HR Q&A: The Role of Referrals When Hiring

Referrals – they’re perhaps old school. You know, with job boards, LinkedIn, recruiter strategies and so on. But here’s the thing: Referrals continue to deliver exceptional employee prospects when done right. 

But to get the most out of referrals you need to have a plan rather than relying on the good will of people keeping your company top of mind when they identify someone who they think would be a good fit.  

We sat down with Renee Vongsa, vice president of human resources at Tandem HR, to discuss how she approaches referrals, why she likes them, and what to watch out for when incorporating them into your hiring strategy.

Why are referrals so effective when it comes to finding quality employees? 

You’re getting recommendations from people who have proven themselves and understand your industry; that’s a big advantage. Most of us have large networks as our careers mature and often we know what to look for – especially in our respective fields.  

With a referral, you kind of have a head start in the process. While every referral doesn’t work out, the likelihood is high because you’re starting with an educated recommendation that comes with credibility.  

Are referrals more effective for filling some positions than others? 

Certainly. Often, they’re most beneficial to us at the manager, director and executive levels. It’s imperative we get those positions right. A “miss” is costly for a number of reasons and referrals can help us mitigate the risk of a bad hire. 

We get referrals from all over, ranging from our CEO to people in our external networks who understand our niche and needs. Building a culture where referrals are encouraged is essential to ensuring these leads make their way to you as a hiring manager. 

Speaking of encouraging referrals, how do you recommend people approach setting up a referral rewards program? 

I’m a believer in keeping it simple and tangible. For me, that comes down to a clear financial benefit for the person who refers someone. Other perks, such as company merch, gift cards and so on are nice but those should be extra.  

We offer our employees $1,500 for every referral who gets hired and stays with us for 90 days. A few referrals a year and you could have a nice side gig within your current gig! 

Are there times when referrals are more valuable than others? 

Honestly, they’re always a great channel for finding quality people. With that said, we really count on them when we need people with specific industry experience in specialized areas.  

For instance, we’re building out our sales team, which isn’t currently as robust or mature as some of our other departments. That means we need to be incredibly selective and detailed when bringing people into the team. The credibility that comes with referrals often helps us avoid some of the guess work and additional vetting needed when looking at “cold” applications. 

Are there any risks to relying on referrals? 

Certainly, which is why it’s important to be aware of them. 

First, objectivity is important. Occasionally someone will refer a friend but that person may not be truly qualified. You can’t put too much weight on the relationship side of things. That’s why we always keep “right seat, right person” in mind with all referrals, as we do with any new hire.  

Second, referrals can create some blind spots in your hiring if you aren’t cognizant of it. What I mean by that is if people don’t have a deep network of people with diverse professional, personal, and cultural backgrounds you could put yourself at risk of missing out on new ideas and skills. 

Additionally, you could end up with, literally, a less diverse workforce. We strive for diversity, so we’re always aware of this potential challenge and work to avoid it.