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The Many Pros and Cons of Employee Referrals

The Many Pros and Cons of Employee Referrals on ahabusinessconsulting.comMake a better hiring decision by weighing both sides.

Employee referrals are great. Sometimes. Before you take the word of an employee on the next ‘perfect hire,’ be sure to weigh the benefits against the potential issues to help guide you as you make your hiring decision.


  • If you like and trust your referring employee and they’re doing a great job, their recommendation could be very valuable. The employee knows your culture, and if they think someone they recommend is a fit and could be strong contributor, they well could be.
  • The retention rate could be higher because the referral is a good fit. Because the referring employee and the new hire know each other, team-building could be facilitated.
  • You are reaching qualified people you might not reach otherwise. It’s like a friend who knows you well setting you up on a date with someone they know has common interests, rather than you meeting your match through a dating site.
  • You might find that right candidate faster than you would going through regular recruitment channels that could take months.
  • It’s empowering to employees that their referrals are sought after, and increases engagement.
  • You could save money not paying for an ad, going through a recruiter, or spending company time sifting through resumes and interviews.


  • There is the potential for other employees to complain about favoritism, viewing the referring employee and new hire as a clique, with the effect of hurting the team.
  • Depending on your referring employee’s new working relationship with the hired referral, either one or both may be reluctant to share ideas or critiques, because they don’t want to cause hurt feelings or damage their personal relationship.
  • While it can be tempting to quickly hire a good referral, you might be overlooking a more qualified candidate you would have found through a recruiter.
  • The referring employee might know the referral only casually, and not know their work ethic and if the person would truly be a good fit.
  • If the employee’s referral is not hired, your employee could feel it reflects negatively on them, and they could feel ill will towards the company.
  • If the relationship between your employee and the hired referral sours, their individual work could suffer, as could that of the entire team.
  • If either your employee or the referral chose to leave, you might lose both of them.

Bottom line: Keep your eyes open

If you have a good employee referral, by all means follow up. The referral might be a hidden gem you wouldn’t have found otherwise. But if you don’t have employee referrals or want to consider a larger pool of applicants, you might want to use a recruiting partner rather than the job boards, because a good recruiter is only recommending those applicants that fit your culture and can do the job. They act as your referral team.

Regardless of how you find your next hire, puts the odds in your favor that the new employee will work out. Do your research, conduct the usual interviews, administer the pre-hire assessment (if you do one), do the background check, so you know you’re getting a perfect fit.

At AHA! Impressions, we know finding the right frontline employees is hard, even if you aren’t starting from scratch. We offer turnkey recruitment services and tools to take the headache out of hiring: schedule a free consultation today to see how we can help you get back to doing what you do best.

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