All You Need to Know About Employee Referral Programs and Why You Need to Implement One This Year
The current climate sees many companies facing difficulties when hiring necessary staff. From post-pandemic routine changes to rises in the cost-of-living driving wages up, it’s becoming increasingly difficult to help your company stand out. Research shows that people are more likely to trust the recommendation of a friend or acquaintance than advertising. It seems logical, then, to use this to improve your recruiting. This is where employee-referral programs come in.
In this article we’ll be looking at:
● The benefits of employee-referral programs
● How you can build your own.
Let’s get into it!
What are Employee-Referral Programs?
An employee referral program is a scheme where your existing employees receive some kind of benefit for referring people to your organization. This isn’t a blanket benefit, though — you’ll only be hiring certain people, and you don want to reward employees for referring irrelevant or underqualified candidates!
However, when set up correctly, these programs can be hugely beneficial.
The Benefits of Employee Referral Programs
Increased Employee Retention
Showing that you value your employees is a great way to improve employee retention. Most employees leave an organization because they feel stuck or undervalued. By showing them you value their work and social contributions, you can entice them to stick around.
Improved Candidate Quality
Candidates from an employee-referral program are more likely to be suitable for a role. Employees know who they want to work with, and that person is generally somebody confident, able to get the job done, and pleasant. This way you can filter out poor candidates much more quickly than using the traditional interview method.
Your employees are advertising for you — that means you won’t need to be spending money on writing and distributing job ads. Plus, improved candidate quality means you’ll be ahead on the candidate screening process, meaning that you’ll spend less time (and therefore less money) on the hiring process.
How Much Does a Referral Program Cost?
Referral programs cost as much as you want them to.
Typical financial bonuses for employees range from $250+, but you can also emphasize the benefits of having people you like to work with to increase employee uptake. Faster Time-to-Fill Employees will know where to send their friends and family to apply, so you’ll have more people engaging with job listings. Plus, those applying are much more likely to accept the position – meaning you won’t get stuck in extensive negotiations.
Reduced Recruitment Process Time and Effort
Better candidates means quicker recruitment. In addition to that, you don’t need to spend time advertising!
Increased Diversity and Inclusivity in Hiring
With this method, you can pull from a much broader pool than a centralized job board. However, this can be a double-edged sword: employees typically refer those they know, who tend to be similar in experience and culture.
Better Alignment Between Candidate and Company Culture
Due to your employees’ knowledge of the company, they’re not going to pick people who don’t fit the culture. If nothing else, they want to make sure that the people they’re referring (typically friends or relatives) find an enjoyable position – which they won’t if they’re not a good fit.
How to Design a Successful Employee Referral Program
Clearly Define Program Goals and Objectives
This is the first step for any new policy. What do you want to get out of the program?
“More employees” is probably not sufficiently specific. How many is enough? How will you know if your program is working? When might you stop or suspend the program? Determine Program Eligibility CriteriaThis is important both for employees and prospective candidates. Generally, people directly involved with the hiring process (such as HR staff and managers) should be excluded from the program. You might also want to place a minimum on time spent at the company.
In terms of candidates, you should make sure that they haven’t previously applied and been rejected.
Establish Program Rewards and Incentives
Making sure you understand what your reward scheme is going to look like is key to setting up a program effectively. This is for two reasons:
1. You want the benefits to be clear to your employees
2. You want to ensure that you can finance the program, and that you understand its potential impact.
Set Program Guidelines and Rules
Just like making sure your program is accessible, you want to make it clear to your employees what will and won’t get them their bonus! Make sure you’re only granting bonuses to employees when their referrals succeed,and also let them know when to expect their bonus/reward.
Promote the Program Effectively
Don’t just send a half-hearted memo out — make sure your employees know about the program! Team meetings, department conferences, and other kinds of lower-level meetings are great places to make sure the information gets across. Putting up posters in the workplace (if you have a physical office) can also be a great choice.
Provide Ongoing Communication and Updates
Mention the program regularly in your correspondence. Give some numbers out if you can, too, to show that the program is being used! This can help encourage more employees to get in on the action.
Make the Program Easily Accessible and User-Friendly
Your employees aren’t going to use the program if it’s hard to get into. Make it as easy as possible — and make sure your employees understand what you’re looking to recruit for! If you tell your employees about effective ways to apply for a job (such as choosing the right CV or resume), not only will they appreciate you helping them develop further skills, but they’ll pass it on to those they refer, too!
Monitor Program Performance and Track Metrics
There’s not a lot of point in having a referral program if it doesn’t work, or isn’t economical. Making sure you’re keeping tabs on the program will help you decide if it’s worth keeping as is, needs changing, or should be gotten rid of entirely.
Setting up a review later down the line is a good way to make sure you properly analyze the data you collect.
Continuously Evaluate and Refine the Program
There are always improvements to be made — don’t leave your program alone! If you need to fill a certain role, pivot it to give more incentives to candidates. If you’re noticing the bonus is less attractive, consider reframing or increasing it.
Recognize and Reward Participants and Program Champions
Just like providing ongoing communication and updates, recognizing and rewarding people who use the program will encourage others to take part as well.
The Bottom Line
So now you know a bit more about employee-referral programs! If you’re looking to further streamline your recruiting process, why not try out the Shine Interview software? Schedule a free demo and explore our great solution for a professional online interview which helps you screen and sorted candidates easily so you can get to the right hire faster.
Give it a go today and let us know how you get on!