Blog - Tips for a Successful Employee Referral Program

Tips for a Successful Employee Referral Program

Employees hired through employee referral programs tend to be better qualified and more well-suited to the employer’s company culture. Internal referrals result in faster hires than other recruiting channels and often come with a lower cost-to-hire. For this and other reasons, referral programs are one of the easiest, most effective ways to recruit top talent.

Every organization should add an employee referral program to its talent management toolkit. But what does it take to create a successful referral program? Read on for the facts about why employee referral programs work so well and tips for generating great referrals from within your own workforce.

Why your business needs an employee referral program

A LinkedIn recruiting survey revealed 48% of talent leaders found their employee referral programs to be a top source of quality hires. And employee referrals have a higher applicant-to-new-hire conversion rate than other candidate sources–about 40% of new hires at companies with referral programs come from employee referrals.

Employee referral programs are not only more successful than other recruitment methods, they also bring the organization greater long term benefits and higher recruiting ROI. Candidates sourced through employee referral are hired 55% faster than those coming in from career websites.This lowers the cost-per-hire, because fewer internal HR resources are being used to complete the hire. Employers with a referral program enjoy higher retention rates. In fact, 47% of employees hired through a referral program stay for more than three years, compared to only 14% hired from job boards.

What the best referral programs have in common

You can easily turn your workforce into your most effective recruiting tool, but first, you have to create a referral program that is easy to understand. The best referral programs include attractive financial incentives for employees and ready-made materials your employees can use to educate their friends and colleagues about your company.

5 tips to build employee referral programs that work

Successful recruiting organizations direct resources and attention to building a successful employee referral program. Here are five tips for designing and delivering a referral program that works:

1. Create an easy-to-use program.
Most companies let all employees participate in the referral program. Make it easy for your employees to identify open jobs and submit a referral. An internal website can make it easy to access the program and also easy for HR to update information about positions they are recruiting.

2. Set clear guidelines and educate your workforce.
Take time to train employees about how the program works and why it is important to the company’s overall success. Set clear guidelines and expectations. Emphasize the values and personality traits that help ensure success and a good cultural fit at your company.

3. Incentivize employee participation.
According to research by HCI, 74% of employers offer referral incentives, with 92% of the incentives being monetary payments after a referred candidate has been hired. However, there are ways to get creative with the incentives in your program. You could experiment with offering experience packages, extra time off, or gift cards. Beyond financial incentives, employees also like to be recognized for making these important contributions to the team.

4. Keep employees invested in the outcome of their referrals.
Whatever incentives you decide to use, try to pay it out across the timeline of hiring and onboarding. For example, you might give a small gift card to the referring employee when a referral submits a resume, while delivering a larger cash incentive after the employee is hired and has worked in the business for several months. This incentivizes referring employees to help new hires succeed in their first weeks on the job. Communicate with candidates and referring employees throughout the process.

5. Measure your referral program’s success and report it.
You’re asking your workforce to invest in helping you win the war for talent. Let them know about the impact the program is making. Measure things like the total number of referrals received, how many resulted in new hires, the rate of employee participation, and comparisons of referred employees vs. other sources of hire when it comes to retention and performance.

Referral programs are an essential tool for talent management

With low unemployment and a shortage of skilled workers, businesses need to employ every effective strategy to win the war for talent. An easy-to-use employee referral program can mobilize a wide network to find talented candidates who fit your office culture. Asure Software can be a strong partner in supporting effective talent management and recruitment strategies.

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