How to build a successful employee referral program

Sam Hannaway REFFIND

Employee referrals are the most powerful tool in recruiting. Referred employees have higher retention rates and increased employee engagement.*

Hiring through employee referrals can deliver outstanding results but some companies don’t see the value of an employee referral program because the program itself is flawed. Creating an employee referral program that delivers value requires a methodical approach and can be made easier with the right technology.

We have identified seven steps to building an employee referral program that delivers:

  1. Define the problem. Understanding the problem makes it easier to design the right solution and measure success. Organisations may need a better quality of candidates, a larger pool of candidates, or a better recruitment process, for example.
  2. Determine target roles. Identify the business areas with roles that are hard-to-fill and/or ripe for referrals. Decide whether to target certain groups or any referral. Knowing these things will help when deciding how to reward referrals.
  3. Reward. There are inherent rewards for employees who successfully refer candidates but it is also important to offer a tangible reward. To decide what that should be, consider what competitors are offering, what will appeal to your employees, and what will fit the culture of your organisation. Generally there is a tipping point that will make employees sit up and take notice. It may not be linked to financial rewards.
  4. Make it simple. A common stumbling block in many referral programs is too much red tape and poor referral mechanisms. By making it as easy as possible for people to understand and participate in the referral program, it is far more likely to generate positive results.
  5. Launch it. Communications and change management are critical. Many companies spend a long time on design and invest significantly in the program itself, only to underestimate the communication strategy required. As a guide, it should take just as much time to plan the launch as it does to design the program.
  6. Remind. An employee referral program that no one remembers will not generate many candidates. It’s important to remind employees regularly about the program and ask them to think about people they may know in their network. Reminding employees regularly about jobs and potential referrals can be more effective than increasing the reward amount associated with a referral.
  7. Measure. To understand whether the employee referral program is delivering results, it’s important to measure the number of candidates recruited through the referral program. Long-term, it is useful to measure those employees’ performance versus those recruited through traditional means.

Talented workers are exceptionally valuable to organisations. With worsening skills gaps, it has become more important than ever to leverage any advantage when it comes to effective recruitment.

The benefits of employee referrals are significant – companies that can manage a successful employee referral program will have the edge over their rivals who recruit using traditional methods.

*RecruiterBox, 2016

Sam Hannaway, Customer Success Manager, REFFIND