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Operations

The Complete Guide to Employee Referral Programs

Disclosure: This content is reader-supported, which means if you click on some of our links that we may earn a commission.

An employee referral program can lower the cost of attracting and keeping top talent while incentivizing your current employees to do some of your recruiting for you. In this guide, we dive deeper into the impact of an employee referral program done right, as well as some quick tips and long-term strategies you can use to fine-tune your referral efforts. 

Why Employee Referral Programs Are So Important

By now, you’re probably aware of just how costly acquiring new talent can be for any given business. In fact, it can cost as much as $5,000 to acquire a new hire after you’ve spent time and energy searching for and vetting out candidates. In short, effective employee referral programs save you money by shortcutting the employee vetting and acquisition process.

Greenhouse shares referral program case study results of employee retention rates shooting up to 46% as opposed to hires from career sites, whose retention rate only hovered around 33%. Not only that, but hires from referral programs produce about 25% higher profits than hires from other sources. The historical evidence points to the fact that implementing a referral program can be more than worth it. 

Hires that are referred from existing employees also tend to stay with the company longer and are better quality candidates. So, if you know you can save yourself tons of money, increase your retention rate, and get access to higher-quality candidates—instead of flailing through the application process and finding sub-par company candidates that aren’t a good fit—what’s stopping you from implementing and refining an employee referral program? 

You were probably already asking yourself that question. To help, we’ve drawn together a comprehensive guide with tips on how to improve your employee referral program in the short and long term as well as what tools can best help you get the job done. 

Quick Tips to Improve Your Employee Referral Program Today

When you’re establishing a repeatable and sustainable employee referral program, automation is going to be your best friend. With an employee referral-friendly tool like Workable, you can start recruiting more high-quality talent right away.

With it, employees can upload resumes or provide a link to an online profile. Throughout the whole process, whether a referral garnered any attention or otherwise, employees are automatically kept up to speed on the status of their referrals through the power of automation.  

Automate The Process

Automating the employee referral program ensures a couple of key things including:

  • Ensuring referrals don’t fall through the cracks and get lost in the shuffle
  • Making sure the right employee gets rewarded for the referral
  • Erasing the unnecessary paperwork that can come with a manual process
  • Motivating employees to stay engaged and informed
  • Making it easy for employees to participate and find accurate information on the referral process
  • Making it accessible to everyone in your company that needs to know about it

Without automation, you’ll have a harder time ensuring employees participate, keeping accurate records of who referred whom, and archiving information for scheduling interviews and vetting candidates. Your best bet is working with an applicant tracking system that includes robust referral tools. 

In our case, it’s why we recommend a versatile all-in-one hiring solution like Workable. Once you set up your employee referral workflow, it’s just a matter of checking in on what referrals are coming in and tweaking your strategy as you go. 

Choose Your Incentives

One of the quickest ways to get started with a referral program is to decide early on what your employee incentives are going to be. How will you entice them to participate and enter reliable referrals for any open positions that come up? How will you know if your incentives are actually something your employees want to win?

It’s questions like these that can lead you to pick better incentives that go beyond simply rewarding a successful referral with money. While money can be as good a motivator as any, in a lot of cases it can be best if you not only offer monetary incentives but mix it up with a few non-financial perks thrown in.

These can be things like: 

  • PTO (everybody loves some free PTO)
  • An extra holiday throughout the year
  • A special thank you note from higher-ranking employees
  • Exciting company swag
  • An award or recognition ceremony
  • Gift cards
  • Useful and relevant memberships 

The better your mix of incentives, the higher your participation rate. Couple this with an effort to raise awareness, and you’ll soon see your referral program start to take shape (and get attention). 

Raise Awareness

Needless to say, you won’t see any referrals start coming in unless you let your employees know it exists. There are plenty of ways to do this, including bringing it up in meetings, putting up reminders in the break room, or sending out an announcement in the company newsletter. 

The more you spread the word about your referral program, coupled with a carefully chosen set of incentives, the more your referral program will stay top of mind for employees. Once it’s top of mind, if your referral submission process is easily accessible, employees are bound to be more motivated to submit the best candidates from within their network.  

Make It Easily Accessible

The last thing you want to do is make it hard for employees to submit their referral suggestions. Is there a centralized place online where they can easily submit a resume or a link to a public profile? Is there a way for them to be kept in the know about the status of their referrals? 

Making your referral easily accessible can be achieved by using an online tool like Workable that seamlessly sets up and manages the process for you. However, you can do your own research to find a tool that’ll work for you. 

Empower Your Employees With Gamification

Empowering your employees to take the helm and refer as many valuable candidates as they can think of can start with publicly rewarding successful referrers. Sometimes, you have to get your employees excited about what’s possible. Empowering them and keeping them informed with the right incentives and the right information can go a long way in garnering the results you’re looking for. 

Make sure you let them know that your referral process is a win-win scenario. While you get a valuable referral to a great potential new hire, they get rewards, perks, and recognition. Gamification can form a huge part of the success of your referral program. Are there referral tiers employees can reach to unlock new rewards the more quality submissions they make?

Keep in mind that you don’t have to wait to reward employees only when you’ve successfully made a hire. The rewards can start as soon as employees submit referrals. This can show other employees that you’re serious about rewarding valuable referrals even if they don’t become hires. The point is to ensure you get employees excited enough to participate and share the best form of their network. 

Long-Term Strategies for A Better Employee Referral Program

If you’re wanting to maintain your referral program long-term, you’ll want to have a plan for maintaining and refining the process as your needs change. These are a few key points you should keep in mind that’ll help you do that.  

Schedule Occasional Reminders

Staying top of mind takes scheduling occasional reminders. Employees are busy working and taking care of business. A courtesy reminder that your employee referral process is alive and well, and that the company is seeking particular hires, will help employees remember it’s there in case they have someone in mind to refer or meet someone down the road. 

You can also occasionally send emails or bring it up in meetings. The point is, if you let your referral program take a back seat and stagnate, it won’t do much for you on its own. Though there are a lot of things about it you can automate, other things you’re better off taking care of proactively. 

Revisit Your Incentives

Chances are, you aren’t going to get the ideal referral program right on your first attempt. Sometimes, implementing a referral program that gets results takes a bit of trial and error. You might have to get through a flop or a rework of your mix of incentives before you arrive at a referral program that works well with your company culture and what motivates your employees.

Revisiting your incentives every now and again is a great way to make sure your referral program is as fine-tuned as possible. Maybe there are better, more relevant referral rewards that you can offer your employees if your company has grown.

Or better yet, maybe you can afford bigger and better referral rewards if your referral budget has increased. The secret to keeping a referral program useful is to keep it top of mind and keep it relevant as your company grows, motivations shift, and different positions open up.  

Involve Leadership

Getting a successful referral program off the ground doesn’t have to be a process you go at alone. Involving higher-ups and employees in positions of leadership can help bring both excitement and involvement to the referral process.

Are there additional incentives managers can offer to the members of their team for successfully referring someone? Can leadership get involved in the occasional but purposeful reminders to employees that the referral program exists? 

The more your leadership is involved the higher the chances your employees will take referring candidates more seriously and the more widespread your referral efforts will be. 

Refine Your Company Culture

Though this might not be something you automatically think about when you’re brainstorming ways to keep your referral program running long-term, going out of your way to first refine your company culture can be a big step towards eventually managing a more successful referral process. 

Improving and defining your company culture can help you find hires that are better cultural fits long-term—which also plays into higher employee retention rates. Not only that, but you’ll also need to spend less time on the onboarding of new hires. 

Overall, this speaks to the interconnectedness of how you run your business and how much of an impact one thing can have on the other. A referral program alone won’t save your business from hiring underperforming employees if other key parts of the company aren’t actively being looked after and fine-tuned for growth. Ask yourself, what’s the current state of my company’s culture? How is this affecting the results of our referral efforts? 

Gather Feedback

Going back to employee incentives, how will you know what actually motivates employees if you don’t ask them? Taking the time to gather employee feedback can be an invaluable part of your overall process.

While it’s easy to assume that you already know what drives an incentivized program, gathering feedback can often tell you otherwise. Without a doubt, candid employee feedback on your referral program can be one of the best ways to make improvements and see actual results. 

Consider setting up an employee feedback process. Make it anonymous if you think that’ll work better. Once employees have a way to share their opinions about what they want and what really drives them to share referrals whether through an online logging system or otherwise, you’ll have rich data from which to pull from and course-correct as you go. 

Next Steps

A successful employee referral program is only one piece of the puzzle as far as running a successful business goes. There’s tons more to learn and navigate. It’s why we like to nerd out and create guides on things like the best performance management software.

From there, you’ll definitely want to check out our complete guide to the best employee monitoring tools to ensure you’re optimizing your projects and work processes.  

Are you looking for employee onboarding guidance? Our guide on the best onboarding software can help you choose a tool that’ll optimize your approach to onboarding new employees. If you liked this guide, make sure to bookmark it for future reference. 


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