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How to Set Up an Employee Referral Program

You want to beef up your staff and hire some top-notch new employees, so you post a job ad on one of the multitude of job sites out there. Then you wait for the onslaught of strangers’ resumes to crowd your inbox and eat up your precious time as you sort through the stack of candidates, most of them unqualified for the job at hand.

If you have a feeling that there has to be a better way, you are right. Before you post any ads, look to your current employees for advice. Seek their input first. After all, who better than your employees knows what it takes to fit into the culture of your company? Your employees know what qualities, skills and knowledge are required to work for you and perform the duties of the job. So tap into that knowhow by creating a formal employee referral program.

An employee referral program, which rewards employees for referring job candidates to open positions, can be tremendously beneficial for your business if you make the referral worth your employees’ time. Use the following tips to create and implement a successful employee referral program.

Establish the Rules of Your Program

Before you announce your employee referral program, have all the details sorted out, such as the reward system it will use and the criteria for the each open position (e.g. a job description). Remember to establish guidelines for the program. For example, you may decide to only accept referrals for qualified candidates, or candidates must accept the job before you reward employees. Laying out all the ground rules prevents misunderstandings and confusion down the road. It will also help prevent people from abusing the program.

Emphasize the Value to the Team

Rewards are great, and employees deserve something extra for going above and beyond the call of duty. That said, always remind employees that the reason you have a referral program is to hire exceptional employees that will make the team more productive, innovative and successful. Explain that any person you hire will affect employees each and every day, so they must only recommend those people that they believe in, trust and will vouch for.

Provide Instant Gratification

In most employee referral programs, it takes months before an employee receives a reward for recommending a new hire. While it’s understandable that you would want to wait and confirm that the new hire is actually a good choice before you pay employees, people naturally want and expect immediate recognition for their efforts. When employees submit names or resumes for the job, reward them with something small, such as a $10 gas card or a set of movie tickets. Your employees will feel recognized for doing the extra work, and they’ll be more engaged in the process. Just remember to limit the number of rewards one can collect, as you do not want employees to abuse the program.

Encourage Employees to Use Social Media

Chances are your employees are connected to at least one social mediaaccount. Grant them permission to share the job opening on those accounts and to encourage colleagues within their networks to also share the job with their contacts. Giving your employees a copy of the job description, or writing a brief job ad for them to share, will simplify the process.

Many software companies and job sites have programs that can simplify and facilitate your referral program. One of the most useful recruiting tools isLinkedIn. Not only should your employees utilize their LinkedIn network for referrals, but LinkedIn’s Recruiter service can also help you implement and manage a referral program from a simple dashboard. Jobvite similarly has a feature called “Jobvite Refer,” which facilitates a referral program. SaaScompanies like GoodJob and Zao can also help implement a referral program driven through social media.

Prioritize Referral Providers

If an employee has a history of referring outstanding candidates, place their referrals at the top of the stack. For those employees who time and again have referred candidates that don’t meet the requirements of the job, move their referrals to the bottom of the stack. This practice encourages people to vet job candidates and recommend the cream of the crop, rather than having employees refer anyone simply to reap the benefits of the program.

Create Referral Packets

A referral packet should include a copy of the job description, a summary of thebenefits of working with your organization and other interesting material that will attract top candidates. For highly visible employees, such as those in a sales capacity, or for those employees who will attend industry events and trade shows, create an information packet they can freely share with people they think will be a good fit for the organization.

Go Beyond Employees

Don’t exclude managers or your HR staff from referring employees. They are well-connected and could refer outstanding candidates. In addition, expand your reach by opening your program up to vendors, partners, investors and other people with whom you have a business affiliation and you trust.

Make Rewards Meaningful

How you reward employees is highly contingent on what you can afford and the size of your current staff. However, here are some options, sorted from least to most expensive, that will make employees excited about contributing to your referral program:

  • Extra paid time off. Employees want time off, and it is a great way to reward them without costing you anything extra. For example, you could reward one day to the referrer if the candidate is called in for an interview, two days for a candidate who receives an offer, and a week for a candidate who accepts a position.
  • Lunch with leaders. Your top-tier employees are typically the ones who are most likely to provide top-notch referrals. That caliber of employee covets opportunities to connect with upper management. If your business is small, employees interacting with you may be the norm, but if not, connect them with the top brass, whether that is you, senior managers, investors or partners.
  • Reward employees with your products. Free products or services that have some monetary value, such as TVs, stereos, tech gadgets, etc., can be very appealing to employees.
  • Prepay the tax on the bonus. Employees keep the entire sum of the bonusbecause you pay the tax on the check. That small tweak can make the perceived value of even smaller bonuses seem much greater.
  • Pay in increments. Take the burden off of providing a large bonus all at once by adding it to an employee’s salary and dividing it over 12 months. Or pay out a percentage each month, increasing the rate for each month the new employee stays with your company. You likely will want to cap the payout at one year.

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