Should you consider an employee referral program?

There are many strategies when it comes to hiring talent that will help move your company forward. One of the most consistently successful strategies, leading to employing the best-quality people, is an employee referral program. Hiring employees based on a current employee's recommendation is an excellent way to find talent. Your employees want to work with other people they respect and who can help them, and the company, do great work. As people who work at the company day-in and day-out, current employees are likely to know the requirements of the open position and how it fits within the rest of the company. Most of the time, a current employee will recommend individuals who have not only the skillset to do a great job, but will fit in well with other employees and exhibit the values and mission of the company.

When you decide to create an employee referral program, or ERP, you should also make sure your employees want to use the program. Your time and investment in setting up an ERP is only effective if it actually attracts quality employee referrals. Here are the top 5 things to keep in mind when creating your employee referral program.

1. Distribute benefits immediately

According to the Wall Street Journal, it now takes an employer an average of 25 working days to fill a vacancy. That's over a month of work! If you make a referral bonus contingent on an employee being hired and working a certain amount of time, such as three or six months, there's no instant gratification for your employees. While they will appreciate seeing the extra money in their paycheck if that's the award you decide you use in your ERP, it's hard for the brain to link the cause to the effect. Instead, award the benefit on the new employee's hire date. There should be no need to institute a waiting period to see if the employee works out. The right screening and hiring process should guard against most employee attrition in the first six months and all but eliminate the need for a probationary period.

2. Engage social media

Many employees who are well-poised to recommend great people have professional networks that span the globe. These days, people also do lots of networking online, especially through Facebook, LinkedIn, and professional organizations and networking groups. Make it easy for your employees to use social media to invite members of their network to apply while automatically making it clear who is referring them.

3. Prioritize employee referrals

Your ERP won't be as successful as it could be if you add employee referrals to the same queue as all other employee applications. If one of your goals in an employee referral program is to recruit more highly qualified individuals who are a great fit for your company culture, you will want to act on those applications right away. Think of an employee referral as giving a step up to that potential candidate.

4. Hold networking events

A breakfast, lunch, or information session where employees are encouraged to bring their prospective referrals can help increase employee participation and allow your recruiting or HR team to meet with candidates and make informal connections before reaching out to schedule interviews. A tangible benefit like catered food, networking, and social engagement can be a fun way to get employees involved, and the event’s presence will help remind other employees of the opportunities that exist when you refer a candidate.

5. Reward outside referrals

Expand your ERP to include non-employees. If you offer a cash bonus, which is one of the most common benefits in employee referral programs, determine if your accounting system can be set up to make outside payments in the same amount. Retirees, former employees, employee spouses, vendors and clients may all have insights into your business and know people who would be a great fit. Let these people know you will pay for the right referral and expand your pool of potential candidates.

With quality employee referrals, it's highly likely you can reduce your recruitment costs and increase employee retention. Employee referrals require no outside advertising, and perhaps less original vetting than cold resume submissions. Aside from feeling appreciated and helpful when they refer someone who ultimately gets hired, your employees will enjoy working with people they know, like, and with whom they can effectively collaborate. Building on social and professional bonds outside your company makes your company stronger, which also creates more productivity and employee satisfaction.