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April 21, 2020
Brad Jamison

How to set up an employee referral program

If you don’t already have a strong employee referral program, it’s time to establish one. And if you do, it might be time to evaluate your program’s effectiveness, brainstorm some new employee referral program ideas, and assess whether or not it’s time for a revamp.

"Employee referrals have proven success," says Amber Hyatt, SHRM-SCP, vice president of product marketing for SilkRoad.

"Employee referrals have excellent conversion rates from interview to hire, as well as typically longer tenure with the organization."

Hyatt points out that savvy recruiting teams recognize the value of leveraging employee referral programs, leading to quicker, more cost-effective recruiting, as well as a way to secure talent for difficult-to-fill positions.

Because of the myriad of benefits, companies continue to rely heavily on employee referral programs to make new hires. In general, about 30% of new hires in organizations come through employee referrals.

82% of employers rated employee referrals as the top way of generating a high return on investment when it came to hiring.

However, to rake in the benefits of these programs, you have to establish them in the right way; Just having an employee referral program doesn't guarantee success on its own.

What's an employee referral program?

An employee referral program is designed to allow your employees to refer candidates to job openings. In doing so, you can leverage your team's personal and professional networks while rewarding them for helping bring in great candidates.

The reality is that most of your top talent socializes in circles of other talented people. Tapping into this gives you access to some of the best possible candidates. Additionally, it seems fair to assume that these people will likely be a good fit for your company culture as the employee referring to them is already part of that culture.

It's important to remember that a referral program should be created to benefit all parties: your company, your employees, and your candidates.

Identify your employee referral program goals

The first step to creating an effective employee referral program is identifying your hiring priorities. At the onset, you'll have to determine if you have the funds to provide rewards for referrals in terms of all positions you're hiring for (the best situation).

If not, you can set up your employee referral program to focus on one of these five types of positions:

  • Hires you've struggled to fill through other means
  • Niche hires that require specialized experience
  • Hires that need to be made fast
  • Senior-level hires that would otherwise require a recruiting firm
  • Critical hires to fill positions that simply cannot go unfilled

Make your employee referral policy expectations explicit

Whatever your goals are for your employee referral policy, you need to ensure that your team fully understands the type of candidates you're looking for, the full referral process, and any relevant incentives.

The best way to communicate this is to include your referral program policies in your employee handbook and educate new hires about it as part of the onboarding process. If you don’t have an employee handbook, fear not—all it takes is a well-outlined Google Doc to do the trick.

To further ensure clarity, consider breaking down your employee referral policy into these five sections:

  1. Why the program exists
  2. What positions are eligible
  3. What perks employees get for a successful referral
  4. What the rules are for the program
  5. How to submit a referral for consideration

Keeping the employee referral process simple

In the same way your sales team tries to keep making a purchase as effortless as possible for a customer, you can design your employee referral process to be as simple as possible for your team members.

Your employees will already have an incentive to refer top candidates to human resources—don't make them jump through unnecessary hoops to do so.

The first step to making the process as simple as possible is to open it to all positions instead of differentiating between those jobs that are more difficult to fill and those that are easy.

Request employee referrals

One way to keep employees thinking about the referral program is to email or Slack regular updates regarding what positions you’re hiring for at the start of the search process.

However, you'll want to avoid sending out a mass email listing all the positions you're hiring for. Instead, send out referral requests one at a time.

This note should include a copy of the job description and requirements—as well as the main reasons why it's an awesome opportunity. Ideally, it should also be set up to allow an employee to add a personalized message before forwarding it to a candidate.

Think beyond email

Another way to boost engagement with your employee referral program is to provide employees with copy-and-paste Tweets and Facebook & LinkedIn posts. 

It’s fairly common for professionals to use a variety of social media platforms for communicating with both friends and colleagues (aka your potential candidates). With this in mind, make it easy for your team members to contact candidates through whichever platform is their most comfortable form of communication.

Don't forget to follow up

Your employees are busy, which means that it might take a couple of nudges to get them to shift their focus long enough to engage with your employee referral program.

Given this, plan on sending reminders to employees about which positions you’re looking to fill and what rewards you're offering to the employee who helps you make the hire.

Employee referral program ideas: providing the right rewards for referrals

Without the right incentives, employee referral programs fall flat. Though there is a long tradition of offering cold, hard cash as a reward for employee referral systems, it's not always the best solution.

Instead, consider implementing employee referral program ideas that allow employees to focus on staying happy and healthy, giving back to the community, or something else that’s important to them. When you show them you care about their unique personalities, engagement soars.

As with any reward system, the key is to start by listening to your employees. What do they think would incentivize them to take part in an employee referral program?

Once you have feedback, you can decide what types of rewards are in your budget and whether you should do a one-time reward for referrals or roll out the perk for several months following a successful hire.

Dive deeper: 8 tools and 6 steps for effectively sourcing employee feedback

Final thoughts: How to set up an employee referral program for success

Building a robust employee referral program isn't rocket science. However, you should still take care to do it in a way that means something to your employees—after all, when you love where you work, you want all of your brightest peers to join you. 

By having a clear goal from the onset and communicating the details of the program to your employees during onboarding, you'll be creating a healthy company culture that engages with the program.

Of course, the real kicker is that the program must benefit everyone—which means you need to offer rewards that your employees value. With new changes in workplace values as younger generations step up to the plate, there’s more latitude in providing unique perks that incentivize your team—and don't break the bank.

Zestful: recognize and reward your employees—minus the admin work.

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