Insight Blog

Developing an Employee Referral Program

Developing an Employee Referral Program Who you know or get to know can play a big part in hiring. According to a report by the U.S. Bureau of Labor and Statistics and Yale University, 70 percent of jobs are filled by networking. Interestingly, a LinkedIn global survey reported in 2017 that 70 percent of people were hired at a company where they had a connection. Not only do those connections help employees in search of a new position. They also help companies in hiring mode.

One effective method for identifying new talent is to ask current employees for referrals. In fact, this method is so effective, it is has become part of a regular program at some organizations. 

Employee Referral Programs typically reward current employees for helping to identify potential new employees. To develop an effective program, an organization needs to consider why one is needed and whether it can be executed in a fair and objective manner. Here are six specific suggestions:
1.  Be direct with communication.
State the reason for the program, its goals, and how it works or will work. Keep the process simple but think about the following details before a program launch or relaunch:
  • Should referrals be contacted ahead of time by employees for their consent to be referred?
  • Are employees to submit a name and contact information for a referral via an online form? Or should they email a designated program representative instead?
  • Should employees state the open position for which the referral is best suited or are general referrals also accepted?
  • Are referrals guaranteed a phone/video or in-person interview?
  • Are employees rewarded for the referral itself or only upon hire of the referral? If upon hire, is the reward based upon the referred remaining in the position for a set period of time?
  • How can employees be publicly recognized for a successful referral?
2.  Be metric-minded with the program.
The clearest way to gauge whether a program is working is to have baseline metrics for comparison. Consider these as a foundation to build upon:
  • How many referrals did employees provide prior to the program launch or relaunch?
  • What percentage of referrals resulted in hires?
  • How did the employment duration of hired referrals compare to the employee average? 
  • How did the career progression (promotion, raise, or performance bonus) of hired referrals compare to other employees in that role or job function?
3.  Be creative with rewards.
While “cash may be king,” there are other incentives to motivate employees. Instead of a cash or check reward, consider company branded items, paid time off in the form of extra vacation or personal days, gift cards or certificates to favorite restaurants or stores, or even a point system that can be accrued and redeemed for event tickets, a spa day, or other memorable experiences.

4.  Be inclusive with participants.
Do not limit the program to only top management or only select departments, titles, or functions. Allow employees at all levels to participate and to offer suggestions for potential employees who may not work in a similar role as them. Additionally, all program participants should be offered the same reward or reward options.

5.  Be responsive with all involved.
Promptly thank employees within 24 hours for their suggestions and reward them as appropriate, and promptly contact referrals within 48 hours to determine their level of interest and availability to interview.

6.  Be selective with hires.
Just because a program is in place does not mean an organization is obligated to hire a referral. Employees usually understand how important good referrals are and that poor ones can reflect negatively on them; however, it is not the employee’s responsibility to qualify referrals. It is the company’s responsibility to interview and conduct reference checks on referrals as it would for traditional applicants.

If your organization has a current hiring need, please contact us to connect with a Helbling search consultant