Quick Study Finds 3 Reasons Employees Won’t Refer

We recently conducted an experiment with 178 employees to find out how they would react to a new employee referral program. 42 signed up. That is 23.6%. Not bad, but also not anywhere good enough. I wanted to know why more did not participate.

Before we started this experiment we did a little researching of our own to find out what to expect. How many employees usually participate in referral programs? I had a hard time finding a study that focused specifically on that, but the number seems rather small. Less than 10% seems to be a common number I hear. (If you know of a study that provides good data about this – please send me the link)

That means if you have a company of 250 great employees that you would love to clone, you only get about 20 to 25 of them that ever pass on names for you to consider. Why is that?

After running our test for 3 weeks I interviewed a subset of the employees that participated in the referral program and a subset that did not. The responses were interesting and I will write about some more of them in future blogs, but here are the top three reasons employees did not want to participate in referrals:

1. Email Noise: This one surprised me (though maybe it should not have). An overwhelming number of the participants in both groups interviewed said they barely read emails that aren’t critical to the task at hand. Emails from HR or “corporate” get perused, but unless it really affects them right now, today, they put it aside. It is not that they have anything against participating in a referral program; they just didn’t slow down enough to read the email.
2. Fear of Failure Effect: Employees don’t want to be associated with a bad referral. They even stated in our conversation that they realized referrals usually resulted in better employees, but they were unwilling to pass along any name that might not be seen as a great referral.
3. Refer vs. Recommend (or just passing along a name): This reason was related to the Fear of Failure reason above but was different in a very important way. They did no trust that HR would still put a referral through the same kind of scrutiny they would a non-referred candidate. The employees said they knew a lot of people, but that was not the same thing as knowing whether they would fit in as employees. They were happy to pass on the name, but were not comfortable saying the person was a guaranteed good fit.

What's your experience with referrals? If you have any information on employee participation in referrals that you're willing to share,  I’d love to hear about it.