September 19, 2022

Six Key Elements To Build an Employee Referral Program

by Mike O'Neill

How much time and money have you spent pouring resources into creating job posts? Hiring a new recruit isn’t easy, and with the hundreds of job applications that come in, there are so many possible candidates to choose from. Making sure that you hire the right person can be difficult. 

So why not improve your strategy and start recruiting internally with an employee referral program?

External recruiting is good, but internal recruiting is better. In the last ten years, 30% of employers have implemented an employee referral program within their company. Within the last year, those numbers have seen a significant increase. 30-45% of all employers have some type of program in place.

Why? Simple. Studies show that referred employees tend to get up to speed faster, contribute more, and stay longer. The employee culture is also affected in a positive way through an employee referral program. It can be a more expensive recruitment option, however, the quality of employees it produces makes it worth it. It’ll be money well spent  and more cost-effective than external recruitment.

Referral programs are straightforward, however, it’s not as simple as copying and pasting an online  template. Differentiating a good program from a bad one rests on how well the program complements the company's goals and values. Creating an employee referral program needs to be unique to the company. 

Remember: it’s your employees you’re trying to turn into recruiters. Help them understand why they should promote the company.

To help guide you through creating your employee referral program, I have come up with six key points to remember. These are the fundamental ideas I constantly returned to when managing the recruiting process for a large Fortune 500 company. The goal isn’t to use a cookie-cutter approach but to develop an unique program that gives your employees a feeling that they are part of the company’s future. 

Keep reading to start creating your own program.

#1 Provide The Right Tools

Your employees won’t become stellar recruiters overnight. Your employees need to be equipped with the right tools and knowledge to make the referrals. Without knowing how to go about the referral process, what’s needed to make a referral, and what happens afterwards, they cannot help the company grow. 

Whether this is an email, through a meeting, or a posting, make sure that the information is getting through to your employees. With the right tools, your employees will be able to refer high-quality employees and improve retention. 

A successful employee referral program comes with many benefits you won’t want to miss out on. Make sure that your employees have the tools to propel the program further and make them feel like they are a foundational part of the program.

#2 Be Clear

Chances are, if the referral process is too difficult, you won’t get much participation. Your employees aren’t going to jump through hoops to help you. They need easy-to-follow instructions that’ll become second nature to them. 

It’s crucial to make sure that your employees understand the process and the rules. If they are blindsided by fine print and unclear requirements, you’ll lose a great HR opportunity.

Be straightforward when outlining rules and create a simple participation form that’s sharable among your workforce. Provide simple, step-by-step guidelines and clearly outline expectations, so your employees know what the process will look like. Simplicity is key. 

#3 Create Incentives

Incentives are the best motivators. Who doesn’t want a reward for a referral? Banks, airlines, subscription services, and everyone is starting to use incentives for referrals. And for the right reason: it pays off.

However, as effective as incentives are, it’s important that the rewards given out don’t differ between positions. Your goal is participation, not division. Motivating through equal incentives will create an inclusive work culture, boost retention, and have an overall positive effect on the company environment.

There are many types of incentives you can use for the employee referral program. You don’t need to be confined to monetary incentives, and you don’t want to promise more than your company is willing to give out.

Great incentives to include are:

  • Money
  • Trips
  • Vouchers
  • Sports events

#4 Market Intentionally

Just because the recruiting is done internally doesn’t mean marketing is any less important. Your employees are going to be your recruiters and your biggest advocates in the program, so how you promote the referral program is important. 

Your goal is to give them as much information as possible, so they feel like they are prepared to make the referral. Marketing is an investment into the program that you don’t want to skimp on. 

Let them know how it works, why they should care, what to expect, where to participate, and other important information along those lines. If an incentive is the biggest motivator, then knowledge creates action. Market the program intentionally so that your employees aren’t left wondering and confused.

#5 Have Accountability

Who will be the champions of the employee referral program? It’s no surprise that HR will be the team leading the program, but having advocates who will understand and embrace the program will take a load off HR’s shoulders.

Having senior leadership promoting the program will be a huge game changer in how employees view the program. It’ll have an immensely positive impact on employee culture and show the employees that management cares about who’s coming into the company. 

Senior leadership should take accountability for promoting the program because of the position they hold. However, HR will have ownership of the program and what happens within the program. That being said, having more people on your team supporting you will enhance the overall quality of the employee referral program.

#6 Measure The Results

Now you want to make sure that your efforts are paying off. Just implementing the program isn’t enough, you want to have data to return to when you decide to improve your program. To make sure that your employee referral program is successful and produces first-rate employees, you’ll need to collect and compare data. 

These specific measurements will show you how cost effective the program is and where you can improve. If your employee referral program is created mindful of  the needs of your company, it’s producing an employee culture that will only improve from here.

To measure your results, you’ll need to go back to your previous recruiting efforts and compare them to the referral program. You’re going to want to make sure you’re calculating the:

  • Number of people referred
  • Number of people hired based on the program
  • Rate of participation
  • Retention of referred hires
  • Performance of referred hires

What Next

These six key elements will help your employee referral program be successful. 

Remember to:

  • Give your employees the tools they need to make the referral
  • Set clear guidelines for your employees to follow
  • Create incentives to strongly motivate employees
  • Be intentional in creating an internal marketing campaign
  • Get senior leadership to promote the program
  • Measure the results and compare the data to other recruiting efforts

However, after you start the employee referral program, what comes next? 

In the next series of the blog, we will give you the tools you’ll need to increase participation and improve your program. 

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