I’ll tell you why networking is the key to adding great talent to your current team.
This issue takes about 4 minutes to read…
Before We Get Started:
Each week, I post a new podcast with tips you’ll find in the weekly newsletter and bonus stories, wisdom, and motivation. The Introverted Networker podcast is like the weekly newsletter but with additional narration and thoughts from me. Be sure to listen to this week’s podcast and check out the previous episodes of the podcast on Spotify and Apple Podcasts for more networking tips and insights.
Why Employee Referrals Matter
Employee referrals have consistently proven to be one of the most effective ways to fill open positions in companies.
Why?
Because when current employees refer people they know, those candidates tend to stay longer, be more satisfied, and become top performers.
Watch the whole video on my YouTube channel
According to a 2023 survey by JobVite, employees referred to a company:
Have a 30% chance of being hired compared to only 7% for applicants from other sources, like job boards.
Are 40% more likely to stay at a company after their first year
Are 18% more likely to feel satisfied in their roles
The bottom line: companies save money on recruitment costs and gain more engaged employees by utilizing referrals.
This is just one of the advantages of teaching your employees how to network.
If you want to see the other four, check out TIN #112 - 5 Reason Why Every Company Should Train Their Employees To Network.
But what’s the connection between networking and these stellar results?
Let’s break it down.
The Networking Advantage in Employee Referrals
Employee referrals work because they involve more than just bringing in a warm body to fill a role.
When you refer someone to your company, you’re acting as a dual filter—you’re screening your connection for the company and your company for the connection.
Here’s why it works:
You know the candidate: Whether it’s a friend, family member, or someone from your professional network, you have firsthand knowledge of their strengths and work style.
You know the company: You’re already an insider who understands the culture, expectations, and nuances of your workplace. This means you’re uniquely positioned to evaluate whether this person will thrive in that environment.
You only refer the best: Because your reputation is at stake, you’re not going to refer someone who won’t succeed. You act as a gatekeeper, filtering out anyone who might not fit or perform well. And, you aren’t going to refer someone into a company that isn’t right for them because you want to maintain your relationship with your connection.
You have a vested interest in both sides being happy about the hire.
Building a Referral-Focused Culture
If you’re a company looking to increase your number of employee referrals, ask yourself this: Are your employees actively networking and identifying great talent to bring in?
Most companies offer referral bonuses, but very few actively encourage and train employees to be “talent scouts” out in the world.
If companies invest in teaching employees how to network effectively, it empowers them to build relationships that lead to finding great future hires.
Imagine having a team of employees who not only do their jobs well but are also ambassadors who can identify talent through their own networks!
Addressing the Risk of Networking
Some companies might worry if employees learn how to network, they’ll find better job opportunities elsewhere.
It’s a valid concern—but if your company offers a great place to work, the risk of losing employees is much lower.
In fact, if your company has a healthy culture, employees will want to refer their connections because they genuinely believe it’s a great place to work.
If you’re worried about your employees networking their way out of the company, they’re probably already doing that anyway.
The best approach is to create a culture people want to advocate for, rather than trying to limit opportunities for them.
How to Teach Employees to Network
Here’s how companies can train their teams to network effectively and generate more high-quality referrals:
Provide networking training: Teach employees the basics of networking—how to approach new connections, build relationships, and maintain them over time.
Don’t want to wait for your company to train you? You’re in the right place! Check out my “5 Steps To Grow Your Professional Network,” course.
Encourage networking beyond the industry: Great talent can come from anywhere, not just your specific industry.
Show employees how to expand their professional networks to include a diverse set of professionals.
Incentivize smart networking: Make the referral bonuses worthwhile, but emphasize quality over quantity.
Employees should focus on bringing in the right candidates, not just anyone they know.
Take Action: Become a Better Networker
If you’re an individual looking to grow your professional network or a company interested in improving your employee referral program, I’m here to help.
Remember: Great companies are built on great people.
And the best people often come from the networks of the talent they already have.
By focusing on teaching your employees to network better, you not only improve your referral program—you also build a stronger company culture.
Have a great week, and as always—keep connecting!