REFERRAL RATE

Application This measure will be most useful for organizations that value employee referrals as a source of highly qualified candidates that fit well within the organization. Candidate referrals as a percentage of average headcount. Referrals / Average Headcount * 100 Referral Rate measures the average number of recruiting referrals each employee has submitted during the period. Many employers have studied hiring, turnover, and other data to learn that candidates referred by employees are better organizational fits, are more successful, and/or remain with the organization longer than other hires. Organizations that find this to be true use Referral Rate to measure the volume of such referrals or to measure the impact of referral awareness or incentive campaigns. While an increasing Referral Rate means that employees are submitting relatively more referrals, this result should also be compared to overall hiring volume to determine how the volume of referrals contributes to the ongoing hiring needs of the organization.

Description Formula Interpretation

Data Sourcing

Organizations that track referral data typically do so within a recruitment system or a recruitment table within an HRIS.

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Considerations Analysis Organizations may analyze this measure by various employee subgroups to understand which areas of the workforce contribute the bulk of referrals. Dimensions commonly analyzed for this purpose are age, tenure, employment level, job family, and job function. Limitations This measure does not indicate how the volume of referrals compares to overall hiring volume. It does not indicate how recruitment costs or cycle times differ between referred and nonreferred candidates. Also, it does not indicate the percentage of referrals that become hires or those hires success within the organization.

Targets

Targets for this measure are likely to be absolute targets based on prior referral levels, incentive amounts (if offered), and expected future hiring volume. In periods of high workforce growth, organizations are likely to target high Referral Rates to contribute to pressing recruitment needs. While referrals may still be an important sourcing of quality hires throughout workforce contractions, organizations may lower targets for this measure.

Variations
Referral Rate< 30 Years Old Referral RateExempt Referral RateHigh Performers Referral RateHigh Tenure Referral RateLow Tenure Referral RateManagers Referral RateMid Tenure Referral RateMinority Referral RateNon-Exempt

Related Measures
Applicant Ratio Average Interviews per Hire Average Time to Fill Employee Commitment Index Employee Retention Index External Hire Rate Interviewee Offer Rate Interviewee Ratio Net Hire Ratio New Hire Performance Satisfaction New Hire Satisfaction with Recruiting Offer Acceptance Rate Recruitment Cost per Hire Referral Conversion Rate Termination Rate< 1-Year Tenure (variation)

Source: Corporate Leadership Council research.

STAFFING: Staffing Effectiveness