How to build a successful employee referral program

Employee referrals are the most powerful tool in recruiting. Referred employees have higher retention rates and better engagement. Here’s how to implement your own employee referral program.

Hiring through employee referrals can deliver outstanding results, but some companies don’t see the value of their employee referral program because the program itself is flawed. Creating an employee referral program that delivers value requires a methodical approach, and can be made easier with the right technology.

Here are seven steps for building an employee referral program that delivers strong results:

1. Define the problem

Understanding the problem makes it easier to design the right solution and measure success. Organisations may need a better quality of candidates, a larger pool of candidates, or a better recruitment process, for example.

2. Determine target roles

Identify the business areas with roles that are hard to fill and/or ripe for referrals. Decide whether to target certain groups. This will help when working out how to reward referrals.

3. Reward

There are inherent rewards for employees who successfully refer candidates, but it is also important to offer tangible rewards. To decide what these should be, consider what your competitors are offering, what will appeal to your employees and what will fit the culture of your organisation. Generally there is a tipping point that will make employees sit up and take notice. It may not be linked to financial rewards.

4. Make it simple

Common stumbling blocks in many referral programs are excessive red tape and poor referral mechanisms. By making it as easy as possible for people to understand and participate in the referral program, you are far more likely to generate positive results.

5. Launch it

Communications and change management are critical. Many companies spend a long time on design and invest significantly in the program itself, only to underestimate the communication strategy required. As a guide, it should take just as much time to plan the launch as it does to design the program.

6. Remind

An employee referral program that no one remembers will not generate many candidates. It’s important to remind employees regularly about the program and ask them to think about people they may know in their networks. Reminding employees regularly about jobs and potential referrals can be more effective than increasing the reward amount associated with a referral.

7. Measure

To understand whether your employee referral program is delivering results, it’s important to measure the number of candidates recruited. In the long term, it is useful to measure referred employees’ performance versus the performance of those recruited through traditional means.

Talented workers are exceptionally valuable to organisations. With worsening skills gaps, it has become more important than ever to leverage any advantage when it comes to effective recruitment. The benefits of employee referrals are significant. Companies that can manage a successful employee referral program have the edge over their rivals who recruit using traditional methods.

Sam Hannaway is a customer success manager at REFFIND, a software company that has developed a mobile app to allow employees to communicate with employers.


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