Who Benefits From Job Referrals?

Employers love hiring through referrals. These candidates are more engaged and report higher job satisfaction, better relationships with their managers and less intent to leave. But what about workers — do job referrals work out as well for them as they do for employers?

The short answer is: it depends.

For our latest report, The Impact of Job Referrals, PayScale collected data on how workers came to apply to their current job. We looked at survey responses from roughly 53,000 respondents from April 24, 2017 to August 25, 2017.

We found that some types of job referrals are more valuable than others:

If you’re referred by a Business Contact…

The least valuable referral in terms of pay comes from friends and family. Men and women who receive these types of referral earned $1,600 less on average than candidates who come in off the street.

The next-least valuable type comes from targeting a current employee (for example, through LinkedIn). While these types of referrals lead to higher employee engagement, they make no difference in terms of higher pay.

The most valuable referrals come from business contacts, such as a former coworker or client — but the pay boost differs for men and women.

If you’re a man…

On average, men earn $8,200 more when they receive referrals through business contacts, while women earn only an additional $3,700.

Men were also more likely than women to receive referrals in the first place.

If you’re white…

Finally, the likelihood of even receiving a referral increases if the candidate is white and non-Hispanic. When we controlled for all other factors, including age, job level and industry, we found that:

• Minority women were 35 percent less likely to have received a referral for their current job.
• Minority men were 26 percent less likely.
• Non-Hispanic white women are 12 percent less likely.

The bottom line is that referrals are easier to come by for some workers than others, and also more likely to pay off in terms of higher salary.

Tell Us What You Think

Have you ever been hired through a referral? We want to hear from you. Share your story in the comments or join the conversation on Twitter.