5 Major Misconceptions Employers Have About Referrals

Guest Post
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At Drafted, we believe that referrals are an invaluable source of top talent. Research has our backs on this, too – data consistently shows that referrals lead to candidates with longer tenures, broader diversity, and better performance. Despite this, a lot of hiring managers are still wary of referral programs. Why? We asked around, did our research, and saw some of the same issues coming up.

Here are 5 common hesitations employers have about referrals - and why they’re wrong.

Misconception #1

‘I already have too many candidates’

We get it – Your ATS is overflowing with candidates. You have interviews lined up for weeks and are getting more emails than you can handle. Turning down a promising referral because you have ‘too many’ other candidates is like turning down a paycheck because you have 'too many' lottery tickets.[Tweet "Turning down a promising referral because you have ‘too many’ other candidates is like turning down a paycheck because you have 'too many' lottery tickets."]

Misconception #2

‘Referral bonuses are a waste of money’

Sometimes after you hire a referred candidate and pay the employee that referred them you might have second thoughts. “Wow, this person is getting $5K for just an intro? Was that really worth it?Yes, it was. If you outsource your hire to a third-party recruiting agency, you’re paying a much higher price than if you relied on in-house recruiting. Referrals are a critical part of in-house recruiting, because they enable your whole company to be part of the recruiting force.

Misconception #3

‘My CEO/manager doesn’t want to try new hiring methods’

Of course they do! They know more than anyone that company success depends on attracting the best talent.You're much more likely to do that if you find solutions off the beaten path, instead of just sponsoring the same career fair with dozens of other companies in the same space.

Misconception #4

‘Referral programs need to be complicated in order to be effective’

Managers rolling out an employee referral program for the first time often approach it like this:“What if the hire doesn’t work out? Then we shouldn’t pay the full referral bonus. So let’s make a 90 day provision. And then let’s withhold 25% of the bonus until the 2 year anniversary of the new hire. And let’s run a regression analysis to optimize the delivery time of the check and…”...and the employees have lost interest. Keeping the call to action simple, actionable and succinct makes it robust and approachable. Over complicating it will discourage referrals, because it begins to seem like a big pile of red tape.

Misconception #5

‘If we offer referral bonuses, we’ll get flooded with candidates from people trying to make quick cash'

Multiple studies - including ones from LinkedIn, Deloitte, and our own team at Drafted - have examined the effects of bonuses on referrals and came to the same result: Bonuses aren’t the primary motivation. Studies actually conclusively show that the primary motivation is to help, since fortunately you’ve hired a team of good people and not just mercenaries*. And good people want to work with other good people.

*Although... even if they were mercenaries, they would probably still want to work alongside other competent mercenaries brought on by people they knew.

At the end of the day, people will be able to tell you more about another person more than their resume ever will. Referrals are an organic, powerful way to build strong teams – and good managers make it an official part of their TA strategy. Focus on hiring A+ players who will refer their A+ friends.

Intrigued, but unsure where to start? We can help you find out the right employee referral program for your team, and help you start making great connections today.

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