Employee Referral Programs Are Your Best Recruiting Strategy

Believe it or not, there’s a tremendous amount of research available on the psychology of employee referrals. Studies on the topic include employee and candidate motivations, to economic models that demonstrate financial savings for recruiting, onboarding, and lower turnover. Studies have shown that referred workers perform better and stay longer than any other recruitment channel and that there are higher productivity and profit yields with referred workers.

Without a doubt, it is the most successful recruiting method outside of your organization’s career site.

Referrals count for as much as 50% of hires in companies with referral programs

In most organizations with employee referral programs, they see higher rates of job satisfaction, the desire to help job seekers find good fitting jobs, the desire to help the organization find good suitable employees, and rewards predicted positive referrals.

Referrals are 55% faster to hire, compared with employees sourced via other means

HR technologist

Moreover, in the organization, rewarding employees for making referrals, more positive and less negative references were made than in organizations without referral programs.

Referral hiring involves more than just bringing new employees into your organization. Referral programs bring in a particular employee — someone known to your current employees and most likely to have strong social ties.

Employee referrals improve the quality of hire
Eighty-eight percent of employers said that referrals are the #1 best source for above-average applicants.

It also means hiring candidates that you believe match the company’s mission and social environment. Your employees see the performance of their referral as a reflection of themselves in the eyes of their employer and coworkers, and these concerns for their reputation, in turn, lead the referrer to be highly selective in choosing whom they decide to refer.

Employee referrals reduce the turnover rate.

After two years, retention of referred employees is 45% compared to 20% from job boards.


The referee improves the social component of the employees’ work environment; this component will influence the attitudes and perceptions that will contribute to improved job performance and lower turnover.

If you’re looking for qualified candidates, a referral program should be the cornerstone of your recruitment strategy. These programs have the highest ROI of any recruitment spending.

Putting Together a Referral Program

So you want to put together an employee referral program. What are the steps required to get on successfully up and running?

  • Start by getting buy-in from your hospital executive team, senior clinical leadership, and non-clinical directors. Share all the positives of having a referral program.
  • Research and address any legal issues and ensure that you have a plan that avoids any unintentional discrimination issues.
  • Design your ERP – the goals, processes, participation rules, a rewards system that encourages the maximum number of employee participants, and referrals.
  • Determine your hiring goals and how you intend to measure the outcomes of your plan.
  • Develop your employee referral plan marketing and communications plan.

If you’re interested in developing an ERP for you facility, we have a complete program ready for installation.

Contact us and we’d be happy to discuss your interests or concerns with ERPs. Our online referral program and tool, TeamUp Now, has been around now for the last decade or so and comes complete with creative and communications campaigns and materials.

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