REFERRAL CONVERSION 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. Referrals hired as a percentage of total referrals. External Hires.Referrals / Referrals * 100 Referral Conversion Rate refers to the number of hired candidates referred to the organization by employees as a percentage of total referrals. 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. This measure can, therefore, serve as a measure of both the success of the referral program and the quality of referred candidates. A high result likely means that the organization found a high percentage of referred candidates to be worthy of an employment offer, indicating high quality of the referral candidate pool. A high result also indicates efficiency for the recruiting function in filling positions from the referral candidate pool, which is likely a signal of program success. Results for Referral Conversion Rate are also likely to depend on the overall hiring volume of the organization and the extent to which the organization hopes to hire candidates that mirror the existing workforce. Organizations with low hiring volumes might naturally hire fewer referral candidates, and organizations looking to shift their workforce away from its current form may find referral candidates mirror the current workforce too closely.

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 Referral Conversion Rate by employment level, job title, job function, organization unit, geography, and pay grade to understand how referral conversion differs throughout the organization and among various job types and levels filled by the recruiting process. Additionally, organizations may analyze this measure by characteristics of the referring employee, such as age, tenure, employment level, job family, and job function to assess the quality of referrals from various segments of the workforce. Limitations This measure does not indicate the volume of referrals or how that compares to overall hiring volume. It also does not indicate how recruitment costs or cycle times differ between referred and nonreferred candidates, nor does it measure the performance or success of referred candidates once hired.

Targets

Targets for Referral Conversion Rate will depend on the employers hiring volume and the extent to which the employer aims to hire candidates that mirror the existing workforce. Organizations are likely to set targets based in part on targets for Applicant Ratio, which compares all applicants to the number of hires. Generally, organizations expect a higher conversion rate on referrals than on other applicants, assuming referral candidate quality remains high.

Variations
Referral Conversion RateExempt Referral Conversion RateManagers Referral Conversion RateMinority Referral Conversion RateNon-Exempt

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

Source: Corporate Leadership Council research.

STAFFING: Staffing Effectiveness