Employee referral programs reward employees who refer successful new hires to their business. The Society of Human Resource Management (SHRM) states that employee referrals are “employers’ top source of hires, delivering more than 30 percent of all hires.” That’s a great reason to build an employee referral program that helps recruit top talent.
Thank you to Indeed for sponsoring this article.
Here’s what the pros are doing to get more employee referrals.
1. Use Indeed to Share Your Job Openings with Team Members
Marc Prosser, Co-Founder, Fit Small Business
We use Indeed for hiring. We are able to copy/paste the job opening link into an email, or post on Slack for any jobs that we’re recruiting for. Then when an internal employee recommends a candidate for that job (by sharing the Indeed job link with them), we pay a financial bonus if that candidate is ultimately hired.
Indeed makes it easy for us to share job openings with our internal team members.
2. Include Three Components in Your Employee Referral Program
Jose Laurel, Director of Recruitment Services, G&A Partners
The most effective referral programs share a few common strategic components:
- Must be well-designed (i.e., not overly complicated) and clearly communicated to the staff so everyone understands the mechanics and process
- Must be measurable, and include clear metrics to track its success and allow for improvement
- The reward for a successful referral should fit the company’s culture and help to drive engagement forward
A combination of financial compensation and company recognition is the perfect blend for a winning employee referral program reward.
3. Let Your Employees Become Evangelists for Your Company
Zach Townsend, PHR, SHRM-CP, HR Manager, Verified First
We offer our employees a cash bonus for referrals, paid when the new employee reaches 90 days. This bonus is available for any referral for any position—the only restriction is the 90 days. When we have tougher positions to fill, or we are doing a high volume of hiring (such as creating a new division or department), then we’ve increased the bonus tied to that specific hiring need.
Oftentimes, we find our employees generate referrals without needing any incentive because we have a great culture and they share their experience on social media. Our Facebook page is filled with the fun events and programs we have for the staff, and they will tag and share photos with their friends. Through social media, our employees have become evangelists for careers at Verified First just by showing they enjoy working here.
4. Give Employees Ownership of Hiring Objectives
Johnny Reinsch, CEO & Co-Founder, Qwil
Ownership, both individually and as a team, in the hiring objectives is key. As a team, we take on hiring together and everyone has a say. Each candidate has the opportunity to speak with members of Qwil across the founding team, tech team, and business team. We discuss each candidate at our all-hands before making a decision.
This incentivizes Qwil employees to take ownership of the process from top to bottom, and helps us to be far more effective. Individually, we offer incentive bonuses for referred candidates who are hired and ultimately remain with Qwil for six months.
5. Incentivize Employees with Extra Vacation Days
Michael Sunderland, Managing Director, Full Stack Talent
We’ve seen companies very successfully recruit through employee referral programs by incentivizing current employees with money or extra vacation days.
There are usually stipulations, such as the referred person must successfully complete their 90-day probationary period, and only three referrals are allowed per year.
6. Leverage Your Applicant Tracking System
Sara Schrage, VP People Operations, Splice Machine
We leverage our applicant tracking system (ATS) to push out “We’re hiring” announcements on our team’s LinkedIn network, host local meetups where they can invite former co-workers and offer incentives for introduction, as well as referral bonuses for hires.
Splice Machine also works to ensure our team members are connected to our culture. We believe that doing so will encourage them to recommend our company to people they know (and make them happier team members themselves).
7. Be Active in Your Industry
Aamer Ghaffar, Business Development & Strategy, Kordinator
Panel presentations and publications that explain what we are doing have been very effective for us in recruiting and getting employees to refer top talent.
A successful project has actually been a bigger motivator for employee referrals than a cash/referral fee, because a lot of talented candidates in the advancing field of technology want to work on solutions that have a social and moral impact.
8. Pay Twice: Once for the Referral, and Again at 90 Days
Ashley White, Executive Director of Human Resources, APQC
We have utilized a standard program that pays out a flat amount at the time of hire and an additional flat amount at the 90-day mark. This helps make sure that we not only get the hire, but retain them through the typical training period.
When I have a tougher position to fill, I normally will raise the dollar amount and promote the position in a bigger way internally.
9. Make It Easy & Transparent
Janelle Bieler, Vice President Sales, Adecco USA
Be sure to maintain clear and transparent communication with employees throughout the referral process. This includes developing a system for tracking who referred whom, date of hire, when a bonus will be paid out, etc.
The easier the system, the more likely an employee will be interested in referring other candidates.
10. Encourage a Good Cultural Fit
Carrie Morgan, Vice President of Culture & Leadership, LunchboxWax
We are a culture-first company. Employees are invested in bringing on co-workers who are a match for our high-performing, win-win work environment, which includes six-hour shifts and full benefits at 32-hour work weeks. Our waxologists spend two hours a week as “intrepreneurs,” testing marketing and customer engagement ideas in local markets and reporting back on what works.
LunchboxWax employees are protective and discerning about who will fully show up alongside us. Our number one recruitment tool has been reviews on the websites Glassdoor and Indeed.
New hires consistently tell us about the impact these reviews made on their growing excitement about LunchboxWax and the decision to apply.
11. Provide Training on How Your Referral Program Works
Matt Dunne, Hiring Manager, Africa Travel
Providing some basic training is always beneficial in getting more referrals. It may be that you have plenty of employees who would love to refer candidates, but who don’t know where to begin. Team sourcing sessions and onboarding are very simple methods any business can implement to give their staff the know-how to refer someone.
Even creating a how-to guide will show employees the ins and outs of referrals; these can provide information on how to submit referrals through the system and how to search through the many different networks out there.
Creating a template message that helps your employees to compose an interesting and persuasive message, which they can send to people in their networks, is also a big help. Templates show your employees how to craft an enticing message and also makes it easy for them to update and edit when reaching out to different people.
12. Thank the Referrer & New Hire with a Meal or Activity
John Waldmann, Co-Founder & CEO, Homebase
At Homebase, we provide a meal or activity at one of our local business customers (restaurants, coffee shops, even escape rooms!) for the referrer and the new hire.
It’s a way to say thank you for the referral, help the new hire get to know the company, and instill our value of service to our customers.
13. When in Doubt, Offer Money
Jason Chen, Vice President, Exxact Corporation
Offer money. People always respond to money. Not to mention, people prefer to work with good people, so if they can be a part of that process, all the better. The key is to make sure it is structured properly so that you get good quality candidates and that incentives are aligned.
For example, we don’t pay referral bonuses until after the referred employees’ three-month anniversary. Also, managers do not qualify for the bonus if the referred employee is a direct report.
14. Offer a Second Bonus if Referred Employee Stays On
Debra Carpenter, Director of Marketing, FlashMarks
Offering a bonus (even offering a second bonus if the referred employee stays on for a certain length of time) is the best way to incentivize employees to share job openings with talented friends or acquaintances.
Job boards can get really costly and don’t always return the best-matched candidates, so we rely on referrals most often. Employees tend to refer people whose work ethic and productivity level is a good match for our company—they won’t refer someone who they don’t genuinely believe is going to be a good fit.
15. Be a Likeable Company to Attract Talent
Jada Davis, Media Staffing Manager, Maslow Media Group
Likable companies, reasonable amounts, and easy referral processes are the most effective programs. Although employees don’t refer friends based on the size of incentive (it’s based on how much they love the company), I’ve found that any amount over $500 will grab anyone’s attention. Once you have their attention, keeping the process to one or two steps will always encourage participation.
16. Tie Your Referral Program to Your Core Values
Holly Stehlin, Human Resource Manager, Walker Sands Communications
Employee referral programs that tie back to a company’s core values seem to have the best results, at least that’s what we’ve found at Walker Sands.
As a tight-knit organization, our employees realize the importance of referring someone they are truly proud of and someone who lives by our values, as this person will be working closely with their current coworkers on a daily basis.
17. Encourage Employees to Tap into Their Professional Network
Amy Hyde, Director of Operations, Outspoken Media, Inc.
We use our Employee Referral Program ($1,000 bonus after 90 days) to help promote job postings internally, but have noticed that these referrals help to expedite the recruitment and hiring process.
When we forecast a need for a position, we use department-specific members of the leadership team to help draft a job description before posting on our careers page.
Once the job is posted, we notify our employees in our Stand-Up / Status meetings. We follow that up with an email reminder of our Employee Referral Program and encourage our employees to look into their personal or professional network for candidates.
18. Offer a Tiered Rewards Program
Diem Nguyen, Human Resources Generalist, Health Labs.com
We’ve found that a tiered rewards program drives competition and incentivizes our current employees to refer more skilled talent.
With our tiered rewards program, we offer higher rewards for positions that are harder to fill, like software engineers, than positions that require less specialized training, like receptionists.
We offer cash for our less specialized positions, and offer more high-value products, like laptops, for our harder-to-fill positions.
19. Consider Creative Non-Traditional Incentives
Tomáš Haviar, Recruiter, Bynder
As much as money does incentivize slightly, more creative approaches to referral bonuses tend to be more effective. This could be a donation to a charity on behalf of the employee, contributing to a bucket list event, or offering a prize to the employee who refers the most.
The best employee referral program isn’t a referral program at all. If you build an open and friendly company culture that your employees are proud of, then they will want to bring their friends in.
20. Don’t Make Mistakes with Your Employee Referral Program
Mike Cox, President, Cox Innovations
An employee referral program should be an effective tool. Unfortunately, most programs underperform for one of three reasons:
- Employees fail to realize they exist or are unclear about how to utilize them because employers market them poorly.
- Employers fail to provide a positive experience for candidates recommended through the referral program.
- Employers inadequately communicate back to the employee as they engage with the candidate.
When an employee refers a candidate, they entrust the employer with the power to influence their personal relationship with the recommended candidate. If the employer does not visibly demonstrate to the employee that they are providing the candidate with a fair and positive recruiting experience, that employee is unlikely to offer the employer a future opportunity to impact their personal relationships, and may actively deter other employees from taking that risk.
21. Withhold Bonus Until After the New Hire Completes Training
Steve Durham, President, EnviroCon Termite & Pest Solutions
We offer a bonus to employees who refer successful candidates, meaning after the new employee has successfully completed their training period with us.
It’s worth the investment to reward our team, and we’ve found that they think more long-term. We get better candidates than a smaller incentive just for getting someone in the door for an interview.
22. Build a Pipeline of Referrals, Even if You’re Not Actively Hiring
Ketan Kapoor, CEO & Co-Founder, Mettl
The trick is to ask employees to vouch for someone’s skills and get initial validation so that HR can build a humongous talent pipeline—running in the thousands to choose from.
The strategy works fine for the long-term once the pipeline grows in size and reaches a certain number. It’s opposite to a “hire when you need” strategy and is more about keeping high-potentials ready for future perusal.
Next, the filtering criteria lies with the HR teams, and is primarily done through resume screening and LinkedIn profiling. Multiple factors such as work experience, type of organization and personal summary reflect how viable a prospect is for hiring.
The pool is always ready to pick from and gets constantly updated with recent resumes. And whenever a candidate from the talent pool closes a requisition, the person who referred the candidate is eligible for a referral bonus.
Employees are more motivated to refer potential hires if there are incentives, which is why almost 70 percent of companies offer between $1,000 and $5,000 in cash incentives for staff members who are able to refer qualified candidates.
The goal doesn’t always have to be to get more referred candidates. Kara Yarnot, Founder & President at Meritage Talent Solutions, says she has worked with companies that are using referrals to improve diversity by focusing on a select group of employees.
The most important rule for designing your employee referral program is to keep it simple.
Create a user-friendly program that will be fast and easy to use, both for your employees and your hiring team.
For a referral program to work, it has to be easy. And it has to motivate existing team members to want to contribute. You’ll also need a way to manage your referrals, such as in a free applicant tracking system or recruiting software. Read more about how to generate more employee referrals.
We recommend using Indeed, the number one job board, to post your open positions, as they include applicant tracking tools for free. Then, you can ask your employees to share those open positions with talented professionals in their network. Once a referred candidate is hired, you’ll be able to see, through Indeed, exactly who referred them—making your referral program easy to manage.