Referrals and the impact of referral on the Top Line

Employee referral is one of the best channels to hire quality talent. And, if done well, it can impact an organisation’s topline in a significant way. So, what’s an employee referral?

An employee referral is where an employee looks into an open job position and recommends a colleague or a friend from their network. They say ‘Hey! I know this person and can vouch that he/she would be a good fit for this role.’

Typically, items from talent acquisition that impact topline revolve around two things.

1) What's the quality of the hire? Which means -  Are you hiring someone who is 10x developer or rockstar sales person? High calibre candidates can directly produce far more than just the average candidate. Employee referrals are known as the number one source for producing quality talent. By hiring candidates through this channel, you bring quality profiles and can impact the topline directly. 

Organisations that do analysis of their productivity by their source of hiring tell us that the industry average of productivity through referrals tends to be 32 percent more than any other channel. 

2) Why is employee referral hiring critical? The answer lies in retention. Candidates hired through the employee referral channel, both the referee and the hire tend to stay for longer in the organisation. The longer an employee stays in the organisation, higher their contribution to the employee lifetime value. Tenured employees automatically have a stronger organisational context helping you improve the topline in a significant manner.
Just the two factors - employee retention and productivity alone has a significant impact on the top line.

Employees hired through the employee referral channel also tend to have a soft landing in the organisation. They have a friend inside who they rely on, who helps them shortcut their onboarding and teaches them the nuances to be successful. This means that their time to contribute reduces significantly and their integration into the teams tend to be better. All of this contributes to the organisation.

Would love to understand if you have done any kind of mapping in terms of productivity by source of hiring and if your results are consistent. We believe employee referrals are a strong channel that can impact an organisation’s topline or bottom line. Let me know your thoughts.