Building a Successful Employee Referral Program
6 min. Read
Last Updated: 11/02/2021
Table of Contents
An effective employee referral program can help you attract and retain highly qualified workers who are a good fit with your company's vision. However, simply putting a referral program in place without a clear strategy, objectives, or incentives may yield limited results and could increase your risk for discrimination claims. Building an intentional and well-orchestrated referral program can be worth the time investment and can lead to some incredible benefits for your organization. Here are a few considerations to help you create an employee referral program.
What Is an Employee Referral Program?
An employee referral program is a structured set of processes through which current employees can refer people they know to help fill open positions within their organization. Referral programs can create a win-win-win scenario — the organization gets leads on job candidates for minimal recruiting costs, the employee gets a bonus or reward for their recommendation, and the job candidate gets a lead on an open position from someone with an inside connection to the organization.
Employee referral programs that are well-organized and implemented consistently in conjunction with a company’s overall hiring strategy can be an integral part of finding and maintaining a high-caliber workforce. These programs can help to minimize recruiting expenses and help current employees to stay informed about open positions within the company.
Considerations for How To Build a More Effective Employee Referral Program
While there is no single right or wrong way to incentivize your employees and encourage high-quality referrals, there are several key steps that can encourage your team to keep your most pressing recruitment efforts top of mind. Proactive steps, such as sourcing sessions and referral training, combined with intentional communication efforts, can help your referral program achieve maximum effectiveness.
Sourcing sessions are generally short meetings where recruiters can connect with existing employees to see if anyone in their network could be a good fit for open positions in the company. Taking a short, dedicated period of time to talk about your referral program can prompt your employees to think of promising referrals and get them to follow up quickly. Consider holding these meetings in a casual environment — invite employees for coffee or take a short walk together.
Educate employees about your referral program, highlight your top-priority open positions, and ask if there is anyone they know who is qualified and might be a good fit. Often, employees may not reach out about potential hires because they are busy or don't want to bother company recruiters. If your team doesn't have time to do this across the board, consider scheduling priority sessions within key recruiting areas, such as meeting with your technology team to find developers.
Many successful programs offer a bonus to both the referrer and the candidate. Incentives can help employees see that there's a specific and personalized benefit to suggesting qualified candidates for open roles. Incentives can be less expensive than job postings, paying outside search firms, or other costly recruiting techniques. Incentives can come in many forms including:
- Monetary incentives
- Additional paid time away from work
- Special gifts
Referral Training Resources
Successful employee referral programs often start with training your team. Teach them how to spot a qualified candidate and offer them different strategies and templates for making that initial contact. A user-friendly process is more likely to help you develop a successful referral program. Here are some resources to consider for your team:
- An email template that employees can use to share job leads with their professional contacts.
- Short social media status updates that employees can share in their networks.
- Well-crafted job descriptions, career websites, and other materials that are clear and easy to understand so employees can feel confident in sharing them within their networks.
Promote Priority Positions
While a well-oiled referral program can lead to great candidates across the organization, consider focusing on priority positions. For example, if your company particularly needs developers or finance talent, consider showcasing these jobs. Mention them in your employee newsletter, highlight one position a week on your intranet, or mention specific positions during employee meetings. Your team members may not have the time to comb through your careers website looking for open roles, but if they hear about an open position during their workday, they may make a connection between the position and someone they know who is qualified for it.
Recognize and Engage Your Employees
Many companies believe that a financial incentive is all that's needed to gain participation in an employee referral program. However, personal recognition, in conjunction with incentives, may be even more effective. Some ways you can do this is to mention people who have referred new hires during all-hands meetings or send flowers and a thank you note from your talent team. Periodically check in with your employees to make sure they are aware of the employee referral program and are on the lookout for the talent you're seeking most. Periodic check-ins from your recruiters can result in much higher levels of engagement.
Employee referral programs are popular for a number of reasons: they can lower the costs associated with recruiting, while increasing the quality of the candidates that you see. However, a successful employee referral program requires the right tools, consistent engagement from your talent acquisition team, and strong levers in place to recognize participation. You will also want to ensure your overall recruiting strategy incorporates compliance with applicable federal, state and local employment laws. These action items can help you create an effective and successful employee referral program.