How to launch your employee referral program the right way

By Miriam Groom

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When it comes to recruiting new employees, companies are lucky enough to be able to choose from a number of different resources and practices to get the job done. From posting on career sites to hiring recruitment agencies, there are many different tactics that can yield great results. Companies can – and should – use a particularly key resource when looking to grow their team: their existing employees.

Photo by Tim Gouw on Unsplash

Employee referral programs – offering current employees rewards if they refer candidates that get hired – are effective for a number of reasons. Firstly, they’re economical, as these plans don’t come with any upfront costs save for some strategizing. Secondly, the referred candidates already have knowledge and a keen interest to join the company based on their relationship to the employee that referred them. Finally, implementing an employee referral program gets the existing staff more involved with company culture, and gives them a sense of empowerment.

While getting your team involved in your recruitment strategy is a generally straightforward endeavour, it takes some planning. Here are some steps to introducing an employee referral program that works:

  1. Determine your goals 

Many case studies have proved that referral programs are much cheaper than running ads on career sites, hosting events or hiring a recruitment agency. It’s easy to see why it has an attractive ROI – return on investment – when the only investment is planning, and the only cost is the reward for the referrer (expenses that are easily written off in various ways – more on that later).

To begin, identify all of the positions that need to be filled, and get them posted to your website careers page and to your human resources system (see point #3). Next, set some goals that can be measured to determine the success of your referral program. For instance, you might want your program to generate a certain number of leads over a period of time that results in a certain percentage of hires. It’s important to have some objectives as they can help you tweak the program in the future.

  1. Establish the incentive

After you’ve established your hiring needs and determined some hard objectives, decide what the bonus will be if an employee refers a candidate that gets hired. Keep in mind that employees will participate in a referral program in order to help their friends get hired, and to earn the reward – simply doing a favor for the company probably isn’t their prime motivation. Knowing this, the incentive must be great enough for an employee to go out of their way, but mustn’t be too costly for the company. Typically, employee referral bonuses can come in the form of cash – often between $250 and $500 – but each company is different and there isn’t necessarily an industry standard.

Some examples of non-cash incentives:

-Gift cards (particularly for brands that are already partnered with your company. For example, Apple products).

-Charitable donations in the referrer’s name.

-A free flight to a location where your company has an office.

Options like these are less costly for a company compared to cash, and can be just as attractive for employees.

  1. Automate the process

Without the help of automation software, your referral program might simply consist of employees handing in resumés to human resources – not particularly easy to keep track of. Both your HR team and employees need to be able to use the program to their benefit, and to track its success.

Automated employee referral solutions track submitted referrals, help keep the pre-screening and hiring process streamlined, and also track who referred the candidate, and so forth. They save time and provide valuable data. There are lots of popular HR softwares that come with a built-in referral solution. If your system doesn’t have a referral function, you may be able to have one added to your existing software. 

If there’s one thing to keep in mind when designing your referral program it should be ease of use. If there are too many steps to refer a candidate, employees will be far less inclined to participate.

  1. Communicate the program using various mediums.

Just mentioning a referral program and letting employees discover the rules online isn’t enough to get the message across or to generate any kind of excitement. Use printed materials and an email campaign to explain the rules, and consider holding meetings. For example, the head of each department can let their team know about vacancies in their department and the kind of candidates they’re looking for. Getting the group together and explaining how they can help shape the future of the team is more impactful than sending an email alone.

  1. Share the program with new employees during onboarding.

If you provide new employees with a welcoming package during their onboarding process (recommended) include detailed information about the referral program. Not only will you have one more person aware of your hiring needs, but the new employee will feel more included and valued by the company.

  1. Keep reminding employees regularly.

Employees might get excited at the prospect of referring the next superstar recruit, but over time, they might forget about the program. Periodically (quarterly or semi-annually, for example) remind employees about the program and the incentives, and consider changing the incentives to make it more interesting.

  1. Make it easy for employees to share job openings with their networks.

It’s one thing to encourage your employees to recruit, it’s another to give them an easy way to do it. Make sure that the job posting on your website is shareable; with one click, your employees should be able to share it across their social media networks. Your automating software might also have functions that makes the job posting easy to share.

  1. Publicly recognize the all-star “recruiters”

Occasionally let everyone know who has been doing a great job of referring good quality candidates. For example, during an annual company-wide meeting, identify the employees who have recruited several new employees, and the bonuses they earned from it. It allows others to see that it’s possible to benefit from the program.

To conclude, turning your employees into recruiters is a proven hiring approach, although it certainly shouldn't be the only part of an overall recruitment plan. Ultimately, a hiring strategy should use a variety of approaches, with referral programs being a part of it.


Contributed by Miriam Groom, VP of Sales and Marketing at Groom and Associates, a Canadian recruitment agency specialized in headhunting and HR consulting.

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