5 Dos and 5 Don’ts for Employee Referral Programs

Employee referral programs aren’t new. As the recruiting pendulum continues to swing toward having fewer active job seekers; however, they’re reclaiming the spotlight. Employee referral programs can galvanize passive candidates, the ones who aren’t actively engaged in job hunting. And with the job market tightening, passive candidates are highly prized.

Employee referral programs are efficient on multiple fronts. You spend less money to advertise open positions. You spend less time interviewing and vetting candidates. Plus, employee-referred new hires tend to onboard faster and stay longer. If reading this makes you gung-ho on creating an employee referral program, keep these dos and don’ts in mind.

5 Dos 

1.    Make the reward valuable. If your employees are making six-figures, a $250 reward may not motivate them. If your employees have unlimited PTO, an extra week of vacation isn’t much of a carrot. A strong reward program is worth every penny. New hires from an employee referral have a 45 percent retention rate compared to a 33 percent retention rates for employees hired through career websites.

2.    Promote your program. A program only works if people know about it.Consider company-wide campaigns every quarter.

3.    Enlist management in spreading the message. Managers and senior leadership are in the spotlight all the time. Ask them to make the referral program a talking point at any speaking engagements, company meetings and presentations.

4.    Make it viral and fun. Host a contest where employees post short, simple videos about why your company is a great place to work. As part of the contest, employees have to get their friends and family to vote for their video. It’s a subtle way to promote your company to your employees’ personal networks. 

5.    Take it to the streets. There’s no reason non-employees can’t help refer talent. Your company has fans in its suppliers, board members, clients and more. Take advantage of all that positive energy with a version of your employee referral program that rewards them.

5 Don’ts

1.    Don’t create a black hole where referrals go in and no action comes out. Employees who make referrals rely on you to follow through. Ignoring a referral can frustrate employees who have stuck out their proverbial necks. If you’re not respectful, you could be looking for two employees instead of one. 

2.    Don’t tie an employee’s bonus to the new hire’s training or duration of employment. Your employee referred someone to you. You thought it was a good hire. Pay the bonus and relieve the employee from that awkward I’m-in-the-middle feeling.

3.    Don’t be ambiguous with your program. Formalize it, communicate it, make it transparent and stick to it. Because it is an internal program, any misstep on the part of HR will broadcast on the employee grapevine.

4.    Don’t overthink it. From your employees’ standpoint, keep your program as simple as possible. They have other things to do, like their jobs. 

5.    Don’t treat an employee referral like a routine applicant. A candidate referred by an employee is plugged in, and anything you do or say can be broadcast around the company. Make sure these candidates know that you know who they are. Tag these applicants’ files, customize their communication and expedite the process. 

If you need help with recruiting, hiring or designing an employee referral program, we’re happy to help. Call us at 800.621.1308.