employee referral program presentation

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Build a Stronger Employee Referral Program

• Kate Gautier
• Lalith Munasinghe

Both applicants and hiring teams will benefit.

Because the value of hiring referrals is really in the information the referrer brings to bear, job applicants and hiring teams need to ask key questions of referrers. Job applicants should know how long their contact has worked at the company and whether they’ve worked in a similar role to the open position. Hiring teams should ask referrers if they’ve worked with the candidate in the past, how they know each other, and for how long they have known each other. This information can be incredibly valuable to the hiring process. And ultimately, it will enable employees to reach their full matchmaking potential, resulting in faster screening, lower turnover, and better hires.

You’ve probably heard that internal referrals result in better hiring outcomes. Research has found that referred candidates are of higher quality than applicants from the general public and are more likely both to receive and accept an offer, stay at the job longer, and perform better. This all adds up to spending less time on the hiring process, reducing turnover, and increasing overall productivity. But not all referrals are equal.

• KG Kate Gautier studied mathematics at Barnard College of Columbia University and is a graduate student at Stanford Graduate School of Business. She is the co-founder of Talenteck, a human capital analytics company and research lab.
• LM Lalith Munasinghe , Ph.D. is a Professor of Economics at Barnard College of Columbia University and the founder of Talenteck, a human capital analytics company and research lab.

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How to grow your team better, faster with an employee referral program

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What is an employee referral program?

6 reasons you need an employee referral program, what should an employee referral program include, 4 steps to create a successful employee referral program.

4 companies with stellar employee referral programs

You might’ve heard the phrase, “great people know other great people.” 

When it comes to hiring great candidates, we know it can feel like a war for talent. The hiring process can be daunting. According to the US Labor Department, as of November 2021, there are 10.6 million job openings . Compare that with the reported 6.3 million unemployed people in the US. Looking purely at the numbers, there is a war for talent. 

But in an economy where employers are vying for the best talent , one tool can be extremely beneficial: employee referrals. 

Your own great employees are well-positioned to know what type of people can contribute and thrive in your company.

If your organization is looking for the best ways to source high-quality talent, employee referral programs are the way to go. Let’s dig into what an employee referral program is, why it’s important, and how to create one at your company. 

What is an employee referral program? 

An employee referral program is a recruiting strategy. Employers look to their current employees to provide talent recommendations for open positions. Employee referral programs often include incentives and recognition to motivate employees to tap into their personal networks to find good candidates.

Oftentimes, employee referral programs come with incentive-based rewards. This means the employee who refers a great candidate gets rewarded. The benefit for the company? They gain great talent. It’s also a great way for employees to feel heard and valued . When an employee refers a great candidate who gets hired, the employee feels a sense of ownership . They are making contributions to how the business is growing in a very tangible way. But there are some nuances to what makes a successful employee referral program. Let’s first examine if your organization needs one. We’ll also talk about what it takes to make a good employee referral program work well for your company.

First, let’s look at the data. Do employee referral programs really work? There’s a lot of information out there on the success (or lack thereof) of employee referral programs. It’s a more complicated answer than a simple yes or no. But when done right, employee referral programs do have a significant positive impact on your business . 

Research shows that referred employees perform better than non-referral candidates . Research also shows that referrals are higher-quality candidates. They’re more likely to not only accept the offer but are more likely to stay at your company longer. 

Here are five reasons why you should consider implementing an employee referral program.

Help hire faster

According to LinkedIn data, the average recruiting lifecycle takes 55 days . If you’re a hiring manager, that’s a long time to sit with an open job position. But with employee referrals, data shows the recruiting lifecycle reduces to 29 days. That’s a significant chunk of time saved — and productivity gained .

Save on recruiting costs

Think about all the costs associated with hiring for a single position. The recruitment process is expensive. And finding qualified candidates can cost time — and money. You may be spending money on advertisements or social media. You may pay for real estate on job boards or job postings. You may enlist the help of a recruiting firm or agency. You may outsource the position to another third-party firm.

But with employee referrals, your overall costs are reduced. According to the same LinkedIn data, employee referrals are less expensive. Even if your organization implements a generous incentive program, it’s likely you’ll still save money.

Higher-quality candidates

According to LinkedIn, the number one way people discover a new job is through a referral . LinkedIn also reports that companies can expand their talent pool by 10x if they tap into their employees’ networks. In the end, this results in higher-quality candidates. LinkedIn notes that high-performers are more likely to refer to other high-performers. This gives some truth to the phrase “A-players know other A-players.” There’s actually science behind it. This should come with one caveat: the referrer needs to know the candidate well. The strength of connection plays a role in the quality of the candidate. Research shows that employee referrals are of higher quality when the connection is strong .

Increased employee retention 

Every organization wants employees to remain employed as long as possible. Employee retention plays a key role in overall business performance. So what does employee retention look like when it comes to referred candidates? In short, referred candidates stay longer. Employee referral programs can improve your organization's retention rates. The above-mentioned LinkedIn data shows that 33% of career site hires stay at their organization for at least one year. But if that candidate was referred by an employee, 46% of referred hires stay for at least one year. 

Diversity 

Meaningfully diversifying your workforce is an important priority for many organizations. Employee referral programs haven’t always been beneficial in increasing a diverse representation . But over the last ten years, it's gotten better. According to Glassdoor, referral pools have become more diverse over the last decade. Glassdoor’s data reveals that since 2019, 45.7% of US referral interviewees were Black, Indigenous, or people of color (BIPOC). It also reflects that 49.8% were women. That’s a 12% increase since 2010. But many would say this still isn’t enough. Consider employee referral programs as a component of your diversity recruiting strategy . But it shouldn’t be relied on as its sole source for diverse talent . An effective diversity recruiting strategy is multi-faceted. It needs to be intentional. It’s also worth looking at your employee demographics. If your organization isn’t meeting your diversity goals, why would your employee referral program meet them? Employee referral programs have the potential to be a value-add to your diversity recruiting strategy. But it depends on your organization’s overall approach to diversity, equity, and inclusion . Consider working with your HR leaders to see how to best factor in diversity when implementing an employee referral program.

Culture and morale

An employee referral program can also bring positive benefits to your organization’s company culture and morale. First, the referer can experience a boost in morale . When their employer trusts and values their opinion of a candidate, that employee is going to feel a sense of value and belonging. Those components are key to fostering a sense of belonging in your company’s culture . It’s also important to look at referrals and evaluate their culture add to your organization. To truly foster a diverse, welcoming culture, your leaders will need to look at talent from a different perspective. What attributes, qualities, and culture add does the candidate bring? How can this referred candidate enhance the company culture? In what ways can you use the employee referral program to build brand awareness ?

Now, you’re ready to start thinking about how to build an employee referral program. It’s important to understand the key components before you start building. Consider these factors:

• Eligibility, rules, and guidelines. It’s important to work with your HR team to ensure the program doesn’t violate nondiscrimination laws. Consider eligibility and other policy guidelines you’d like to consider. Can every employee participate? For example, some companies allow full-time employees to participate (but not part-time). Other companies require referred candidates to stay with the company for a period of time for the referrer to be rewarded. Do ample research and work with HR leaders to put guardrails around the program design.
• An accessible resource page for all information. Your organization’s intranet is a great place to house information on your employee referral program. Make sure you put all the program details in one place that’s easily accessible.
• An incentive program. Most (if not all) employee referral programs have some sort of incentive. After all, employees are bringing your organization great talent. Consider what type of referral bonus you’d like to reward employees with (think: cash bonuses, gift cards, employee recognition, and more).

1. Make the referral process easy for employees to participate

If the referral process is too complicated, you’re not going to reach desired results. Make it easy for employees to refer qualified candidates. If there are barriers to participation, the program won’t be successful. Again, work with your human resources team and talent acquisition teams to ensure it’s easy for employees to take part. HR professionals will have a pulse on what it takes to create a successful program.

 2. Promote the program (often) 

Employees won’t know the program exists unless you tell them about it. Clear, open communication is key to launching the program. Find ways to talk about the program in onboarding or new hire orientation . Maybe you can promote the program at your organization’s all-hands meeting. Or maybe you can include it in an all-company email or Slack message to your teams. Consider working with your internal communications team to get the word out. Ongoing communication is key to the success of any program.

3. Reward (and recognize) employees who participate

As mentioned, it’s important to consider how you’ll incentivize your employees’ participation. Consider a cash bonus structure. LinkedIn recommends anywhere from $2,000 to USD 5,000 for employee referrals. But don’t lose sight of employee recognition . If an employee refers a fantastic new hire, recognize them. If you publicly recognize and thank employees for their participation, you’re more likely to see others participate, too.

4. Avoid discrimination and biases 

This is a big one. Work with your legal teams to make sure you’re in compliance with all laws and regulations around hiring. Make sure you think about diverse talent, like underrepresented minorities, people with disabilities , and more.

The downside of relying on employee referrals is that they will tend to bring in candidates in some way similar to themselves — if you lack diversity in your current workforce, referrals may make it worse. At the same time, if you are deliberate about creating a diverse and inclusive workforce from the start, a referral program will support that. Be cognizant of any biases you or any other leaders in your organization may have. It’s a good idea to ensure that your hiring managers take part in diversity training . Also, promote and model inclusive leadership practices . 

4 companies who have stellar employee referral programs

It’s a good idea to lean on peers and other organizations in your field. Ask them how they’ve implemented employee referral programs. Consider learning what successes (and challenges) they’ve had.

At BetterUp, we value employee referrals and think we've been pretty succesful with our program as we've grown. It has helped us maintain our unique culture and commitment. The challenge is sometimes finding certain skill sets or experience levels when the company is at a transition point so employee referrals can't be your only sourcing strategy in this market.

Let’s take a look at some organizations that have stellar employee referral programs.

It’s hard to talk about employee referral programs without mentioning Google. A BetterUp customer , Google has one of the best-in-class employee referral programs out there. Google started with a simple question in their interview process: “Who’s the best {insert job title} you know?” The company captured referrals right from the very beginning: the onboarding process. They ask new employees for their recommendations. This created a culture of referrals where they saw an increase of 33% in referrals.

Enterprise Rent-A-Car

What better way to increase employee engagement than with friendly competition . According to LinkedIn, Enterprise Rent-A-Car decided to create a leaderboard. The leaderboard showed the top-ranking regions where employee referrals were being hired. Not only did this spark competition, but it also created social connections between regions and teams. 

Salesforce took a social approach to its employee referral program. The company organizes what they call a “happy hour” recruitment event . Employees get to invite friends and family to introduce themselves to Salesforce recruiters. Every employee who refers a candidate gets a gift, regardless of whether or not it worked out. The end result? More than 50% of Salesforce new hires come from employee referrals.

Warner Media

Another BetterUp customer, Warner Media has grown its employee base with the help of good ole word of mouth. Watch this video to learn more about Warner Media’s approach to career and employee development. 

Start hiring

When done right, employee referral programs can be a huge business benefit. 

If your organization is implementing an employee referral program, how will you measure its success? What are your goals for the program? How do you see it fitting into your recruiting strategy? How does it fit into your DEIB goals? With the right people, guidance, and teams, your company can create a stellar referral program. Happy hiring! 

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Madeline Miles

Madeline is a writer, communicator, and storyteller who is passionate about using words to help drive positive change. She holds a bachelor's in English Creative Writing and Communication Studies and lives in Denver, Colorado. In her spare time, she's usually somewhere outside (preferably in the mountains) — and enjoys poetry and fiction.

Organizational training: The what, why, and how

Employee recognition: your guide to boosting morale, 7 steps to develop an employee training program that sticks, betterup raises $26 million to democratize professional coaching, what employee poaching is and how to avoid it, 9 employee retention strategies that actually work, employee onboarding: how a great start leads to great results, people managers: the antidote to employee burnout, the 5 tools to foster a happier, healthier workplace, similar articles, full cycle recruiting: a whole person recruiting process, what a diversity recruiting strategy is — and how to improve it, employer branding and how your company can attract top talent, what are passive candidates tips for recruiting passive job seekers, 9 must-haves for a stellar candidate experience, 5 candidate sourcing tactics that’ll put your company a step ahead, the 6 stages of the employee lifecycle, want to retain talent start with your talent acquisition strategy, what is an acqui-hire and how does it work, stay connected with betterup, get our newsletter, event invites, plus product insights and research..

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How to Build an Employee Referral Program in 4 Steps

These days, many companies are relying on an employee referral program to attract new candidates to their business. This is because studies have shown that referred candidates tend to be of higher value. They are also more likely to accept an offer, perform better, and stay at the job longer. All this results in lower recruitment costs, reduced turnover, and more engaged and productive employees.

Table of Contents

What is an Employee Referral Program?

An employee referral program, also known as a recruitment referral program, is a hiring strategy where employers ask their existing employees to recommend or refer qualified candidates who could be a good match for the company. It is a way of expanding the talent pool without the need to reach out to outside sources. Think of it as a cross between an internal and external recruitment process .

Compared to more time-consuming recruitment strategies like human design or virtual recruiting ideas , employee referral programs are based on the assumption that employees generally know people with similar skills and attitudes. So, if you have a valuable employee, then their contacts are also likely to be of value. And because someone has been referred by a friend or associate whose opinion matters to them, then they are far more likely to become a productive and motivated member of staff. And, in return, the original referring employee usually receives some form of incentive.

Do Employee Referral Programs Work?

Provided you do the right planning, promote it well, and offer the right incentives, employee referral programs make good business sense. They can be an easy and cost-effective tool for avoiding understaffing and overstaffing issues in your company.

Here are the main advantages of including an employee referral program in your recruitment and selection process:

• Faster time-to-hire : Finding, interviewing, and onboarding the perfect candidate takes time. In fact, most of the time is usually spent trawling through the applicant pool. Employee referral programs give you a head start as your existing employees hand you potential candidates on a plate. This saves your recruiting manager roles a great deal of valuable time.
• Saves you money : Employee referral programs are also very cost-effective as your sourcing strategy relies primarily on word-of-mouth and internal communication.
• Top talent attracts top talent : People tend to surround themselves with those that are like them. Your employees also know whether or not someone would fit into your company culture. So if someone you consider a valuable employee refers a potential candidate, they are likely to become an equally valuable member or staff. Plus, your employees will only refer candidates they can be sure won’t negatively impact their own reputation.
• Improved employee retention : Candidates hired via an employee referral program tend to be of higher quality. They also tend to stay at their jobs longer, improving your rate of retention. Employee referral programs also make it easier to rehire former employees ( boomerang employees ).

How to Build an Employee Referral Program: 4 Steps

If this is your first time designing a program, or if your existing employee referral program is not yielding the results you’d like, then you may be wondering what the key to success is.

In fact, the answer is simple: it’s simplicity, recognition, incentives, and communication.

Just follow the steps below to plan, design, promote and maintain a successful employee referral program in your company:

Plan Your Employee Referral Program

The most vital step of all employee referral programs is planning. If you fail to do the right planning and consider all aspects of your program, then the initiative is likely to fail.

There are a number of aspects you need to consider:

• Make sure you understand and define your hiring needs and resources . Do you need to fill a lot of positions? Are you looking to expand your organization or just fill current vacancies? Are you having trouble finding suitable candidates for certain positions? If so, why?
• Set clear goals for your employee referral program . Try to make these goals measurable. For example, this might be “Increase the total number of referrals by 5% in March”, or “Reduce turnover rate by 10% by June”.
• Clarify the resources you will need to establish your referral program. This includes staff, time, and budgets. You should also assign a specific employee to manage and monitor the program to ensure your goals are met.

Design Your Employee Referral Program

The next step is designing your team member referral program. The key here is simplicity. How will employees refer potential candidates to you? What information will they have about your company and the positions you are looking to fill? What recruitment software will you use to manage applications? How will you ensure your program is clear, consistent, transparent, and fair? And which incentives will you use to encourage your employees to refer applicants?

Most companies choose to use an applicant tracking system for managing job postings and applications. Many come with templates and tools for automating the processes involved in employee referral programs in their employee referral programs.

You should also design a clear employee referral program policy that outlines all processes and procedures so that your current employees understand how the initiative works and what they can expect when they refer a candidate.

Promote Your Employee Referral Program

Once you’ve planned and designed your employee referral program, you need to promote it at every level of your company. Don’t overwhelm your employees with information – less is more. You want to make it as easy as possible for your employees to refer candidates to you. This will motivate them to get on board and spread the word.

You could do this through your intranet or through a mass internal email. Alternatively, simply post something on your social media pages and ask your employees to share it with their contacts. Some companies even hold launch parties for their employee referral programs. This can be a great motivator!

Speak to your marketing department to see what they think would work best.

Maintain Your Employee Referral Program

The final step is monitoring and maintenance.

All company referral programs rely on the motivation and enthusiasm of their employees. Make sure you are recognizing and rewarding your employees on a regular basis. Also, make sure you update those who have referred candidates so that they know if their recommendations have been successful. And celebrate each new hire!

What can you do to keep your employees engaged with your program? Are your incentives working? What about the candidates that are being referred – how many are you hiring? Are they valuable members of staff?

Examples of Employee Referral Programs to Consider

Finally, let’s finish by taking a look at a few examples of successful employee referral programs. See if any of these inspire you to design and launch your own program.

According to Salesforce, the majority of their new hires come from employee referrals.

So what is the company doing right?

Salesforce organizes regular referral events known as “recruitment happy hours”. The company encourages all its employees to bring along their friends and associates to these networking events. Everyone has fun, and potential candidates are given the opportunity to meet with members of the recruitment team to see if they might be a good fit for the company.

Transport company SMRT decided to launch an employee referral program to enhance its workforce, increase its talent pool and strengthen its labor capabilities. For each successful new hire under SMRT’s employee referral scheme, employees stand to earn cash rewards of up to $3,000. A great incentive that has had a positive impact on the company’s turnover and retention rates.

Company referral programs don’t always depend on cash incentives to succeed. In fact, Dutch consulting and IT firm Accenture chose a very different approach.

In fact, the company’s employee referral program is centered around the philosophy that referring people makes you feel good. This might be because you have helped out a friend or associate by recommending them for a position, or because you have helped your company find a great new employee.

Employees still get a referral bonus for recommending successful candidates, but they are encouraged to donate part of this bonus to a charity of their choice. And whatever they donate is matched by the company.

Finally, we can’t talk about successful employee referral programs without mentioning our own fantastic initiative for attracting talented friends to join the Factorial Family!

The employee referral program process at Factorial offers a range of incentives to employees. If they refer a successful candidate, they can pick from a selection of prizes including AirPods, an iPad, or a Galaxy Tab.

Why are we being so generous you might ask?

Simple. Because we believe that our employees are the best people to help us grow. Nobody understands our culture and values better than those who vibe with us every day! And this makes our employees the best talent for finding the newest members of our family. And surely, this love and trust is the cornerstone of all successful employee referral programs, right?

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Employee Referral Program: A Guide to What It Is and How to Build One

An employee referral program is a system for incentivizing a company’s current workforce to participate in recruiting efforts by encouraging or recommending people from within their personal circle to apply for open jobs.

Companies tend to fork out loads of money and resources on third-party strategies to attract candidates, when instead they could be tapping into the networks of those closest to them — their current employees. An employee referral program has multiple benefits such as saving money, making hiring faster and improving retention.

Learn more about what an employee referral program is, why it's worth the investment and how you can build one for your team.

Table of Contents

• What Is an Employee Referral Program
• Benefits of an Employee Referral Program

How to Build an Employee Referral Program

Employee referral program best practices, what is an employee referral program.

An employee referral program is a recruitment strategy that encourages and incentivizes current employees to refer qualified candidates from their personal networks. It’s not a request for a one-time referral of someone to fill an opening, but rather, a structured system of rewards meant to attract a continuous stream of capable applicants to benefit recruiting and hiring operations.

Employee referral programs are a boon for HR teams because they can make recruiting more efficient and ensure a high-quality class of applicants — all while cutting down on costs. They offer a steady, reliable source of job candidates, and in turn, help keep existing employees engaged at work by offering bonuses and other forms of reward that make them feel their contributions have value. 

There are different types of employee referral programs that measure specific goals and offer different incentives, but the bottom line is to encourage employees to help fill certain open roles by reaching out to their networks.

How to create core values that will inspire your workforce.

Benefits of Employee Referral Programs

Consider some of the benefits that come with implementing an employee referral program:

Employee Referral Program Benefits

• Better source of hire.
• Faster time-to-hire.
• Decreased cost of hire.
• Higher retention rate.
• Higher quality of hire.
• Improved employee engagement.
• Reaching passive candidates.

Employee Referrals Provide a Better Hiring Source

By using an employee referral program, companies can connect more efficiently with qualified applicants who come recommended by their already-reliable talent pool. A LinkedIn survey of more than 200 companies revealed employers hire anywhere from 20 to 40 percent of their new employees through referrals. Career Plug’s yearly Recruiting Metrics Report determined job candidates who apply through a referral are 18-times more likely to be hired than people who apply from a job board.

Referred Applicants Get Hired Faster

Employee referral programs also have the potential to speed up hiring time. Depending on the industry as well as the type of skills, education and experience an employer is looking for, an open position can take upwards of a month to fill. A survey by Clutch shows 46 percent of recruitment professionals say their companies complete the recruiting process in a month or less.

Read More What Is Employer Branding? Definition, Benefits and Strategies

Employee Referral Programs Save Money

By cutting down on job board postings and fees paid to third-party recruiters, employee referrals can result in substantial savings. More than half of recruiting professionals agree hiring through an employee referral is less expensive than hiring an applicant who wasn’t referred, according to Clutch.

Employee Referrals Lead to Higher Retention

Using employee referrals as a recruiting strategy has also been shown to improve employee retention . The Clutch survey showed nearly 50 percent of businesses see employees who are hired through referrals stay longer. Another study by iCIMS found referral hires stick around 70 percent longer than their non-referred counterparts, and the employees who make the referrals stick around 20 percent longer.

Employee Referral Programs Yield Better Quality Applicants

Because the employees who make the referrals are already familiar with the company and what it’s looking for in an applicant, there’s a greater likelihood that referred candidates will be qualified for the job and a good fit for the company. A survey by Indeed showed almost three-quarters of candidates that come from employee referrals are “extremely qualified.”

Referral Programs Enhance Employee Engagement

Gallup estimates low employee engagement costs the global economy $7.8 trillion, while business units with engaged workers see 23-percent higher profits. Referral programs can help to bolster engagement, and staying in regular communication with employees about referrals promotes continued engagement by assuring current employees their contributions are valued.

Employee Referrals Help Reach Passive Job Candidates

Passive job candidates are potential applicants who are open to new job opportunities, but are not actively looking for a job. Approximately 37 percent of the job candidate pool is passive, according to a 2021 survey . Some of the hardest (and best) candidates to reach are passive, and your top employees are among a network of other passive candidates, just waiting for an opportunity like yours to scoop them up.

You know the what and the why, now we’re going to delve into how to build an employee referral program. There’s no perfect way to build a program, but we’ve included some important factors to consider in this guide.

PRIORITIZE YOUR HIRING NEEDS

Depending on the size and growth stage of your company, you may need to prioritize certain hires over others. When asking employees to take time out of their day to contact people in their network, make sure their search is well worth the effort.

DEFINE THE CANDIDATE PERSONA

To help employees identify the best referrals in their network, first define the candidate personas you are looking for. You’ll want to identify:

• The specific role you are hiring for.
• The current role your ideal candidate possess.
• Their years of experience and education.
• Specific expertise and skills they may require for your open role.
• The geographical location (unless it’s a remote position)
• What personalities, traits or skills are lacking on the hiring team.
• Their online presence — where they spend time online.

Once you’ve answered all of these questions, draft up a candidate persona with all of the information your employees need to help you find the best referrals. Then identify what areas of your recruitment strategy can be used to find your ideal candidates.

REVIEW YOUR RECRUITMENT STRATEGY

Before you can start refining your recruitment strategy, review your current strategy to identify what’s working and what needs improvement. Do some deep digging into current employees to determine how they learned about your company and what platform they used to apply for the role. Consider how long they’ve been at your company and look critically at employee diversity statistics. 

This will help narrow down which recruitment marketing strategies worked with current employees, why employees have continued to stay with your company, why people have left your company, was the application and hiring process user-friendly — something to ask recent hires for the best feedback. All of this will help you improve your recruitment strategy so employee referrals are more likely to complete the application process and are blown away by your organization. 

Further Reading 25 Employee Value Proposition Examples to Know

SET GOALS FOR YOUR EMPLOYEE REFERRAL PROGRAM

In order to measure the success of your employee referral program, set measurable recruitment goals to track and reevaluate over time. It’s not practical or possible to focus on all of the recruitment goals at once, so narrow down a couple of primary areas of focus for your recruitment strategy. You can always reevaluate later and set different goals once you’ve met previous ones. Here are a few recruitment metrics to consider:

• Number of Referrals
• Quality of Referrals
• Applicants Per Opening
• Application Completion Rate
• Cost of an Unfilled Position 
• Time to Hire
• Offer Acceptance Rate
• Cost Per Hire
• Quality of Hire
• Quality of Applicant
• Employee Retention Rate
• Diversity Recruiting 
• Employee Engagement

You can narrow down the metrics you track and set reasonable goals by evaluating your current recruitment strategy. Look at what is working, where do you obtain the best candidates in the shortest amount of time and what are some areas of your current strategy that need a little extra attention. 

EDUCATE EMPLOYEES ON THE PROGRAM

In order to ensure your employee referral program runs smoothly and efficiently for everyone involved, it’s important to educate employees on your goals, the candidate persona, roles to prioritize and information on how they can effectively recruit referrals.  

Whether your employee referral program runs year round or is only implemented for certain high-priority roles, it’s important to provide employees with the job description of the open role, an overview of the qualities you are looking for in the hire as well as some tips on how they can approach people in their network. 

KEEP THE REFERRAL PROCESS SIMPLE AND EFFECTIVE

It’s one thing to have an employee tell their friends about an open position, but it’s another thing to have the referral actually follow through and apply for the job. You can help employees help their referrals apply by making the referral and recruitment process as simple as possible.

One way to identify and track which employees referred which candidates is to create a unique trackable link for each individual employee to share. If your company utilizes an applicant tracking system , they often have a link builder that tracks jobs shared by individual employees.

KEEP EVERYONE IN THE LOOP

Communication is key when it comes to an employee referral program. When working with people referred to you by employees, you really owe it to both the employee and the referral to keep them updated on the status of the hire. Even if the referral isn’t a match for the role, let your employee know, and show your appreciation for referring someone in their network.

OFFER AN EMPLOYEE REFERRAL BONUS

The best way to get employees to refer friends is to offer some kind of incentive. Employee referral bonuses can either be monetary or non-monetary. Monetary bonuses usually range from $1,000 to $5,000, and are typically conditional based on the employee remaining with the company for a minimum period of time. The difference in the amount of bonus cash may be determined by the seniority of the role hired, the difficulty of the role hired or the length a role has been open.

There are also a wide variety of non-monetary bonuses companies offer employees to refer candidates, such as: 

• Extra time off
• All-expense paid trips
• Tickets to games, events and concerts

The smaller prizes are also a nice gesture to offer anyone who refers a candidate even if they don't get hired.

SUPPORT A DIVERSE EMPLOYEE REFERRAL BONUS

H iring diverse candidates is critical to the success and growth of any company. In order to turn words into action, Glowforge utilized its employee referral program to bring in more diverse candidate referrals, offering a steep $5,000 referral bonus for employees who refer under-represented candidates. Talk about putting your money where your mouth is.

HOST AN EMPLOYEE REFERRAL EVENT

Employee referral events are a highly effective recruitment strategy. Unlike most recruiting events , an employee referral event is often more enticing because the employee who referred them can attend the event with them and introduce the referral to other people at the company. It’s more laid back, and both candidates and employees will get a good sense of how the other will fit into the job opportunity. 

And if you’re offering some kind of employee referral bonus, kindly remind employees about the very sweet benefit they could enjoy if they took the time to refer people from their network.

If you’re really struggling to hire for a certain role, up the ante with more enticing bonuses or prizes for employees that refer a candidate. Provide imagery, recruitment videos and written content tailored to different social media platforms as well to help them share the role on their personal and business social media accounts.

Every time you open a new role and define a candidate persona, make sure to continuously communicate this information to the team. One of the biggest downsides to hiring by employee referrals is that employees are limited to the people in their network — which typically means they are referring people who share similar backgrounds, experiences and interests. While referrals are often the best source of candidates, they all too often lead to homogenous teams of like-minded thinkers and doers. Encourage current employees to make diverse referrals to ensure a broad array of backgrounds and experience in the candidate pool.

Best Practices for Employee Referral Programs

• Offer enticing bonuses or prizes.
• Provide content about the open job that employees can post on social media to notify their network about the vacancy.
• Keep the lines of communication open with employees who make a referral and applicants who were referred.
• Provide feedback if an applicant doesn’t get hired.
• Encourage diverse referrals.

Referrals can be tricky because feelings and relationships can easily be affected. Employees aren’t just going to refer anyone in hopes of receiving some kind of referral bonus. They are going to refer people they think would be a great match for the role, culture and that they would enjoy working with. These individuals are often close friends, so when the referral doesn’t get hired, it’s up to you to ensure the relationship is left intact.

Similarly, many people assume to have a leg-up by being referred, and while referrals are often top candidates, that doesn’t always mean they will get hired. If they’ve been asked/referred by a friend to apply for a job and go through the recruitment process, it can be really disappointing to not get the job. After all, they probably didn’t plan on applying for a job until your employee convinced them to, so it can feel like they’ve wasted their time.

Don’t let referrals leave on a bad note. Provide them with helpful feedback on why you didn’t hire them, send a thank you note for applying and encourage them to join your talent community for future open roles. 

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How to Create an Employee Referral Program

​What's the best way to recruit—and retain—employees? Your company career site? Networking? Word of mouth? According to many studies, it's actually employee referrals, which attract employees who tend to stick around for extended periods compared with those who are found through different methods. Since referrals are shown to produce better workers, it's important to encourage your current employees and extended network to be involved in the recruitment process.

An employee referral program is a recruiting strategy in which employers incentivize current employees or former employees (alumni) through rewards to refer qualified candidates for jobs in their organizations. Employee referrals are a great way to drive qualified candidates from a very active and engaged pool of professionals who are your employees. They know the organization and its culture and can speak to the business brand like no one else.

If you're building your employer brand and starting from the ground up expecting your employees to send a flurry of referrals for your open positions, the best place to start is by creating a brand ambassador program, especially one that is accessible and focused online.

What Brand Ambassador Programs Look Like

At its core, your employees’ experience is their story. No amount of policy, NDAs or "spin" can change what that means. If your program is to be successful, you need to incentivize your workforce and put your workers in the driver's seat. It needs to be organic, not programmed or forced. Automation and control take this out of the realm of word of mouth and into the realm of advertising, resulting in a loss of effectiveness.

With your employees as the centerpiece, your program can tell the story from the right perspective and will address the issues your candidates are most likely to be concerned with. Simply stated, this needs to be an organic effort by your employees to tell real, positive stories about what it means to be a part of your brand and why others should consider signing on. Let employees share the benefits of working for you that have meant the most to them, via social media, YouTube and any other source they prefer. This is what employment branding really is.

It's not enough to simply create a program for employee referrals. Sure, you could send an all-company e-mail with instructions on how to refer candidates to open positions at your company and leave it there, but it's likely to fall flat (or get lost in e-mail). Your employees are busy with life and work. Tell employees that you're interested in working with them to find others who can help build a great place to work and a rewarding culture. Let them know that you will send e-mails about open positions regularly and would appreciate their recommendations for suitable candidates who fit in with the culture and have the capacity to make important contributions.

How to Promote Your Program

HR and recruiting leaders must be master marketers focused on internal employees as well as company communication. What CEO or HR doesn't want a qualified pipeline of candidates whose cost-per-hire is substantially less? And don't forget that employee referral programs also historically have lower turnover rates because those candidates are prepped and given expectations by your best employees. Here's how to get started:

• Roll it out. As soon as you create an employee referral program, HR should do more than just send an e-mail. Internal marketing should be a focused, detailed and long-term process. HR teams should think big picture by looking at small opportunities to drive conversation, such as bringing in a lunch or snack, gathering your teams and talking about the benefits of employee referrals. Position it as a perk ("you're great, you likely know other great possible employees") and don't just leave it there. Combining these more tactical strategies with a larger plan, you are sure to generate positive results.
• Celebrate the small wins. Send an all-company e-mail when someone's referral is hired—and include what the referring employee will get (X dollars after X days of employment for their referral). Examples like these will incentivize other team members to stop and take a look at their networks to see who they can send your way.

Remember: High-performing employees refer high-performing candidates.

Ideally, you want to hire referrals from your best employees—and your top performers. Logically, it makes sense that candidates in your employee's network share some of the same traits that you're looking for. Your highest-performing teams likely are also the busiest ones. It's key to make employee referrals easy and quick, as well as to include the referring employee in the status of their referral.

• Post a reward. Your employees wants to know that your company cares that they took the time to refer a candidate. It's a small thing to set up a reward system, whether cash or gift card or a paid day off (once their referral has worked at your company for a specific period of time). Have all-hands meetings. Take the time to thank your team members for their referrals. Recognition is its own reward, but cash is still the most effective employee referral strategy.
• Give a bonus. Offer a 90-day or 120-day retention bonus on top of your first-day-start referral bonus. It helps ensure that the employee who's doing the referring is committed to sending the best talent for the long term to your company. This is the secret sauce for a robust referral program.
• With a small budget, consider swag. Why not create a killer design for an employee t-shirt with your brand and Instagram hashtag? Or a tagline like "ask me about my amazing job @yourinstagramhandle?" Depending on the number of employees who are willing to wear the shirts around town, at the gym, at grocery stores and elsewhere, putting it on a tee is a fun way to get a conversation about your company started. As a bonus, this contributes to company branding!

This article is adapted from Digitizing Talent: Creative Strategies for the Digital Recruiting Age , by Jessica Miller-Merrell (SHRM Books, 2023).

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How to Design an Employee Referral Program (with Examples)

Posted by Grant Robertson-Adams | Last updated Aug 10, 2023

When most people think about referral programs they think that they’re aimed at current customers as a way of using their network to bring in new customers. Well, they’d be right to think that, that is exactly what they are, but they can also be used internally in a company and set up as an employee referral program. In this article, we explore how you can design an employee referral program that is effective and gets results. We’ll also throw in some examples that companies have used in the past to get great results.

What is an employee referral program?

Using a similar setup to a typical referral program, an employee referral program offers employees an incentive in exchange for referred candidates for available positions within the company. The concept is that your own employees know the type of person that they want to work with, they know the skills required, and are unlikely to select poor candidates that could negatively impact their work environment.

Each employee referral program is different and needs to be designed with the business, roles, and employees in mind. There needs to be a degree of research and planning conducted before launching into a campaign, but once created they can be a superb source of qualified candidates.

So the long and short of it, rather than referring you new business, they’re referring you, new employees.

Benefits of an Employee Referral Program

Bringing your employees onboard to your recruitment process can bring a number of benefits to your business, such as:

• Higher conversion rate for new hires: When candidates are referred they are usually hired a third of the time.
• Quicker hiring rate: As candidates are already known by the company (through the employee), chances are that they know some of the hiring processes already, this makes for a quicker time-to-hire process.
• Higher employee retention rate: It’s a known fact that when customers are referred to a business they’re more likely to become retained customers, the same is true for employees that are referred, they are far more likely to stay with the company for a longer period of time. In fact, referred employees are 13% more likely to stay after their first year of employment compared to regularly hired employees.
• Better employees all round: Referred employees are far more likely to hold the same company values, have the required skills, and fit into the company ethos vs normally sourced employees. Furthermore, it has been found that referred employees bring 25% more profit than other employees.
• Increased employee engagement : When participating in employee referral programs, those employees are significantly more likely to be more engaged with the company .
• Reach candidates not actively looking for a new role: Otherwise known as passive candidates, these are the excellent candidates who are within your employees’ networks. They might not be actively looking for a new position or role, but when referred to one by a friend, they’re more likely to consider it.

Essentially, having an employee referral program means that you’re able to find a better quality candidate, who is more likely to stay as your employee, who’ll be a better employee for you, whilst keeping your current workforce engaged and acting with initiative within your business. It certainly makes sense to consider launching one.

How to Start an Employee Referral Program

Starting an employee referral program is a bit different from starting a standard customer referral program . You’ll need to take into account a number of factors and understand the ethos of your business, as well as any hiring policies before getting started. The most important part is to keep the whole process as simple as you can. The simpler it is for employees to participate the more likely they are to do so.

1. Confirm that management is happy with the idea

This might seem obvious, but chances are that marketing departments have a far greater sense of autonomy versus departments that are in charge of bringing staff into the company. Therefore, before even beginning the setup process, check that your management is happy to run an employee referral program.

Once it has been confirmed that the program can go ahead, it’s important that high level employees are willing to support the program. They are the ones in the company who are most likely to get the wider workforce engaged and participating in the program.

Furthermore, referral programs can be expensive to set up in the first place. So be wary that this might be something of a tough pitch if your budgets don’t yet meet the costs.

2. Build the referral process

At this point, remembering the keep it simple advice from above is at it’s most important. Remember that you’re going to be asking your employees to be going beyond their typical remit, you’re asking them to talk about work outside of work, and you’re asking them to spend some of their social currency by staking their reputation on the line by recommending friends come to join the same company as them.

When building the referral process, make sure it is as straightforward as possible for employees to participate. The best way to do this is to invest in referral program software. This not only makes setting up the referral process easy but also makes managing it in the future far easier too.

Making the process digital is a far better solution than physical drop boxes etc, especially when considering that a great number of employees are working from home in the current climate. To that end, you might want to consider creating a number of templates and materials for employees to use. These could be emails, pamphlets, letters, and more. Again, if you take the decision to invest in referral software then many of the tools have these built-in.

You should also take a look at the outward-facing side of your business, remember that when employees make a referral or talk about it to their network, one of the first things that their friends and family will do is to look at resources online. They’ll judge whether the company is a good fit for them using places like your website, and online reviews. Make sure that these are in good order, and have information that prospective employees might be interested in.

3. Get your metrics in order

It’s easy to get excited about launching your campaign and then realizing you have no way of measuring how successful it has been as you have no stats to measure it by. At the start of the campaign, come up with some goals. Ensure that these are easily measurable, quantifiable, achievable, and work towards a greater good for the company. These metrics could be:

• Increase qualified applications by 30%
• Reduce annual employee churn by 25%
• Increase candidates accepting position by 10%

4. Incentivize your employees

Referral programs work at their best when there is an incentive to take part. If you want your employees to trade their valuable time to participate in your company’s referral program then you should offer them some sort of incentive. It’s easy to immediately think of monetary remuneration, but you could also offer vouchers, free products, paid vacation days, prizes, or even charitable donations.

Although employee referral programs work quite a bit differently than customer referral programs, choosing referral incentives works about the same.

If you’re unsure what incentives to offer, then just ask them! Talk to your employees, let them know that this program is coming, and ask what type of reward would best encourage them to participate? If you’re a larger, national, or multinational company with many different smaller company ecosystems, these incentives might work best on a more micro-level with specific incentives that work for that particular workforce.

Once you’ve decided on the incentive type, another way to increase engagement is to offer gamification and/or tiered incentives. With gamification, you could create a leader board with an additional reward for the best, top 3, top 10 participants. A tiered incentive system allows you to reward those best participants by increasing their rewards after they’ve made a certain number of referrals.

However, you do the incentives, be clear on two things. How the employees can earn the incentive and how they’ll receive them. Be clear on these from the start. The last thing you want is for your engaged employees to become disgruntled when their rewards don’t appear when you said they would. With automated fulfilment, referral marketing software makes this far easier.

5. Make a big announcement

When the program is ready to launch, make a song and dance of it. Let everyone know that it has launched, you’re excited for them to participate and build some hype. Create dedicated materials that explain the process, detail the rewards, and share the methods of participation.

Once the program is well and truly established, you might even include information about it during the onboarding process for new applicants, hopefully, they’ll already know about it as they will have been referred themselves!

It’s also important to schedule reminder emails from time to time, to jog your employees’ minds that the referral program exists. Ideally, your program would be so incredible that there’s no way that they’d forget about it, but let’s be realistic.

6. Champion those participating best

At some point, referrals will start flooding in, you’ll be fulfilling incentives and rewards, and everyone is happy. Now is the time to recognize those participating the most and bring the best candidates to the company. You could keep it simple by sending out an email, you could host a whole party, or you could offer them a special reward . Make sure to fit the celebration to the company and those involved.

7. Make the referral program normal

Once the initial launch is completed, take the time to integrate the program into the normal routine of the company. Some businesses have had success with referral events, where employees can bring potential candidates to the workplace to get a feel for the company, others have hosted quarterly updates or celebrations for participants.

8. Reflect and adapt

Once you’ve completed your first stage of the program (whatever you deem that to be, usually a quarter or a year) take the time to reflect on the program, the results and understand what could be done to improve the system. Talk to the participants, gauge feedback, consider if the rewards were sufficient and appropriate then build on the foundations that you’ve built.

Employee Referral Program Examples

The employee referral program is hugely successful, with something between 40-60% of employees joining through the referral program. They deem the success of the program down to its rapid nature. New employees are onboarded quickly and then, within weeks, are asked if they want to participate and if they know anyone who would be a good fit. Most of the time, they do.

InMobi found themselves in serious need of engineering managers, and so turned to their global workforce for referrals. Their incentives were some of the more ingenious that we’ve seen. Employees were offered a motorbike or a holiday to Bali for each successful referral. The motorbikes were made to be country-specific too. When they made the country-specific referral rewards participation rate soared from 20% of global employees to 50%.

Intel found that they were understaffed when it came to women and minorities, their simple solution was to leverage their already successful employee referral program but double the incentive reward if employees referred women or minorities who went on to become employees. This shows that you can use your employee referral program to solve more than just recruitment.

Key Takeaways

Building an employee referral program can be hugely beneficial for not only your business as a whole but also the individual workplaces that make up the larger company. Take time to understand what your employees want to receive and you’ll quickly be gaining a higher quality of qualified candidates.

• Take time building out the referral process to ensure it is clear and straightforward
• Ensure you incentives are appropriate and consider varying them per part of the business
• Remind and champion those participating to ensure the best engagement

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Through The Grapevine: How to Create and Manage an Employee Referral Program

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A well-managed employee referral program may be the single most powerful weapon in an organization’s recruitment arsenal.

In fact, according to Silkroad’s Sources of Hire Report , employee referral programs continue to be a top source for hires.

By encouraging employees to refer contacts in their professional networks for open positions you can reduce recruiting costs, improve candidate quality and increase employee engagement .

In this article, we explore the case for employee referral programs, some of the top considerations organizations should be mindful of and how to properly manage a referral program.

The Case for Developing an Employee Referral Program

Intuitively, developing a formal employee referral program makes sense.

After all, who better to refer great candidates and sell those candidates on why they should join your organization than your own employees?

Employee referral programs make good business sense. Some of the benefits your organization may reap from an employee referral program include:

• Faster time-to-hire: A LinkedIn study uncovered that it takes an average of 29 days to hire a referred candidate compared to 39 days to hire a candidate through a job board.
• Less impact on your talent acquisition budget: An employee referral program is an inexpensive sourcing strategy that relies primarily on word-of-mouth and internal communication. You don’t have to pay to advertise job posts. Due to the faster time-to-hire, organizations can cut internal costs as well, since recruiters won’t be spending as much time sourcing and interviewing candidates for open positions.
• Top talent begets top talent: Another LinkedIn survey revealed that star employees tend to refer other star employees. Tapping into your top talent can help organizations source and hire high performers more effectively.
• Better employee retention: Not only are candidates hired via an employee referral typically of higher quality, they also tend to stay at their jobs longer, with 46 percent remaining in their position for at least three years .

Employee Referral Programs as an Extension of Employee Engagement

With employee referral programs, saving time and money is just the beginning.

Employee referrals also add value through improved employee engagement.

Using employee referrals to hire candidates builds a more robust corporate culture by intersecting performance and engagement to drive business success through tapping current employees for qualified candidate referrals, thus simplifying the sourcing process.

Employees who recommend a new hire have a vested interest in onboarding and retaining that person, as many referral programs include a requirement that the referred employee must be with the organization for a specific period of time before the referring employee can get a referral bonus.

What’s more, employees who refer candidates will feel a sense of commitment to ensure their referral’s success because they recommended the position.

Moreover, employees who are involved in the recruitment process may feel a greater sense of purpose towards the future of your company.

By encouraging employees to submit referrals, you are letting them know you value their input and contribution.

What to Consider Before Implementing an Employee Referral Program

Set program objectives.

Before implementing an employee referral program, organizations should outline objectives in order to set a clear goal.

Defining objectives early on in the process helps ensure your team is on the same page and knows exactly what is expected and when.

Setting objectives can be achieved by holding planning sessions with key stakeholders where you share the vision for the program, develop strategies to achieve success and find solutions that are mutually agreed upon.

Objectives for an employee referral program might include:

• Improving quality-of-hire
• Increasing new hire retention
• Boosting employee morale and recognition
• Lowering overall recruiting costs
• Increasing diversity within the organization
• Sourcing candidates with a specific skill set
• Reducing the time-to-hire for external candidates
• Better targeting and sourcing of passive job seekers
• Deepening the pipeline of potential applicants

Leverage Technology

Technology can help make the employee referral process better for both employers, employees and referrals. Using your technology tools can streamline processes and minimize inefficiencies and missed opportunities in the referral program.

In an article with SHRM, Jennifer Newbill, Director of Global Employment Brand, Dell explains that Dell uses a combination of “white glove” and automated communications to manage its more than 40,000 annual employee referrals, making the process more manageable for the organization’s talent acquisition teams.

Social Media Referrals

Recruitment marketing technology can allow you to post jobs on your organization’s social channels in seconds. You can also leverage your existing employees’ social media networks – if your employees are willing to post on your behalf – to expand your reach.

Auto-Posting Open Roles

In order to get your employees more engaged in your employee referral program, you should consider sharing job openings on a regular basis. Instead of sending out emails manually every time a position opens, you can automate this process through your recruitment email marketing tools.

For example, gig-economy start-up Fiverr leverages employee referral software that gamifies the referral process by adding a competitive element to referring candidates. The software assigns points to employees and credit for all the actions they take. The software also keeps employees up-to-date on the status of their referrals.

Make Jobs Shareable Through Employee Portals

Make it easier for employees to share job opportunities through their social media accounts and email. Adding social links on job posts will allow employees to automatically share job openings with just a few clicks. The quicker and easier jobs are to share, the more likely your employees will participate.

Referral Tracking

Tracking and appropriately attributing a referral is crucial to the program’s success. To make tracking easier, a referral field should be added to applications. The referral field on the job application can be filled in with information about the referring employee, making referral tracking easier.

Managing an Employee Referral Program

When it comes to managing a successful employee referral program, there are a few elements to keep in mind. Ideally, every program includes the following:

• A simple process

Below, we explain how your organization can manage each of these three elements within your employee referral program.

Employee Referral Incentives

According to a survey conducted by LinkedIn, 40 percent of respondents were motivated to refer candidates for a monetary reward . What’s more, 68 percent stated they submitted a referral because they wanted to help their organization. If you want to get the most impact out of your organization’s employee referral program, you should offer a combination of monetary and creative, non-monetary incentives for referrals.

• Experiment with monetary reward amounts because there is no magic number that will motivate all employees. Periodically testing different amounts can allow you to optimize your financial incentives.
• Employees who are more altruistic in nature may prefer the option of donating their referral bonus to a charity or cause close to their hearts.
• An alternative to offering individual monetary incentives is to hold a quarterly prize drawing where every employee who has made a successful referral during the period is eligible to win.
• While prizes and cash incentives can be great motivators, other perks can be just as effective. Non-monetary rewards can include reserved parking spots, extra time off or first choice of shifts and schedules.

For a PeopleScout client and multinational auto parts and accessories manufacturer , we encourage their store managers, area managers and team members to refer quality candidates, including friends and family, to current job openings.

Once the employee’s referral applies to a position, our client lets a member of our recruiting team know that a referral has applied.

In the system the candidate selects referral and the client lets us know. This ensures we do not miss a referral and/or they selected the wrong source code when applying. 

Our team then schedules an interview with the referral and if qualified, proceeds to extend a verbal offer. 

If the referral is qualified, they will be scheduled with the store/hiring manager for an in-person interview, unless the referral was a quality candidate from the store manager and they already met them in person.

To assist our client in tracking the referrals coming in, our recruiters maintain a digital log of the number of referrals that were phone screened and referrals that were hired.

Our client values this referral program because it yields quality candidates and results in a faster time-to-hire for critical positions. 

When a referral is screened the recruiter ensure the source code is correct in the ATS so we provide stats and results of referrals.

Program highlights include:

• When we onboard and train our client’s new managers, PeopleScout emphasizes the employee referral program and its importance to the recruiting process
• PeopleScout’s team has specific SLAs to ensure referrals are expedited
• PeopleScout tracks time in status and conversion rates specifically for referrals
• More than 25 percent of hires for our client come from referrals
• More than 50 percent of referrals submitted are ultimately hired
• PeopleScout hires between 9,000 and 11,000 people for this client annually

Simplify the Employee Referral Process

95 percent of HR professionals believe their employees fully understand how to submit referrals.

However, 63 percent say they “very often or frequently” receive feedback that employees find it too complicated to refer someone.

When evaluating your program, ask yourself these questions:

• Do employees know about your referral program?
• Is it clear with whom or where an employee should submit a referral?
• Is the technology used to submit referrals user-friendly?
• Is it easy to track if the referring employee was given credit?
• Is it easy to track the incentives that were earned?

If the program makes your employees jump through hoops to place a referral, you can be sure that it won’t attract many participants.

To simplify your program, start with the following steps:

Explain your employee referral program : Employees need to understand exactly how your referral program works to make it successful.

How you teach employees about the program depends on your size and how the workforce is dispersed geographically.

You might gather your employees together and give a brief presentation or create an online training course.

Or, you might do something as simple as sending an informational email or flyer for employees to review.

Set your requirements up front : If you want your employees to refer quality candidates, they need to know what traits and skills you are looking for.

Share the open positions you are hiring for and provide employees with the job descriptions, so they get a feel for the types of candidates that would be a good fit.

Provide regular reminders : You should periodically remind employees about the referral program. If you don’t, they may quickly forget about it.

InMobi, an Indian-based mobile technology company, offered a motorbike—a very popular vehicle in India—to any employee who referred a successful engineering manager candidate.

To keep the referral program top of mind, InMobi parked a motorbike right in front of their corporate headquarters so employees were reminded of the referral incentive every day while entering the building.

When you have an influx of open positions, send a reminder to your employees that explains how they can refer candidates and what the reward is for hired candidates.

You can also promote the referral program when you aren’t actively hiring.

An employee might refer a candidate you do not want to miss out on. You should add those candidates to your talent pool.

Collect and Provide Feedback  

Measure Program Results : Measuring results is critical to evaluating the success of the program and to finding improvement opportunities.

While metrics can vary depending on the goals you’ve set for the program, here are some good metrics to track:

• On-the-job performance of referral hires
• Retention/turnover rate of referral hires
• Program ROI or the cost/benefit ratio
• Employee satisfaction with the overall process

Provide notifications after an employee referral is made : Referring employees may be nervous about whether their referrals were any good. The best practice is to notify employees immediately when their referral is accepted/rejected, if the candidate is invited for an interview and when the candidate is finally hired or not.

Employee Referral Program : The Gist

Employee referral programs remain one of the top sources for candidates because they are a cost-effective, engaging talent acquisition strategy.

To get the most out of your referral program, understand what motivates your employees to refer candidates, make the process as easy as possible and maintain good communication with both the referrer and referee.

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