Referral Program for Employees: A Complete Guide

employee referral program

What is a Referral Program for Employees?

It is when a candidate is suggested for a position by an employee of the company or a member of the candidate’s network. This is usually in the case of an employee recommendation. In contrast to the standard application process, the referrer submits the candidate’s resume on their behalf along with a recommendation that they could be a suitable fit for the position. This could take place informally or as part of a program that rewards employees who refer to other people.

Additionally, new hires who were referred by a friend or family member exhibit greater drive and loyalty than those who were employed through more conventional means. Workers use their networks, such as their social media profiles, to recommend particular prospective employees or to spread job advertisements.

What is an employee referral program?

This is a more structured way to organize how your company requests and receives employee referrals. New employees hired through a personal referral show more motivation and loyalty than those recruited through traditional channels. In practice, it works like this: employees make referrals of specific potential candidates or share a job advertisement via their private network, for example via their social media accounts.

The employee who recommended the candidate for employment typically receives a bonus, giving him and other employees an incentive to suggest candidates in the future. Additional details on the employee referral recruiting technique are usually available in the employee referral program.

The recruiting team will then decide if they’re a suitable fit by using the same procedures as with the other candidates: reading their CVs and professional experience, assessing how well they performed on assessments that are particular to their function, and interviewing them.

The important additional information on employee referral recruiting strategy and special characteristics of employee referral programs are usually found in the employee referral programs.

What are the benefits of an employee referral program?

Benefits of employee referral program

It takes effort to recruit. To locate the best applicant for each position, HR experts spend days (or months) advertising available positions, sorting through applications, and interviewing individuals.

Additionally, these experts have the responsibility of developing a welcoming environment and culture that attracts potential hiring in the first place. Surely there is a way to lighten the load. This is where employee recommendations come in handy.

Their recruitment efforts can be significantly boosted by implementing an employee referral program, which enables current employees to recommend friends, family, and other associates for open positions inside the firm. Here are the benefits of the program:

Cut Recruiting Costs

Cut Recruiting Costs

Consider this: You don’t have to pay your employees to tell their friends and family about your job openings. Additionally, you can reduce the number of typical job adverts when individuals are performing this function for free. Since employees already have a deeper understanding of your business and culture and can market your firm more effectively through personal connections, you can also reduce the costs associated with hiring outside recruiters. Even if you pay an employee referral bonus in cash for successful hires (which you should), it will often be far less than what you would have spent on hiring and promoting.

To build an engaged workforce

To build an engaged workforce, give current employees the authority to refer friends and family for open opportunities at your business. And there are two advantages:

  • Because they are contributing to the company’s growth and future, current employees feel respected and valued (and often receive a financial boost through an employee referral bonus). Additionally, they experience a sense of pleasure and success if their reference is hired.
  • Referred employees experience more engagement from day one because  celebrating employees’ personal connections is a great way to “build glue in a company.
  • they already are acquainted with one company insider. They frequently integrate more readily into the culture because they already have a friend or mentor to whom they can turn for advice.

In the words of one HR expert, putting in place a hiring program that celebrates employees’ personal connections is a great way to “build glue in a company”.

To build an engaged workforce

Boosting Staff Retention

The finest talent frequently comes from within—through internal hires or employee referrals. A study on employee referral systems also found that people employed through referrals typically work for a company longer than people hired through other means. The study’s poll of employee referrals revealed that more than half (56%) have held their current position for more than five years. Your employee retention rates will benefit greatly from this! One effective tactic for lowering turnover is to hire workers who have a solid understanding of the business at the outset and an internal champion.

Time efficient

Referrals help you hire more quickly. The majority of the time, when your coworkers recommend someone they know, they can already vouch for that individual and ensure that they satisfy the necessary qualifications for the position. This entails that you can move directly to communicating with the recommended prospect without first posting the job or screening resumes. A further intriguing finding from Glassdoor reveals that referral candidates are 2.6% to 6.6% more likely to accept a job offer.

What is the purpose of an employee referral program?

To Promote a Strong Employment Brand

Employees are a company’s best spokespersons and it’s preferable if they converse more. Most job searchers think about the employer’s reputation and brand before even applying for a position. It’s crucial that you are actively attempting to engage them considering the availability of places like Glassdoor, where employees, previous employees, and candidates are all given a platform to express views.

Improve the quality of hire

Employees who recommend friends and relatives will likely do so because they possess the traits necessary to succeed in the company. This is partly because they are aware of the referral’s assets and liabilities, but it’s also because they are aware that the referral’s performance may have an impact on them.

It turns out to be efficient: According to research by the software start-up Careerify, referral employees are 23% less likely to leave their jobs than other hires. Additionally, referrals typically receive mentoring throughout the hiring process because your current employee will undoubtedly give the referral advice on how to present themselves in the best possible light.

It may seem like the referral has unfair advantages, but it’s actually to the benefit of all. For instance, before the company-mandated onboarding, the new hire is informed of all the obligations and expectations of the organization.

Maintain Company Culture

Yes, “culture” has elevated to the status of a veritable buzzword in the workplace, but for good reason. However, there are other benefits besides only lower turnover. Employees who are happier and more productive tend to work for companies with strong corporate cultures.

Knowing the value of a strong corporate culture does not, however, imply that creating one will be simple. The organization’s vision, goal, and cultural values are first introduced during the interview, after which individuals who fit these criteria are sought. Fortunately, you frequently find applicants who understand and share the values when you have employees who already grasp all these components and refer their contacts.

Build engagement

Disengagement is expensive.  Employee referral programs aid in fostering a sense of belonging among staff members and give them a stake in the company’s success. Being able to contribute to the company’s growth is exactly what employees seek to develop. The correct referral reward can make an employee feel valued, which in turn will help them become more motivated, which is another significant barrier to engagement.

How do you make your employee referral program work?

Employee referral programs’ value has been well established by this point, but if they are not implemented skillfully, they fail to produce the expected results. The following considerations can help you find a solution to this issue.

  • Inform your current staff of any openings
  • Recognize reliable referrals
  • Offer alluring financial and non-financial incentives
  • Improve the user experience
  • Test out referral strategies
  • Give examples of strong candidates’ experiences

How to create an employee referral program?

Only a percentage of what is required to fund the program itself goes toward the expense of a referral bonus. It will still need to be incorporated into the corporate culture and introduced in a way that encourages staff to use it. Costs are also incurred for program maintenance. It is hoped that the program’s advantages, such as higher revenue and a reduced cost-per-hire, will balance its expenses.

Here are a few strategies for developing effective employee referral programs:

  1. Obtain management’s support

You must obtain management approval before beginning any internal employee referral program. You’ll need them to aggressively urge staff members to participate in these programs as well as comprehend the importance of these initiatives. The rest of the company will take it seriously if they do.

Management can be a useful tool for setting hiring objectives and allocating funds for the referral program. However, if your budget doesn’t fund the program, management approval isn’t adequate, so it’s crucial to completely comprehend how the program functions within your company’s constraints. Before making requests to management, be aware of your hiring needs and the resources you’ll need.

  1. Make the referral procedure simple

It must be clear and simple to engage in a referral program if you want employees to do something extra (beyond their regular job obligations). So that an employee doesn’t feel like making a referral would be extra labour, referral criteria and rewards should be simple to understand and apply. There are several ways to simplify this procedure:

  • Utilise a tool for employee referrals online
  • Make a basic online form
  • A resume drop box should be placed in the HR department’s office.
  • Make an email template that staff members can use to quickly recommend qualified candidates.
  • Each time you publish a new position, prepare to email referrals for assistance.

Giving employees corporate resources that make it simpler for them to speak with possible recommendations is another strategy to promote more referrals. Employees can effectively spread the word about your business by using tools like a corporate introduction video or a career page with employee reviews and job descriptions.

  1. Set objectives for the program

While getting more qualified candidates for open positions is your ultimate objective, set some precise, attainable goals for a new employee recommendation program. The program should also have a deadline so that you know when you need to accomplish these targets. The following are a few objectives you could set:

  • 25% more competent applicants for available positions are needed.
  • ten days off the hiring process
  • Reduce staff turnover by 50% in the first quarter.
  1. Offer a variety of rewards
Offer a variety of rewards

Your employee referral program ought to include some kind of reward, whether it’s a monetary reward, a non-monetary reward, or a combination of both. For instance, you may offer presents or additional time off in place of a referral bonus. Paid vacations, entertaining gifts (such noise-cancelling headphones or dinner at a fancy restaurant in town) and financial contributions to the employee’s preferred charity are some other suggestions for employee referral programs. Even if some of these rewards are less expensive than providing monetary pay, employees may still find them enticing.

Asking your staff what would encourage them most is the greatest method to decide what incentives to provide. Here are some additional suggestions for employee referral programs.

  1. Hold competitions

Holding competitions between teams for referrals and awarding prizes can help create excitement and promote teamwork. Recognize top referrers to raise worker satisfaction and promote a culture of referrals.

Think beyond money: Ask your staff explicitly what kinds of rewards might encourage them to recommend applicants by conducting a poll of them. They are more likely to refer if they are enthusiastic about doing so.

Adapt design based on locale: To make your referral program unique, conduct some research on the area. Consider any unique companies or services that are exclusively offered in your neighborhood that employees would enjoy.

If you do choose to provide financial referral bonuses, think about employing a tiered approach. This can entail paying more for those jobs where candidates are harder to come by. Giving a flat fee for each recommendation and increasing the amount for each hiring stage that a candidate successfully completes is another option to implement a tiered system. Additionally, you can decide to pay the new hire after six months.

  1. Make the program announcement and give directions

When launching a referral program, you want to let everyone in the company know about it right away. Publish your incentive plan and draw attention to the most alluring incentives. Make sure to offer detailed guidelines so that everyone is aware of the referral process. Deliver the instructions via a video, a PDF that can be downloaded, or a webpage on the internal website of your business. To make the information readily available, it’s also a good idea to put it in areas where employees congregate, such a break room.

In your new hire onboarding process, take into account information regarding your employee referral program.

7. Reward staff members who recommend prospects

When an employee recommends a candidate you hire, thank them for their contribution to the success of your business. Try these to identify them:

  • the publication of a profile of them in the business newsletter
  • mentioning them on the business’s social media channels
  • highlighting their contribution on the internal website or communication channel of the organisation
  1. Make referrals a part of your company’s culture.

Your referral program shouldn’t feel like an extra benefit for customers at your company. Instead, incorporate it into the corporate culture. While it needs to be a part of the onboarding procedure, it’s also beneficial to incorporate it into other processes across your business. The program will feel more organically integrated into the business this manner rather than feeling like a recruiting tactic created to increase hires and save money.

Here are some ideas for integrating your referral program with the culture of your business:

  • Have a formal launch to generate excitement for the program. Plan a party or mention the initiative at a corporate gathering. Give workers the crucial information and concentrate on inspiring them to participate
  • Encourage employee referrals by advertising the program. Think of launching a few promotions each year to promote the program internally. To increase employee engagement, use a memorable catchphrase and other marketing strategies.
  • Host quarterly happy hours for hiring. This might be a terrific method to have a casual meeting with possible applicants. Invite their recommendations, and have your staff provide food and beverages.

What is a good employee referral  program?

What is a good employee referral  program

They are more engaged

They’ll probably feel at home right immediately because referrals are more likely to be a good (cultural) match. Because they already know at least one person who will introduce them to the rest of the team and teach them the ropes, they will get along well with the rest of your staff.

They are more productive, less likely to leave, you name it

Consequently, referred employees are happier, less likely to quit their jobs early, and more productive than employees who were hired from another source. It goes without saying that this can significantly raise hiring quality.

They are a better culture fit

Therefore, the applicants are already chosen for you by your employees. Who better than your present employees can describe the culture of your business and the qualities necessary for success there?

Additionally, an employee who recommends a candidate will want to ensure that they only provide the best prospect for the position because they will feel personally liable for their referral’s success in the organisation.

Employee Referral Programs Examples

The emotional reward for Accenture

Accenture, a Dutch consulting and IT company, takes a different tack. The idea behind the employee recommendation program is that suggesting people makes you feel good, either because you helped a buddy get employment or because you found a great new employee for the business.

Accenture offered its workers the option to give a portion of their referral bonus to a charity of their choice in order to boost this sense of “doing good.” And to top it off, the company matched that sum.

 Double bonus from Intel

Intel has discovered a simple method for killing two birds with one stone. The American software company doubles its referral payment when employees successfully recommend women and minorities in order to maintain its diversity hiring goals.

InMobi’s bikes

The hiring team at InMobi, a global mobile advertising and discovery platform, knew they had to think of something unique when they were in dire need of engineering managers.

Fiverr’s gamification method

Fiverr, a marketplace for freelance work, intended to boost employee recommendations by tracking social job sharing and incorporating gamification by awarding points for doing so.

As a result, Fiverr chose to work with Zao, a business that offered an employee referral scheme (it has been acquired by PIXID). Since the program awarded employees points and credit for any activities they made and – let’s not forget this – it informed them about status changes of their referrals, it created a competitive element to referring applicants.

Google’s razor-sharp questions

This program exemplifies the power of simplicity when it comes to employee referral programs. Inquiries like “Who’s the top software engineer you know in Boston?” are among the things recruiters perform at Google.

Persons are instantly prompted to think a little bit more deeply about the people they refer to when you ask them probing questions like this.

Wrapping it up

There is no secret recipe that will ensure success, as there is with many things. Finding out what works successfully for your business and your staff often involves trial and error. By putting several referral strategies to the test, you may eliminate those that don’t produce the intended results and move closer to developing an employee referral program that is effective.

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