Impact of Employee Referral's Program

In an interesting analysis Gerry Crispin talks about the impact of employee referral on firm’s hiring over the Job boards. Not that job boards are ineffective but employee referrals are far more effective and have a greater impact than Job boards.

He gives these inputs to substantiate the idea;

Analyzing actual data (as opposed to guesses) from 24 specific firms who filled 188,000 positions during 2005 showed that 32% of the 188,000 were filled with internal movement and promotion. Of the remainder, the folks who were hired externally, 27.1% were filled by Employee Referrals. (source: CXR Annual Source of Hire Survey)

In a second study of employee referrals,More than 50 firms reported that the ratio of the number of hires to the total number of referrals during 2005 produced a yield ranging from 1 hire for every 10 employee referrals to 1 hire for every 2 employee referrals (with 1 hire for every 4 or .25 being the average). (source: CXR Colloquium Benchmark on Referral Practices)

If all companies hired the same percentage of employee referrals (they do not) and, if the average yield for referrals were true for all companies large and small (they are not) then a typical job seeker (there are none) has .271 X .25 chance of being hired if they get a employee to refer them - or about a 6.5% chance of getting hired if they simply focus on getting an employee in a targeted company to refer them.

Previous post on employee referral here .