How to Build a Successful Employee Referral Program

If you are looking for a cost-effective method to recruit top talent to your company, it doesn’t get better than using an employee referral program. Time and time again, studies have proven the success of using employee referral strategies when hiring, in several aspects. First, the referred employees tend to stay in your workplace for a longer time. Second, those who refer candidates tend to be retained for a longer time. This is a win-win situation that can save you money all around, not only with having to hire fewer people in the future but with the process itself, as it reduces the time it takes to post job ads, screen resumes and so on.

While effective employee referral programs make sure that the candidate is already pre-screened for cultural fit and performance — as no one wants to recommend a bad employee — they also create engagement within your team. All of this to say that learning how to build an employee referral program can only benefit your company, and this is how you start:

Set a goal and an incentive

Before jumping into any new process, you should always have a clear plan in mind, and an employee referral program is no different. We know that you want to hire new talent, but try and be more specific, so your employees know exactly who to look for. Do you want to increase the diversity of your company? Do you want to recruit more tech talent? Narrow down the possibilities as much as you can. 

After doing that, decide on the incentive you provide. This doesn’t have to be much, or even money — it can be anything from movie tickets to flexible hours. It’s important not to focus too much on the incentive, however, so you get quality over quantity. Another way of ensuring that is to provide the incentive only after the new hire has worked for several months.

Make sure the employee referral tool is user-friendly

If your referral process requires uploading a resume, as well as contact information, and to top that off, the website keeps crashing — it really doesn’t matter how big the cash prize is. Most workers will participate in your employee referral program as long as you keep it as simple as possible. It was hard enough for them to find the right person, so they don’t want to battle with a long submission form as well. 

You can use one of the best 10 employee referral software solutions out there, which usually provide your employees with easy ways to share job ads on their social media as well. These tools also allow for employee referral tracking, which will make sure you remember to give the incentive to the right person at the end of the process. You can also choose to keep the process even simpler. One of the best employee referral strategies out there only requires people to email the candidate details to HR, and let them take over.

Educate your staff

Once you’ve decided on an employee referral tool (even if it’s manual), you need to make sure your staff knows how to use it. It’s not enough to send them a link and expect them to use it. Schedule a training session for your employee referral program, where you can also lay out all of the benefits of participating. During that time also make sure you explain exactly what kind of employees you are looking to hire, so your staff has no doubts and go over the referrals process with them, so they know what to expect and what to tell their friends. There is nothing more discouraging than continuously referring candidates and never hearing back from HR.

One more thing to remember is that the best employee referral strategies will fail if your team is not kept in the loop about your vacancies. While you may have informed them about your open roles in the first training session, keep reminding them with posters around the office, weekly emails or slack messages.

Give kudos where it’s due

When coming up with a strategy on how to build an employee referral program you may have decided to give a cash prize as thanks for every new hire. However, that’s not the only way you can encourage your employees. A simple thank you email or face-to-face recognition from HR is also great. Even better is to publicly mention a person who provided a successful reference, during a meeting or in a newsletter. This way, not only will that person be inclined to refer again, but others will be encouraged too.

Effective employee referral programs keep changing

 Once you’ve set up your program, don’t forget to always measure, evaluate and make changes accordingly. Just because something worked well when you first started it, doesn’t mean it’ll keep doing the work after 6 months (or 6 years). Use employee referral tracking to see the percentage you get from the program and where you can improve. Ask your employees for feedback and as well as the new hires. Learn as you go and adjust.