How to Create a Successful Employee Referral Program

Studies show that new hires referred by employees tend to perform better and stay longer than non-referrals. However, finding someone with the right mix of skills and attitude can feel like looking for a needle in a haystack. 

Still, there's a hiring tactic that has the potential to consistently attract A+ players looking to join a workplace like yours - an employee referral program. 

Indeed, identifying your top performers and tapping into their personal network will typically yield more relevant candidates that are both motivated and easy to onboard. 

In this article, we'll look at how to design a successful employee referral program that consistently generates those types of candidates. Let's dive in. 

What is an Employee Referral Program?

An employee referral program is a technique used in recruitment wherein current employees can recommend qualified friends or acquaintances for a job vacancy in the company - usually in exchange for a cash reward.

With the employee referral program, you’re tapping into your employees’ networks and incentivising to help find potential candidates. When successful, it can considerably speed up the hiring process, uncover talent and reduce hiring costs. 

The employee referral program is a popular strategy that rewards not only your employees but also your company through increased morale and productivity. 

How to Create a Successful Employee Referral Program

Below are our top tips to help you design a successful employee referral program.

1. Make the referral process super easy

If you make the entire process straightforward and hassle-free, employees are more likely to participate. One way to do this is by creating a simple online form where your employees can easily fill out the details of the potential candidate that they want to refer. 

Don’t forget to provide links or attachments that can help support them in promoting the company. Whether it’s a company introduction video or an infographic showcasing the company’s achievements, additional materials can be effective at enticing potential candidates to apply.

2. Provide great incentives

This can be in the form of a financial bonus, perks you can provide through company partners and resources or even both. Regardless of what it is, properly compensating your employees will increase the chances of them joining the new program.

To make these rewards more appealing, you can even add a couple of tricks. For instance, you can hold a contest where the team or department with the higher number of qualified referrals wins. This will not only boost participation in the program but will also encourage teamwork and promote camaraderie within the workplace.

Not sure what rewards to give? You can survey your employees on what they would personally like to receive. Some non-financial gift ideas can include paid vacations, gift certificates, discount vouchers, sponsored dinners at excellent restaurants, or high-ticket items and gadgets.

If you wish to go the monetary route, you can also consider a tiered program. One example is setting a higher reward for positions that are more difficult to fill. Another option would be to consider a flat-rate incentive with more bonuses as the referral makes their way to the different stages of the hiring process.

Lastly, you can provide a bonus if the person gets hired and stays with the company for at least six months to make sure that your employees will only refer the best of the best.

3. Update your employees along the hiring process

Communication is important, especially if you want a successful employee referral program.

Short updates every now and then can keep your employees motivated and enthusiastic about referring more friends and acquaintances. 

Even if the referred candidate is unsuccessful, a small ‘thank you’ message letting your employee know that their efforts are appreciated will help. 

4. Recognise your best referrers

Acknowledgement is a highly underrated yet effective tool. By recognising your best referrers, you’re giving them something that no amount of money can ever buy: pride.

A trophy, a bonus prize, or even public praise from a high-ranking executive not only encourages your employees to continue with the program but also pushes them to work even harder at landing you the best hire for the position.

To keep everything organised, it’s best to have a system in place. For instance, you can have a point system where employees are awarded one point for each referral and an additional point for every stage their referrals reach in the hiring process. You can then put a list of the month’s top referrers on a bulletin board, an online page, a screen— anywhere that your employees can easily see every day. 

This may sound complicated but there are employee referral software tools that make this process easier, including advanced features like gamification and tiered bonuses.

5. Incorporate it into your company culture

At the end of the day, your employee referral program shouldn’t just be a one-and-done technique. This is especially true if you are in a big company with thousands of employees where hiring at scale will get increasingly harder.

Instead, you should make it part of the company culture. More than just a recruiting tool to increase the number of candidates, decrease employee turnover, and save money for recruitment efforts, the employee referral program should be something that is integrated as naturally as possible into your company culture.

Regularly remind employees of the program, whether or not there are new positions open. Internal campaigns every few months can also boost employee involvement. Make sure that you mention it during team building activities, such as company dinners, events, and trips.

Of course, if this is your first time trying out a program like this, you should have an official launch to make employees aware and enthusiastic about participating. Hold a company-wide event where you’ll announce the details of the new employee referral program. 

Creating a Successful Employee Referral Program

There are countless initiatives that you can use to hire great talent for your company. However, if you’re looking for a strategy that is cost-effective, time-efficient, and proven to deliver relevant candidates consistently, then the employee referral program should be on your radar. When implemented successfully, you’ll not only have a great hire—you’ll have employees who feel more valued and appreciated as well.