Creating an effective employee referral program
If you want your talent acquisition efforts to net big results, you’ll need to employ multiple tactics year-round, even when you don’t have any specific staffing needs. One of these tactics is the use of an employee referral program, which is often presented as a perk, but can also save your company time and money when recruiting.
The idea behind these programs is that your best employees may have similarly qualified friends, former colleagues, and other connections. Employee referrals resulted in more than 30 percent of all hires and 45 percent of internal hires in 2016, according to a report by talent management software company SilkRoad that analyzed data from 14 million applications and 329,000 hires.
We’ll take a look at best practices for creating an employee referral program (or ERP) at your company, including best practices for managing it and ways to structure the referral bonus.
Planning an employee referral program
When you’re planning an ERP, the first thing you want to do is determine your existing hiring needs and take stock of your human resources. The following questions will help you make these determinations from the standpoint of staffing needs, employee motivation, and company culture:
- What types of positions do you need to fill?
- Are some positions significantly more difficult to fill than others?
- What do your employees like the most about your company and the work they do?
- What motivates your employees the most?
- Describe your company culture; is it traditional, progressive, formal, or casual?
Set goals and allocate resources
In order to get the most out of your employee referral program, it’s crucial that you set specific, measurable, and timed goals. For instance, you may want to bring in a certain percentage of more qualified job applicants, increase the total number of applicants by a certain factor, or reduce your hiring cost by a certain percentage within a six-month period. If you do this, you’ll be able to track its success and make any necessary adjustments.
Once you’ve done the prep work, you’ll want to determine the staff, time, and monetary resources needed to pursue those goals. It’s a good idea to have a main point person to lead your ERP, who can then delegate to others as needed. Be careful not to take your workers’ attention off their day-to-day tasks too much, and always make sure your targeted budget has been cleared before you proceed (it helps to explain it in terms of return on investment).
Keep the design of your ERP simple
Don’t overcomplicate it. Ensure that your ERP is simple to use for your employees and recruiting team. One way to accomplish this is by using HR software that automates the process. For instance, some programs have email templates with social media links that your employees can share whenever there’s a staffing need. When one of their connections applies for the job, the program tracks that a given employee referred that person.
You’ll also want to draft a few rules for employees, such as what happens when more than one employee refers the same person or how long a new hire must stay in the position in order to receive an award.
Choosing awards for your employee referral program
Most companies offer cash incentives for referrals, typically $1,000 and up. Ideally, though, you want to figure out what actually motivates your employees. Maybe they’d prefer a few extra vacation days, or perhaps one of your company’s products (if applicable, of course). Other ideas for prizes include the following:
- Tickets to sporting events or concerts
- Money toward their favorite charity
- Gift cards
- Health club membership
Monster can help with all of your recruiting, hiring, and management needs
Using an employee referral program is an effective talent acquisition strategy that also boosts employee morale. But finding the right people typically requires multiple strategies. That’s where Monster has you covered. Sign up for Monster Hiring Solutions, our free e-newsletter, which delivers tips on recruiting, hiring, and management right to your inbox.