How To Create An Employee Referral Program That Works
Myth: You need to deploy recruitment methods only when there is a position available.
Truth: You must remain on the lookout for great talent continuously, even when there is no open position.
Now, it may seem like a monumental task to run a continuous hiring drive but the simplest way to go about identifying and recruiting great talent is to create a simple and effective employee referral program. Your employees are sure to have family, friends and acquaintances who are equally qualified and would make a great addition to your team and given the right incentive, they would be happy to share this information with you.
Importance Of An Employee Referral Program
There is a reason most organisations, especially in the tech industry, have some kind of employee referral program in place. It’s because they are one of the best sources to find and hire the right talent.
Setting up a successful employee referral program can be daunting but if done right, it can be very effective and build a strong and efficient team. There are many benefits to building a referral program:
- Hiring Candidates Who Fit Better
Referred candidates already know quite a bit about your company and its culture through the employee who referred them. They understand the culture and values that the organisation stands for so it’s easier for them to fit in and embrace the culture.
- Fast Hiring
Hiring a new employee can sometimes be a long-drawn process because it isn’t easy to find the right fit. However, research shows that the average hiring time through employee referrals is 29 days as compared to the average of 55 days it takes to hire through a job portal.
- Better Retention Rate
If a new employee is referred by an existing one, it means they are interested in working with the organisation. This leads to a higher retention rate, especially past the first-year mark. The retention rate of employees hired through a job portal stands at 33% whereas, the rate of employee retention for candidates hired through referrals is at a whopping 46%.
Moreover, 45% of people employed through referrals stay with the company for more than four years which saves a lot of time, effort and money for the organisation.
- Reaching Passive Candidates
Some of the best talent in the industry is passive which means they’re not actively looking for a change but are open to it. You can reach these passive candidates through your existing employees because chances are, they run in the same circles.
- Higher Productivity
Employees that come in through a referral, have added motivation to prove themselves which is why they go the extra mile to get things done, leading to higher productivity. Research shows that employees hired through referrals generate approximately 25% more profit than those hired through other sources.
With all those evident benefits of an employee referral program, not having one for your organisation seems like a disservice.
How To Build An Effective Employee Referral Program?
An employee referral program only works if the current employees are motivated to refer candidates. You can follow a step-by-step process to create one that is easy and effective.
- Create An Easy Referral Process
The only way to get your employees to participate in an employee referral program is to keep it simple for them. If they have to manoeuvre through a long, complex process, chances are, they won’t be interested. The referral process and incentives that come with it need to be straightforward so it doesn’t feel like extra work. Some of the ways to keep it simple are:
- Using online employee referral tools
- Use online forms
- Create an email template that can be used to pass on the referral
Equipping employees with company resources like an introduction video, career page, employee testimonials and a thorough job description for the open role would go a long way in simplifying the referral process.
- Set Goals For The Program
Obviously, the ultimate goal of a successful referral program is to get more qualified candidates to apply for the open positions but identifying specific and measurable goals will go a long way in the success of your referral program. It is also ideal that the goal you set is time specific. In short, make your goal a SMART (Specific, Measurable, Achievable, Relevant & Time-bound) one.
“Get 20% more qualified candidates for open positions in 3 weeks” is an example of a SMART goal for a referral program.
- Incentivise Well
“What’s in it for me?”
That’s the question your employees will ask before participating in an employee referral program. And it’s a valid question. Why should they invest time and effort in referring candidates? This is where incentives come into the picture. From monetary rewards to extra paid leave, you can offer a whole variety of incentives to the employees who share referrals that get hired.
Take Amazon for example. The company offers anywhere between $125 – $1000 for a referral that is hired, depending on the position and tier they’re employed at. That is a serious benefit to the employee who is referring the candidate and a great way to motivate others to participate in the referral program.
- Announce And Instruct
How you announce the referral program can make or break your referral program. Be sure to drive the importance of the incentive structure and highlight the rewards.
It is also important to give clear instructions about how to give a referral, the process and the information that needs to be shared. The simplest way to go about this is to create a webpage on your company’s internal website or offer instructions through a downloadable PDF. Make sure this information is easily accessible to your employees and keep it at the fore by posting about it in common areas of the office.
- Recognising Employees For Sharing Credible Referrals
Recognition for employees who share referrals that get hired is a great motivating factor. Share their profile in the company newsletter or post about them on the company’s social media channels or any other form of internal communication.
The reality is, everyone wants to see their name highlighted, and this is a great way to recognise the contribution of your employees towards the improvement of the organisation.
- Integration Of Referrals Into Company Culture
A referral program should not seem like added work for your employees. It needs to become a part of the company culture. You can include a discussion about the referral program during the onboarding or create a dialogue about it during retreats to make the program an integral part of the organisation. It is also a great way to engage employees.
Unless you track the results, you won’t know if the referral program is working or not. Some of the metrics that need to be tracked include:
- Number of referrals received
- Number of referrals that were hired
- Number of positions that were filled through referrals
- How long have referred candidates stayed with the organisation
- Employee response toward the referral program
There’s a lot that goes into creating an effective employee referral program. A successful one will start to show results in a few months as the referred candidates become a part of your workforce and drive positive results for the company.