Blog - Tips for a Successful Employee Referral Programme

Tips for a Successful Employee Referral Programme

Employees hired through employee referral programmes 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 programmes are one of the easiest, most effective ways to recruit top talent.

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

Why your business needs an employee referral programme

A LinkedIn recruiting survey revealed 48% of talent leaders found their employee referral programmes 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 programmes come from employee referrals.

Employee referral programmes can deliver 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. It costs UK businesses an average of £11,000 to replace an employee, and 47% of employees hired through a referral programme stay for more than three years, so companies can reduce turnover costs as well.

What the best referral programmes have in common

You can easily turn your workforce into your most effective recruiting tool, but first, you have to create a referral programme that is easy to understand. The best referral programmes 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 programmes that work

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

1. Create an easy-to-use programme.
Most companies let all employees participate in the referral programme. Make it easy for your employees to identify open jobs and submit a referral. An internal website can make it easy to access the programme 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 programme works and why it is important to the company’s overall success. Set clear guidelines and expectations. Emphasise 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 programme. You could experiment with offering experience packages, extra time off, or gift cards. Beyond financial incentives, employees also like to be recognised 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 programme’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 programme 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 programmes 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 programme can mobilise 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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