Finding new and quality hires demands time and effort. Using an employee referral program, you’ll be able to attract better talent to the table. But how exactly do you set up and run a successful employee referral program?
An employee referral program is a fairly new recruiting tactic used by many companies worldwide to attract talented individuals to the company. It encourages existing employees to refer candidates to the job that you’re advertising in exchange for a referral bonus.
This strategy has been consistently shown to yield greater success than most other employment strategies.
Setting up this type of referral process takes some time and effort, but if you do it right, you’ll be able to harness the power of employee referral programs and reap the rewards of your hard work later on.
What is an employee referral program?
An employee referral program is a hiring process in which employees refer new skilled workers to a job at your company in exchange for a referral bonus. Research shows that referred candidates that companies recruit through employee referral programs are better-suited candidates than non-referred candidates.
Not only that, but the referred employee usually stays with the company after a successful referral than other hires. Employee referral programs offer several benefits over other, more traditional types of recruiting processes. They’re more cost-effective, reduce the length of the hiring process, and at the same time, help you find quality talents for the job.
What benefits does an employee referral program have for you?
Why use an employee referral program?
Here are some of the main benefits of using an employee referral program for successful talent acquisition.
Attracts higher-quality talent
Employee referral programs will allow you to spend less money on recruiting and still be able to attract better candidates for your job.
The reason for this is that these new hires are recommended by referring employees, which means that referred candidates are more likely to know the company culture and its values. They’re also more likely to have the right skill set for the position, allowing you to recruit better candidates for the open position.
Using this referral program, you’re also relying on the integrity of your current employees. Since they will be the ones to recommend potential applicants for the open positions, you’ll be able to make sure that the new hire is perfectly suited for the position. It will give you a competitive advantage over other employers.
Higher employee retention
Another benefit of an employee referral program is that you’ll be able to attract new employees that are going to stay with you for longer. Research shows that referral programs bring in people that are more likely to stay with you for longer than those who apply through job boards.
The main reasons are that new hires come into the job with a better sense of what you’re looking for and are usually a better fit for your company culture. At the same time, they already know the person who referred them, which will help them fit in faster.
Stronger employee morale
Referred employees will create a stronger sense of community and employee engagement. Since you’ll be approving of the referring employee in your company, your current employees will feel a sense of achievement having helped you recruit a new team member.
With this strategy, you’ll include the rest of your coworkers in the hiring process. This will help you create a stronger sense of morale within the team. It’s also a decent team-building strategy.
Saves time and money
This type of recruiting process is a great way to save both time and money. You’ll be able to find potential recruits much faster and learn more information about them early on in the process.
The applicants will also be already familiar with the hiring process and what they can expect from you and the company. Employee referral programs are also practical since the only cost you’ll have is the rewards you’ll give out to the employees after a successful hire.
For example, referral programs are way more cost-effective than other paid types of recruitment, such as running sponsored job ads. These sponsored ads could cost thousands of dollars, but research shows that referral programs are just as effective, if not even more effective – and only for a fraction of the cost.
Improves company reputation
Should you decide to follow this type of referral program, you’ll enhance your company’s credibility. It shows that you value the opinion of your team members and that other employees are respected at your company.
Employee referrals also show that your current employees are satisfied with their job. It will encourage potential applicants to think that your company is worth their time since their friend recommended them to your company.
Additionally, such a program will help you stand out from the rest of the employers who simply use job boards or paid ads to promote their job posts. You’re relying on the word-of-mouth referral which is often the most credible.
How do you set up and run an employee referral program?
So now that you know the benefits of a referral program using your employees, you’re probably wondering how you should get one started.
Here are some tips and steps you can follow to create a successful employee referral program.
Set up the program’s goals and expectations
The first step of creating a good program is to ensure that you set up the standards for what you consider success.
In this step, you’ll want to do the following things:
- Define the type of employee you’re looking for along with some key characteristics
- Define how you see the company in the future and how can a new employee contribute
- Explain the core company values – you can use employee testimonials to get your message across easily
- Set up specific metrics for a successful referral program – for example, what number of new candidates apply, or reducing the time to hire
- Think about the other qualities of the referred candidate
Once you set up these goals and expectations, the employees will help you refer people who are the right fit for the job. This is a crucial step that will help you ensure the program’s success and increase the quality of the referrals submitted.
Make it known to your employees and management
Employee referrals often go under the radar simply because of the fact that people don’t know about them. You will need to make it known to your team that you’re looking for a new hire and that you have an employee referral program for the open position in place.
It will help you make sure that your employees find the time and the willingness to help you out with the referrals. Hopefully, this will help you hire a good candidate and keep your employees happy at the same time.
Make sure that management is aware of your plans. You might need to get them on board with the process before running such a program.
Think about the program’s incentives to the referring employees
For each successful candidate, your current team members should receive a monetary or another type of reward. This reward could be symbolic, or you could set up high rewards to further incentivise team members to contribute to the cause.
You might want to provide a combination of both a monetary incentive and other types of rewards. The focus here should not be to create a competitive environment, but rather, to encourage a sense of teamwork and community in your team.
You want to appreciate your employees for their efforts to encourage them to help you out next time.
Make it easy to submit referrals
It should be easy for your existing employees to submit referrals to the program. It should only take them a few clicks to finish the process.
To make it less time-consuming, use the power of technology. Consult with your team members to create an online referral tool that your candidates could use. This could either be a simple form or an email program where your goal is to get the candidates to the interview stage as quickly as possible.
There are many aspects that you can consider to make it as easy as possible to conclude the process. There should only be a few elements that your program includes, and you certainly don’t want excess papyrology in the process.
Track the success of your program
To help you make sure that your referrals are working as they should, you should keep track of the goals and the metrics you’ve set up in the setting up process. You should track a few of the metrics as long as the program is still running, such as:
- Number of successful referrals
- The quality of the referred employees
- Number of referred employees that were hired
- How successfully referred employees are performing
- Have they made your hiring process easier
- Do the people who come in through referrals stay at your jobs longer
All of these are important metrics that you should consider about the team members hired throughout the process. The goal is to keep a track of this hiring method in the long run and not in the short term.
Keep the program going long-term
Now that you have a solid referral program in place and you’ve found a good candidate or two, it’s not the time to rest on your laurels. Instead, you should consider keeping your program running for the open positions. This will allow you to keep searching for talents and keep on hiring good employees in the long term.
Next time when you’re looking for candidates for an open position, all you need to do is change the parameters of the referral program. Your current employees will already be familiar with the program, which will make it easier for you. It will also help you further boost the morale of your group.
An employee referral program is a hiring technique that helps you find the right talent for your job. It incentivises your current employees to help you refer people with the right skills for the job.
Many successful companies use it not only to find the right people but also to boost the morale within these companies. The goal of referrals is to keep them going in the long term and track their success. With some perseverance and patience, you’ll be able to put some of these actionable tips to your advantage and find the top talent for your team.
About the Author
Sam Shepler is the founder and CEO of Testimonial Hero. 150+ B2B revenue teams at Google, UiPath, Medallia, InsightSquared, and many others use Testimonial Hero to easily create customer videos that engage prospects, reduce friction in the sales cycle, and drive more revenue faster.