An employee referral program maximizes the number of hires coming through your employees’ personal networks. You offer employees a financial or other reward for referrals that lead to hires. It’s a great way to recruit star performers, because people who work for you are likely to know other talented people.
When your employees refer friends and family, they’ll need to be able to tell them about why your company is a great place to work. Add a description of your company, and gather reviews on your Indeed Company Page to create a good impression. Thanks to Indeed for sponsoring this article.
Step 1: Prioritize Your Target Hires
When creating an employee referral program, you’ll need to decide if you want to accept referrals for every open position. If you have the budget to accept referrals and offer rewards for all positions across the board, that’s great. If not, here are the types of positions that usually work well for a referral program:
- Positions that you want to fill quickly
- Positions that you’ve had a difficult time filling through job boards and other traditional routes
- Senior level positions
- Niche positions that require very specialized expertise
It’s good to know your hiring priorities are before starting your communications push.
Step 2: Communicate Job Requirements To Employees
Once you’ve prioritized your target hires, you need to tell your employees what you’re looking for from an ideal candidate for each available position. Here are some things to keep in mind.
Provide a Concise Summary of Job Requirements
People who are going to refer potential employees need a way to easily determine if a position might be a good fit for someone they know.
Starting with a good job description for each open position is key, but employees may also need something more concise than a job description. So prepare a very short summary of the job responsibilities, experience requirements, and why it’s such an amazing opportunity. (You can see our article on Employer Branding for ideas on how to make your firm appealing.) Ideally, the summary should be less than a paragraph. You can always link to the full job description that includes information on benefits such health care or commuter benefits for more details.
Send Single Requests for Referrals
If you’re hiring for multiple positions, send referral requests one at a time. You want your referral source to be able to quickly edit or prepend your concise requirements email and then forward it to a candidate. Grouping different job types makes that difficult to do and can also overwhelm them.
Remind Employees to Refer People
If the referrals don’t come pouring in, remind your employees about the employee referral program and the reward you’re offering. Have a program in place to send reminder emails, and use internal social posts.
Step 3: Make It Easy For Employees To Refer
To maximize employee referrals, you want to make your employee referral program as easy as possible for your referrers.
Post Jobs that Need Referrals in One Place
Put all of the jobs that need referrals in one place such as a intranet home page or weekly team email. You could also use an Indeed Careers page as a way to have all of your available jobs in one place. It’s easy to update your Indeed Careers page whenever you fill a position, so it always accurately reflects your hiring needs
Prepare Shareable Media
For each communication channel, you can create an easily shareable message for referrers. For example, fully formed emails ready for forwarding and canned tweets, LinkedIn posts, and Facebook posts.
Route Referrals Through a Special Hiring Pipeline
As mentioned above, candidates who are referred by existing employees are often of a higher calibre than your run of the mill candidate who responds to a job posting. So, route referral candidates through a different hiring pipeline. This could take the form of a specialized email – firstname.lastname@example.org – or it could be a Slack channel dedicated just for referrals. Click here to learn about to create professional email addresses for your business.
Step 4: Provide The Right Referral Rewards
Most businesses that have an employee referral program offer monetary rewards when a referral leads to a hire. This is almost always a good idea, but depending on your employees, work culture, and budget, you may want to think beyond the typical referral cash bonus. Sure, lots of folks like cash, but that may not be the best incentive.
Most companies start with cash rewards for referrals. These can be broken down into pieces to create an even better incentive. For example a small bonus for a referral, a larger bonus for a hire, and an additional bonus after the hire lasts for 90 days. As for size, a Meritage Report on referrals reported that 69% of companies used cash bonuses between $1,000 and $4,999.
In addition to a standard incentive for all positions, you may want to create short-term additional incentives for hard to fill positions. For instance, double the referral bonus for a position that you’ve been struggling to fill, or double the referral bonus for a month if you want to really ramp up hiring and fill a bunch of positions in a short period of time.
Recognition & Thank You
A lot of the incentive to do a referral is feeling good about helping or getting recognition for it. For example, a Google study found that public recognition of sourcing a hire was a better motivator for referrals than cash bonuses. So send a personal thank you note whenever someone sends a referral. Also send a personal or company-wide thank you if the referral turns into a hire.
You could call out kudos to the referrer for a successful hire in the company newsletter or recognize the employee during a team wide meeting.
Who doesn’t love prizes? Companies will often create drawings for very large prizes like a Caribbean trip or plasma TV for referrals. Often, paid time off can work as a prize as well. If you’re on a tight budget, you can offer a prize just to the employee who gives the most referrals at the end of a month or a year.
Step 5: Track Referrals & Measure Success Of Your Referral Program
The last piece you’ll need to maximize your referral program is typical of most programs: measurement, and iteration. You should have a system in place to track:
- Overall number of employee referrals and number of referrals per employee
- Individual referrer activity (so you can thank and reward them)
- Opportunities to improve your referral program, e.g. does adding pre-formatted email referral templates increase the number of referrals?
You should regularly review your referral program to see what’s working and what’s not.
According to the Meritage report on tools used for employee referral programs, 50% of respondents used referral functionality in their Applicant Tracking System (ATS) and 14% used a third party referral solution. An ATS can help track referrals, create reports, and create a referral portal that employees can access to view their referral program rewards. For more information on Application Tracking Systems, take a look at this article.
Third party systems usually focus on mapping job openings to employee social networks, which makes it easy for employees to refer people they know. Some popular systems include Choozer, Good Job, Jobvite, TalentVine, Zao, and Zalp.
In addition to using an ATS or third party referral tracking systems, you could also use your CRM or talent management software to track referrals.
Bottom Line: How to Generate More Employee Referrals
Since employee referrals are such huge part of a successful hiring program, it’s worth your time and money to make it as effective as possible.
If done properly you should get a number of benefits including:
- More candidates per opening for fewer dollars
- Higher quality candidate pool
- Candidates that have a better understanding and perception of the company coming in
- Candidates that are more likely to be successful
- Hires that stay longer and tend to be more satisfied.