I'm not saying referral hiring is executed well. It's really poorly executed. When I look at the data of companies I've hired for and tracked the success rates of referral hires, they systematically perform better than average.
Those people pass both tests -- referral and standard hiring. To me the question hinges on whether people refer people who might fail standard screening, or if they're just cherry picking in ways your analysis "discovers."
The difference to employers might be moot I suppose, but if you want to substitute referral for standard hiring screens you kinda need to get at something like this to know if referrals are contributing any new information or just boosting hit ratios on existing tests.
The latter is the assumption most of us are making. People tend to refer people based on an intrinsic understanding that 1) I know what my friend likes and I think they will like working here and 2) I know what my employer likes and I think they will like my friend.
No2 is usually formed by a good understanding of how a company measures success in any given role. You'll find the same principle applies to good recruiters. The more a recruiter understands about how your company measures success, the more likely they are to submit candidates that will pass your interview process.
There can be an element of politics to rejecting a referral hire. Your coworker may not want you to be stacking the team with "your people". Petty and sad but it happens.
