How to Effectively Implement an Employee Referral Program


image_01Contrary to what some people might think, not all employers can access an infinite flow of resumes at any time to find a qualified job applicant. For most hiring managers and HR professionals, their schedules are filled with daily tasks that make it harder to devote enough time to recruitment. Nevertheless, part of their role within the company is to find candidates that have the skill, ability and cultural fit for their organization.

One possible answer is hiring via employee referrals. Some studies show that a top source for quality hiring comes from employee referrals. Companies who use employee referral programs have average retention rates of 46 percent, and referral programs can save organizations $3,000 or more per hireĀ [1]. The challenge then becomes implementing a sustainable, well-functioning employee referral program to make the hiring practice less challenging.

Develop a Comprehensive Program

Simply asking employees to hit the streets and recruit is not enough; you should develop a comprehensive plan that clearly communicates the program’s objectives and hiring goals. Even if you engage your top sales team, this does not automatically make them the best recruiters.

Communication and training should be part of the employee referral program. This will acquaint your employees with policies and company rules surrounding recruitment. Additionally, training gives you an opportunity to teach employees how to talk positively about the company.

Some organizations find that asking employees to look for talent at industry conferences or association meetings expands the opportunity to find prospective recruits. The goal is to encourage employees to refer new acquaintances in addition to people they already know.

Select Common Sense Awards

How you decide to reward employees for referring quality candidates is typically based on your desired level of employee engagement. While cash rewards are typically the top incentive, some employees are equally satisfied with extra time off or travel bonuses.

If you choose cash rewards, you might want to pay employees in portions. You can pay part of the reward upon hiring a candidate, and more is paid after the new employee completes the probation period. Final payment could be made after the employee’s first anniversary.

Organizations can gain several benefits through an effective employee referral program. The program helps to reduce the burden on one person or department for finding top talent. When implemented effectively, the program can increase employee engagement.