Have you ever wondered how to find the perfect hire? One with the right skills and who fits perfectly into your team’s culture?
The truth is, finding the best candidates for your company can be a tricky task, often draining more time and resources than you’d expect.
One smart strategy is using the power of employee referral programs.
Known for being cost-effective and popular among staff, these programs are valuable in any hiring toolkit.
And it’s not just large corporations reaping the benefits. In fact, smaller and medium-sized businesses benefit the most from referral programs.
One study found that workers hired through referral programs in smaller firms stayed nearly 122% longer compared to other hiring methods.
In this blog, we’ll explore the importance of employee referral programs and walk you through the steps to create a successful one. We’ll also share examples of strategies that have proven effective for other hiring managers.
What is an employee referral program?
In simple terms, an employee referral program is when your current employees help your company find new hires.
They achieve this by recommending individuals from their personal networks who they believe would be a great fit for job openings at your company.
When one of these recommended candidates is hired, the employee who made the referral is rewarded. This reward could take many forms, like a referral bonus, a special gift, or another appealing incentive.
Employee referral programs help boost employee morale and allow your company to recruit qualified candidates without all the extra work of the traditional recruitment process.
Why do employee referral programs matter?
Employee referral programs can be a game changer for talent acquisition. There are several great advantages, including:
- Improved quality and cultural fit: Candidates referred by existing employees tend to match a company’s needs and culture more closely.
- Increased engagement and productivity: Referred employees often show higher levels of engagement and productivity.
- Higher retention rates: This is particularly notable in smaller businesses, where employee referral programs have led to significantly higher retention rates.
- Cost and time efficiency: With referrals, the hiring process becomes more efficient, saving on time and recruiting costs. In fact, companies save roughly $7,500 in productivity and sourcing costs when hiring a referral. That’s a significant chunk of change!
- Enhanced employer branding: A successful referral program can improve a company’s reputation as a desirable workplace.
Crafting an effective employee referral program: key steps
To make your employee referral program a success, we recommend the following steps:
- Set clear goals and objectives
To get your employee referral program off to a strong start, first pinpoint your main goals. Ask yourself: What do I want this program to accomplish?
Do you want to hire better employees, recruit candidates faster, or keep your employees more engaged? Knowing your goals will help shape your program and make it work better for your company.
- Design the program
Designing your employee referral program is a crucial step. It involves crafting the framework of how the program will operate and the specifics of the rewards system.
Don’t forget to decide who can take part in the program. You might allow all employees to participate or set certain criteria, such as length of service or job grade.
Some companies also extend participation to non-employees, like customers or partners.
- Promote the program
Launch your program with a bang! Use company events, internal communication channels, or meetings to spread the word.
Make sure every employee understands how the program works and the benefits of participating.
- Monitor and adjust
Regularly evaluate the program’s performance against your set goals. Look at the number and quality of hires, employee participation rates, and overall satisfaction with the program.
Be ready to tweak the program based on feedback and results to keep it effective and engaging.
Employee referral program secrets of successful companies
In the quest for successful employee referrals, leading companies have developed some innovative strategies that you can implement at your own company. These strategies include:
Leveraging new hires for referrals immediately (PURE)
Shortly after their start date, ask your new employees if they know anyone who might be a good fit for open roles.
This approach taps into their fresh network and can uncover potential candidates you might not reach otherwise.
Organizing recruitment happy hours (Salesforce)
Host casual get-togethers where your team can relax and chat about potential referrals. These social events can break the ice and encourage employees to think of people in their networks in a more informal setting.
Promoting emotional rewards (Accenture)
Instead of just promoting material rewards, consider highlighting the emotional satisfaction that comes with referring an employee. This approach taps into the fulfilling experience of helping others.
It’s about the joy of helping a friend land a great job or the pride in contributing to your company by bringing in a talented new team member.
Implementing gamification (Fiverr)
Introduce a points system for each successful referral. Employees can accumulate points and exchange them for various rewards.
This adds a fun, competitive element to the referral process, making it more engaging and encouraging broader participation.
How to make your employee referral program a success
To make your employee referral program a hit, try these simple tips:
- Show appreciation to employees: Make sure your team feels valued for their help. A simple thank you goes a long way. This can be through a thank-you note, a shout-out in a meeting, or even a quick email.
- Spread the word: Keep talking about the referral program. Use emails, posters, or quick mentions in meetings to remind everyone of their benefits.
- Reward efforts, not just results: Giving a pat on the back to employees who participated in the program, even if their referral doesn’t get hired, is a good idea. This keeps everyone motivated to keep participating.
- Ask specific questions: Help your team think of potential candidates by asking detailed questions. For example, ‘Do you know someone great with numbers?’ or ‘Who was the best team player at your last job?’ These kinds of questions can help spark ideas.
Employee referral programs offer many benefits. They improve hire quality and cultural fit, increase employee engagement and productivity, and boost retention rates, especially in smaller businesses.
To set up a successful employee referral program, follow the helpful steps outlined in this blog, starting with establishing clear goals and a well-thought-out design.
The most important part? Make sure your employees feel important and stay interested.
Say thanks often, talk about the good things the program does, and reward people even if their referrals don’t get hired. Don’t forget to ask questions that help your team think of the right people for the job.
Discover Deliver Workforce Solutions for your employee recruitment needs
If you’d like help creating an employee referral program, Deliver Workforce Solutions has the necessary expertise.
We offer tailored recruitment strategies and proven processes to help you attract, nurture, and retain exceptional talent within your organization.
For a complimentary consultation, reach out to Kathy at [email protected]. Together, we can pave the path to your workforce’s brighter and more resilient future.
