What are the advantages and disadvantages of employee referrals?

What are the advantages and disadvantages of employee referrals?

Companies and organizations can use an employee referral program to source candidates by asking their employees to recommend candidates from their own networks. Here are some of the top advantages and disadvantages of employee referrals.


Save time and money

When seeking candidates, finding the best ones is often challenging and time-consuming. Employee referrals can save a lot of time and money. One study found that 55 percent of candidates were hired faster than those employed through online career sites. In addition, the candidate may be a better fit compared with other candidates who apply externally, speeding up your company's hiring process significantly.

Higher quality

Employee referrals bring in more qualified candidates for the job. Employees tend to refer candidates who they know will perform well because, as the referrer, they want to ensure their reputation will not be at stake. The candidate quality is generally higher when you source through employee referrals.

Higher retention rates

After a referral, the employee who made the recommendation and the new hire will likely stay with your company longer. A study found that, after one year, retention of referred employees is 46 percent compared to 33 percent from career sites and 22 percent from job boards. The decision to hire someone based on their suggestion makes them feel respected and valued by the company. Furthermore, because the employee and the new hire are already familiar with each other, they can work more effectively and efficiently.

Higher employee engagement and satisfaction

Increasing employee engagement is a key advantage of employee referral programs. Employees who suggest candidates and those employed as a result of recommendations both report feeling more engaged and valued at work.

Boon customers describe an increased sense of community and a more positive organizational culture thanks to referral hires. This is a direct result of employees having a voice and additional opportunities to interact and support one another through the various engagement features found throughout the Boon platform.


Although employee referrals offer many benefits, there are potential downsides. Employee referrals could reduce employee diversity - as traditional employee referrals tend to come from similar backgrounds or close connections, this could lead to a lack of diversity in your company.

Moreover, some employees tend to recommend close connections, which can encourage nepotism. This can result in a bias towards personal relationships instead of objective factors such as skills and accomplishments.

Traditionally, the challenge with referrals is that most employees only engage with about 10 percent of their network regularly, and often these individuals are most similar to them. As a result, many highly qualified candidates are left out of sight and out of mind.

However, implementing an effective recommendation system that enables employees to leverage their entire network, not just the people they can think of on their own, can address these issues. 

Boon’s augmented intelligence solution is built specifically to help address these issues by scouring and sourcing the best talent based on merit, experience, and qualifications. Employers gain a more capable and diverse talent pipeline by giving employees greater access to their entire network.


Weighing the pros and cons, it's clear that building an employee referral program for your company offers a lot more benefits than harm, but choosing the right referral platform is an essential ingredient for success. At Boon, we help you streamline the process, enabling you to easily design and implement a successful employee referral program. Request a demo today!

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