Employee referral programs are lucrative strategies for companies before engaging in paid solutions or when budgets are tight. 88% companies attribute referrals as the leading source of superior candidates. It’s time for companies big and small to take advantage of this opportunity. If you don’t believe me, read this article on Forbes as referrals being the Holy Grail of recruiting.
An employee referral can cost between $250 up to $5,000 for some companies depending on the skillset and tenure. With a notable high ROI, employee referrals can often see higher retention rates and shorter time to hire and better quality of hire. Employees can provide candidates with good, bad and often the ugly. If the company is going through growing pains – the candidate will know right off the bat.
Small to mid-sized companies tend to shy away from employee referrals due to lack of knowledge on how to create one or maintain. Large companies may utilize their Applicant Tracking System and have legal teams to draft policies, payroll to help with payments and HR to process applications. What if this isn’t an option? Here are some easy steps to create an employee referral program and to keep it simple.
Have a policy. This doesn’t need to be pages of legal language, but something documented to outline what your employee referral entails. Does a new hire need to have worked a set amount of time for the referee to receive a bonus? Do select roles not qualify? Download this free template from Workable. If you can’t host your policy on an intranet, put it in your employee handbook or first day paperwork. You can also create a fun flyer on your program that includes the fine print language at the bottom.
Set up a way to receive referrals. If it’s not through your application process (because you don’t have one), consider setting up a shared inbox to encourage employees to send resumes for their referrals and to ensure they're tagged for the referral.
No money, no problem. Decide your incentive. If you can’t provide monetary referral bonuses, give company swag. This is a double whammy as it continues to help with brand awareness and there’s still a sense of appreciation.
Put some skin in the game. Don’t just ask your employees to submit an application or resume, require employee referrals to provide narrative – Why would you recommend this person for this role? Why are they a good fit for this company? A referral isn’t just about anyone who's breathing, it’s not just about blasting LinkedIn to get people to bite. It’s about how much you’ve engaged with them about this opportunity and given them information about your company. An employee should be encouraged to talk to the candidate about your company. Consider this the first call your recruiter might be having when they are typically answering questions that the employee can cover. Again, we’re thinking reduced time to hire here.
Keep track of your referrals. Your HR team or recruiters should treat the candidates with white gloves. They’ve been handed to you, make sure they see it through. If there’s a way to document and keep track of referrals in the process, do it. This will also help determine when a hire happens and when payments are deemed necessary. A spreadsheet can be a simple way of tracking. No need to overcomplicate. Download this free referral tracking spreadsheet.
Don’t leave it in the hands of the hiring manager. Don’t leave a referral to be communicated by a hiring manager and then to HR. Utilize a shared mailbox for referrals or you may come to a point where a Hiring Manager forgets or provides more favoritism to one referral over another. Leave it out of their hands if possible – they have enough going on. If you don’t have HR or Recruiting to work then disregard this statement.
Provide sharables. Communicate your program to your employees and encourage the sharing of jobs with social media sharables. Send weekly blasts on recent jobs posted, or fun photos to include in a post to encourage the promotion and to get attention. If you just send a job, you’re relying on them to either post a boring message or find a photo that may not mirror your brand guidelines.
Have a promotional cycle. Consider referrals just like any sales campaign and have promotional periods. Is there a certain time of year you hire more? Do something special during that time and promote it. Set up a calendar yearly on key days you should begin promoting in order to hit your hiring deadlines and objectives.
Think beyond the hire. Often companies won’t provide referral bonuses to interns or seasonal hires because they are short term hires. However, a conversion of a temp hire has the highest retention rate and lowest onboarding cost. Consider weaving into the language of your policy that temp/seasonal hires won’t be deemed a referral bonus unless converting to a full-time role.
Celebrate. Don’t leave this alone and think it will continue to run. It may, but it could grow bigger if you pay attention to it. Continue to promote (see #7) and celebrate those who do well with referrals. Highlight top referrees in company wide emails, give them swag or just highlight them to make them feel even more appreciated.
Close the loop. Don’t think your referee talks all the time with the candidate they referred. Make sure to let them know if their candidate has been hired AND thank them. An appreciation goes a long way even before a referral bonus.
Careful on the language. A lot of companies promote this as a “refer a friend” program. I’m all in favor of something sounding less corporate. But, do you really want a clicky workforce? If you were to hire everyone and their “friends” would you see the diversity and innovative thinking you’re looking for? Consider how this is worded. Hiring those in your network is one thing, but people don’t always work best with their friends.
Need more help creating or promoting your employee referral program? Let's chat!
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