PayScale Reveals that Employee Referrals Can Affect Candidate Pay But Your Relationship to the Employee Referring You Matters

Women and People of Color Significantly Less Likely to Receive an Employee Referral

Seattle, Washington, UNITED STATES


SEATTLE, Jan. 23, 2018 (GLOBE NEWSWIRE) -- PayScale, Inc., the world’s leading provider of the most precise on-demand compensation data and software, issued its findings on employee referral benefits—or the lack thereof, depending on your gender and race and who’s doing the referring. The company reports that some employees who are referred earn less per year than non-referred employees in the same company. In fact, being referred by a family member or close friend can actually lead to a lower salary, reducing the average offer by about $1,600, after controlling for other factors influencing pay.

PayScale also found that not all referrals are equal. While the most valuable referral is one from a former co-worker, colleague or client—there is a significant difference in how this type of referral benefits men and women: men can expect $8,200 more, while the bump for women is much lower at $3,700. 

PayScale Vice President Lydia Frank observed, “Receiving a referral from someone that can vouch for a candidate’s work versus a close friend or family member who is less likely to have knowledge of their loved one’s potential impact in a professional setting clearly impacts the value a hiring manager places on the referral. It’s disappointing but not unexpected to see gender pay equity issues crop up in this new referral research.”

Highlights from the 2018 Report:

• Overall, about one-third of new job offers go to people who received a referral. However, employee referrals are still the most common job application method in most industries, compared to other options like applying through a career site, being referred by a recruiter, etc.

  • The most common type of referral is from family members or close friends (14 percent of all new employees), followed by former coworkers, colleagues or clients (11 percent). Seven percent of new workers leveraged soft contacts (friends of friends, etc.) to land new jobs. Candidates successfully targeting current employees to request referrals is still uncommon, but 2 percent of workers manage to leverage these cold connections into jobs.

• The likelihood of referrals for women and minorities is also disparate:

  • White women are 12 percent less likely to have received a referral for their current position.
  • Men of color are 26 percent less likely to have received a referral.
  • Women of color are 35 percent less likely.

• Employees who receive referrals are more engaged. Specifically, those who receive a referral by targeting a current employee are the most engaged.

  • Employer satisfaction rates are higher for people who received a referral than for those who did not. While 53 percent of employees who received a referral from a family member or a close friend report being satisfied with their employer, 60 percent of those who received a referral by targeting an employee are satisfied with their employer.
  • The percent of employees reporting they have a great relationship with their manager is highest for employees who were referred to their job by requesting and receiving a referral via a current employee or through their extended personal network.
  • Employees who receive referrals via an existing employee are less likely to be actively seeking a new job in the next six months, having the lowest rates of "intent to leave."

“While it can be tempting to lean on employee referrals as a primary recruiting source, it’s important for organizations to understand who isn’t getting referred.” said Frank. “Relying too heavily on referrals can come at a cost to businesses and result in a homogenous culture with a deficit of diverse thinking.”

For more information about the report and methodology, please visit: www.payscale.com/data/job-referrals

About PayScale:
PayScale offers modern compensation software and the most accurate, real-time, data-driven insights for employees and employers alike. More than 6,500 customers, from small businesses to Fortune 500 companies, use PayScale to power pay decisions for more than 16 million employees. These companies include Dish Network, Getty Images, Skullcandy, Bloomberg BNA and Time Warner. For more information, please visit: www.payscale.com or follow PayScale on Twitter: https://twitter.com/payscale.

Press Contact:
Erica Beyer
Email: erica@fireflycmns.com  
Tel: 206.206.0727