Armand Patella|May 09, 2023

How to Launch a New Employee Referral Program

Ready, Set, Refer - Navigating the Journey to an Effective Employee Referral Program.

Why Referrals Matter

In the realm of recruitment, referred candidates often outshine those from the general public. Research suggests that such candidates tend to be of higher quality, more likely to receive and accept a job offer, stay at the job longer, and perform better​1​. Thus, having a robust Employee Referral Program can significantly streamline your hiring process, reduce turnover, and boost overall productivity.

Mapping Out Your Journey

Before setting out on your journey to launch an employee referral program, it’s crucial to lay out a roadmap that outlines your plan and clarifies your objectives. To do so, follow these steps:

  • Evaluate Your Hiring Processes: Review your previous hiring attempts and identify positions that werechallenging to fill. Consider starting your referral program small by focusing on these roles. This allows you to test your program before scaling it​.

  • Determine the Rewards: Decide what employees receive if they successfully refer a new hire. Mostorganizations provide a monetary reward, but you may also choose other perks, such as additional paid time off or a physical item. Also, establish the requirements for the new hire to meet for the employee to receive the reward​.

  • Assess Your Application Process: Evaluate your hiring program to confirm whether it's user-friendly. It'sessential to use a system that simplifies referring someone or providing referral information. If necessary, consider investing in a new system or introducing an added service that helps manage referrals​.

  • Announce the System: Inform employees about the referral program, including how they can qualify, what theyreceive, and what the process is for referring someone. Ensure everyone knows where to find information about the program and job openings​​.

  • Provide a Job Description: Share job descriptions for the particular positions that you're hiring for.Outlining the specific responsibilities and job requirements is important. It helps ensure everyone understands who may be an ideal candidate for the job to think about who they might refer​​.

  • Communicate with Employees: Update employees about the progress of the person they referred. If a referralisn't progressing in the hiring process, thank the employee who recommended them and encourages them to recommend others in the future. This can help employees feel appreciated even if you didn't choose their referral​​.

  • Recognize Good Referrers: Acknowledge employees who refer someone to the company successfully. Thisreinforces your appreciation for them and reminds other employees about the program​​.

  • Continue Testing Your Program: Modify your referral program to determine what works best. For example, if youhave a high-priority position in a competitive niche to hire for, think about offering a higher bonus. Survey employees about what referral benefits appeal to them the most​

The Building Blocks of an Effective employee referral program

At its core, an effective employee referral program should include the following elements:

  • Incentives or Rewards: Money-based incentives are common and appeal to nearly all employees. However, some companies could offer additional paid time off instead of a cash bonus​​.

  • Advertisement and Communication: Make a formal announcement about the employee referral program to employees as soon as possible. This gives the hiring team access across many different channels as employees have more time to explore their network​.

  • Performance Measurement: Record and analyze metrics related to employee referral program objectives to improve future efforts. This includes the percentage of candidates sourced from each channel, the percentage of new hires sourced through the employee referral program, changes in hiring frequency, and changes in the hiring budget​​.

  • Feedback Generation: Consider gathering both internal and external feedback from current employees and new candidates. This feedback can provide deeper insights and details than data alone, showing the overall performance of the current employee referral program​​.

Final Takeaway

Implementing a well-crafted employee referral program not only helps fill open positions faster but also improves the overall quality of hires. By understanding how referrals work and investing in a thoughtful program, your company can leverage the power of your employees' networks to identify potential candidates that are more likely to stay and thrive within your organization​. Remember, the success of an employee referral program doesn't merely depend on its launch but also on how it's managed and improved over time.

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