3 Disadvantages of Employee Referrals and How To Solve Them (2024)

“Businesses have never done as much hiring as they do today and have never done a worse job of it.”

Have you ever needed to hire a certain profile to scale your business, so you start looking for what other people are doing? Maybe you are part of an entrepreneurial circle or have friends and family with similar businesses, so you try to mimic their success. If it worked for them, why won't it work for you?

You are not alone. Many companies utilize the use of referrals to fill open positions. In fact, when looking for different ways to hire candidates, referrals account for 38%. It seems like an easy fix and one that you can trust. But is it worth the hype?

While referrals are great, certain disadvantages can create setbacks for you and your new hire. Let's explore three of the biggest ones:

1. A recommendation isn’t what you thought It’d be

Your new hire has the skills, but somehow, their personality doesn't fit with the current team. They are rigid and only want to implement methods from their previous employer.

It turns out that they are not A team players, fail to meet KPIs, or don't want to take ownership. This happens for certain reasons.

You have no clue how their previous employer, even if your friend, managed them and how your new hire is used to working, but you hired them anyway and thought things would run swiftly.

2. Dealing with a charismatic referee

When you get a charismatic referee, you see their qualities and are inclined to bring them on board without any projection, plan, or set expectations for their role.

This is especially true because many entrepreneurs bring new hires on board without an actual vacant position in place. While charismatic candidates recommended to you can present amazing qualities, you must wait until you have an open position for them to fill.

3. You could lack diversity and ideas when hiring via referrals only

One disadvantage of relying on employee referrals is that you could end up with a less diverse team. Diversity and inclusion are essential in any business model in 2022 and beyond, and they're also good for business.

Companies with more diverse teams tend to perform better than those that don't, and they're better able to find solutions and solve problems that other companies might not have considered.

If everyone in your team is like-minded, then you risk a lack of diversity and thus limit the number of different opinions, ideas, and perspectives.

How to solve employee referral problems

Finding talented candidates can be a challenge, especially in a competitive marketplace, so here are a few tips:

• Take time to clearly define the job scope, expectations and your budget. For example, if you’re hiring an Operation Associate (OA) you should know what kind of OA are you looking for - a more technical one to create tracking spreadsheets and procedures or a People OA more focused on coaching, leading and overseeing people.
• Don’t rush with hiring. Set a timeline for yourself to do the appropriate research and a timeline to recruit this profile. You can ask around your work friends and contact but don’t take their advice as a holy grail.
• If it’s the first time hiring for this kind of role, make sure this person would have everything they need to do their job effectively. For example, if you’re hiring someone to do business development but you don’t have a lead generation procedure in place, the new employee will struggle.
• Make a list of key competencies (“their superpowers”) you’re looking for in this role and create ways you’ll assess the candidates on these. It is not enough to have a conversation about it, you need to see them in action. Make the assessment brief but thorough.
• Don’t neglect soft skills, but also don’t make them more important than technical.

Balkan Hire provides a platform to discover, vet, and hire top remote talent from the Balkans while saving money. We provide an entirely new way of hiring that takes human error out of the equation.

We match top candidates with your needs before involving them in an interview, making sure there's a good fit for all sides involved.