Referrals Help Land Jobs, Not Always Better Pay: Study

A good reference can help land a prospective employee the job of their dreams, but a new study shows that you may want to be careful about whom you vouch for (or ask to back you), as job referrals can have an effect on what you earn.

PayScale queried 53,000 workers over four months last year on whether they’d received or given a referral for their current company. More than one-third said they’d received a referral, with 41 percent reporting a family member or close friend had backed them for their current role.

Business contacts referred employees 32 percent of the time, and 22 percent said their extended personal network (which could be friends or extended family members) helped them land a job. Five percent reported ‘targeting,’ or asking an employee of a prospective employer to vouch for them.

Within technology, 12 percent of referrals came from family members or close friends. Around 23 percent of referrals came from other sources, meaning 35 percent of tech roles are obtained (at least in part) via referral.

Job Referrals by Industry PayScale

The upside for referrals is that it leads to higher employee satisfaction (once they’re hired). As PayScale notes, referred employees report being satisfied at work more often, and say they have a good relationship with their managers. Those numbers are best when targeting is used, with gains less spectacular for those referred by friends and family.

Job referrals have a noticeable downside. White males benefit more than any other demographic; in tech, this may simply mirror the tech employee ecosystem as a whole, where white men are typically the largest group represented. Similarly, women of color see the least benefit from job referrals.

In some instances, men and women experience the same effect from job referrals, receiving $1,600 less per year when referred by family members or close friends. Referrals from an extended personal network earn both genders roughly $3,200 more than average, while targeting had no discernible effect on income.

Being referred by a business contact is where income equality broke down: men earned $8,200 more on average, while women only picked up an additional $3,700.

Download Dice’s Salary Report Now!

Dice’s Salary Survey shows income levels amongst tech pros are starting to level off. When compared with PayScale’s data, the takeaway is that a referral can help land a job (or at least an interview), but don’t expect to earn a better offer simply because you have the inside track.

If you’re looking for the ‘pro tip’ here, we suggest negotiating for better benefits if the salary isn’t what you’re looking for. Dice’s Salary Survey shows employers are offering things like more time off or the ability to work remotely to engage their workforce.

2 Responses to “Referrals Help Land Jobs, Not Always Better Pay: Study”

  1. Companies shouldn’t post the job ad externally when there is a referral just for the sake of laws or diversity because there are hundreds unemployed people fit perfectly for the job but they didn’t know they wont get the job.