Canadian hiring managers love referrals – but they have a few concerns
Employee referrals can be a powerful hiring tool for Canadian employers — but new data suggest most candidates still aren’t using them, and research warns that referrals come with real risks if left unmanaged.
A new survey finds that Canadian hiring managers overwhelmingly see referrals as a way to speed up decisions, build trust and improve hiring outcomes.
Eight in 10 (81%) of Canadian hiring managers say employee referrals make hiring more efficient, while 87% say a strong internal reference can open doors that would otherwise stay closed.
“Referrals have always carried weight, but what this data shows is that they carry responsibility too,” says Bob Funk, CEO, president and chairman of Express Employment International, which released the survey.
How a referral reshapes hiring decisions
The findings show that a referral “fundamentally changes how hiring managers perceive a candidate,” according to Express Employment Professionals.
Among Canadian hiring managers surveyed:
- 83% trust a candidate’s stated skills more when someone recommends them
- 72% prioritize interviewing referred candidates over equally qualified non-referred applicants
- 66% believe referred candidates perform better on the job.
However, 94% also say a reference doesn’t always mean the candidate is the right fit and 61% worry that relying on referrals can limit team diversity.
Authentic relationships, not last‑minute asks
The Express data also highlight a big challenge, when requests for referrals from hiring managers aren’t necessarily genuine:
- 61% have been contacted by former colleagues for a reference after long periods of no communication.
- 54% are less likely to provide a reference if the only time someone reaches out is when they need one.
- 54% consider whether the person maintained the relationship over the years before agreeing to help.
“The strongest recommendations come from relationships built on consistency and genuine connection, not convenience. When people invest in each other over time, they create opportunities that no algorithm can match. A referral isn’t just a name on an email. It’s trust earned through showing up. That’s what moves careers forward.”
Academic research: good, bad homophily
Academic research backs up much of what Canadian employers are seeing — but also flags additional trade‑offs.
Economist Mitchell Hoffman of the University of Toronto Rotman School of Management, writing in IZA World of Labor in 2017, notes that there are numerous possible benefits from referrals, such as lower turnover, higher productivity, lower recruiting costs, and commonalities related to shared employee values.
He mentions “good homophily,” meaning when firms hire referred employees, “their workforce becomes more likeminded; this can be a positive if workers share values or characteristics that are desirable.”
At the same time, Hoffman warns that hiring through employee referrals “may disadvantage under-represented minorities, entail greater firm costs in the form of higher wages, lead to undesirable commonalities, and reflect nepotism.”
“Referred employees sometimes receive higher wages relative to non-referred employees, which entails increased costs to the firm,” he says in his article “The value of hiring through employee referrals in developed countries.”
And there’s the issue of “bad homophily,” meaning employers using referrals may hire employees similar to their existing employees: “For example, firms might get less demographic diversity and/or employees with less diversity in opinions and ideas… [and] referral hiring may reflect nepotism; friends and family may be hired instead of the best available candidates.”
Hoffman emphasizes that evidence increasingly supports the idea that firms can benefit from hiring through employee referrals.
However, “firms should carefully examine how referrals are (or are not) adding value to their organization. In addition, firms should examine whether more can be done to improve the quality of referrals,” he says in the report.
