How to create an employee referral program

How much time and money goes into your recruiting efforts? If your recruiter is carrying the full responsibility of finding new talent, you’re limiting your resources to the amount of time the recruiter has each day. 

Instead of leaving the burden solely on one person, build a team of recruiters within your company. An employee referral program will encourage and empower employees to help the hiring department connect with potential candidates.

This recruiting strategy offers existing employees rewards for referring qualified candidates for open jobs within the company. Organizing a structured employee referral program can give you a stream of talent to fill open positions.

Employee referral program: More effective than traditional marketing

Employee referrals can be the most valuable strategy in your recruiting toolbox.

  • Retention rate. Referred candidates tend to stay at their jobs longer than hires from other sources. Hiring referred candidates also has a positive impact on overall retention within the company.
  • Time to hire. A referral program can cut days off the hiring process, because recruiters can eliminate extra screening steps.
  • Recruiting expenses. The cost of an employee referral reward is often much cheaper than the money spent on traditional recruiting strategies. 
  • Company culture. Potential candidates have already heard about the company from their friends. As a result, they will start the job with clear expectations about company culture.

Tips for creating a good employee referral program

Where should you start when you want to implement a new employee referral program? Here’s a six-step process you can follow to develop the perfect program.

  1. Keep it simple. Apply the K.I.S.S. principle — keep it simple, stupid. Employees are already juggling many responsibilities. If they need to do something extra, like telling their friend to apply for an open job, it has to be easy for them to do. Create referral rewards and program rules that are clear and easy to understand.
  2. Improve the application experience. Make sure the application process is user-friendly, with a good system to track referrals. A basic form can be an effective way to streamline this process. Check out the JotForm employee referral template to easily collect referrals online.
  3. Maintain clear expectations. Not only do you need to keep employees informed about potential rewards for referrals, but you also need to be clear in sharing job requirements. If you send messages asking for employee referrals, then include links to job descriptions and information about the position. 
  4. Update employees on hiring status. If an employee has gone through the effort of referring a friend, they will expect updates on the hiring process. Referring someone and never hearing back from the recruiting team will make the person less motivated to refer other candidates in the future.
  5. Reward employees for referrals. Sometimes, working with a friend is enough incentive for employees to encourage people to apply for open positions. But most employees want to be rewarded for their efforts. Build monetary rewards into your employee referral program, and look for ways to publicly recognize referrers. You should clearly specify details in the program guidelines to ensure consistency in rewards. The goal is to appreciate and acknowledge employee’s efforts.
  6. Offer enticing rewards. Cash is king, but don’t underestimate the effectiveness of non-cash incentives. You can motivate employees with gift vouchers, time off, or event tickets. Consider using a tiered system that offers higher rewards for positions that are harder to fill.

Employee referrals offer an effective solution for sourcing candidates and connecting your recruiters with top talent. If your company doesn’t have a good employee referral program in place, you’re missing out on an opportunity to connect with potential candidates.

An example to employee referral form templates

The goal is to reduce the burden on your recruiters by building a recruiting mindset among current employees. Remember that your employee referral program is only as effective as your implementation. Creating the right program is just the first step. Once your employee referral program is in place, it’s important to be consistent with the promised rewards.

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