5 Things the Best Employee Referral Programs Have in Common

September 3, 2015

When it’s done right, an employee referral program can make a big impact on your recruiting and hiring efforts. Not only is the on-boarding process easier because the new hire knows another employee, but there is also an established level of trust with a person who is referred. Overall, it makes things a bit more simple.

While they might be the first things that come to mind, referral bonuses and compensation aren’t the only (or major) contributing factors to the success of your employee referral program.

Following are what I’ve found to be the top five common denominators of the best referral programs.

1. The referral program is assigned to one individual

Assigning a specific person to manage and promote a referral program shows a strong commitment to the effort and will greatly enhance the success of the program.

As the point person, this individual surveys current employees to see what would motivate them to provide referrals for future employees. Often, they are more motivated by things like a company parking place, time off, travel, or recognition than they are by cash.

But for times when cash is the reward, this individual develops and manages when and how referral bonuses are paid. Often, the best programs payout upfront instead of over a period of time. If the person is placed in the same department, a payout over time often results in the new employee being mentored by the referring employee. In this case, a payout over time could be beneficial.

For example: 33% on day of hire, 33% after 6 months, and the remaining 33% after one year.

Lastly, this person should take charge of creating a referral card that employees can carry in their wallet or purse, making it very convenient to promote referrals. For example, Southwest Airlines cleverly used a card that looked like an airline boarding pass.

2. Ongoing program training is provided

Before they start scoring their network, your employees need to receive training on your referral program and understand what's in it for them if they refer talent that is hired.

Start by doing the following:

  • Train employees on how to increase their referrals.
  • Teach them how to obtain referrals at trade shows.
  • Give them an updated lists of current talent needed and the necessary credentials.
  • Arm them with a thirty second pitch: “We hire _______ who ______ so they can __________.”
  • Ask them to think of talent they worked with in all their past jobs, not just their most recent. Often loyalty still exists.
  • Teach them how to interact with this person after they are hired.

Providing this type of training will give employees the necessary knowledge and confidence to refer people they know.

3. Program metrics are kept, reviewed and revised

Metrics will reveal both the strengths and weaknesses of a referral program. And, a consistent review of the internal referral program will guarantee timely revisions to enhance results.

Be sure to...

  • Monitor which strategies are most effective. 
  • Review the referral program every six months and include employees in this review process.
  • Survey employees to initiate needed revisions.

Keeping track of these metrics ensures that you are able to make improvements and strengthen the program.

 4. Employees that give referrals are recognized

Recognizing the contributions employees make to your referral program helps solidify relationships and fosters employee engagement and loyalty to your company. We are all wired differently and not every individual needs public recognition, but even the most modest person appreciates some recognition for their efforts.

You can recognize employees in a variety of ways, including plaques, pictures in newsletters, thank you notes from the executive, or even lunch with the executives of the company. This type of recognition gives employees more incentive to make referrals, in addition to the referral bonuses.

5. There is an annual or quarterly bonus or contest

Some of the most effective employee referral programs offer a reward that can be won by anyone who has referred a new employee in the past quarter or year. These rewards can include things like attending an exclusive event or a prize or trip.

Final thought

to create a strong employee referral program that will stand the test of time, it’s important to implement all of the above factors. Doing this will greatly impact your ability to attract and retain top talent.

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