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How to Create a Great Employee Referral Program + Examples

Referred candidates serve as the top source of all hires so it’s no coincidence that creating a great employee referral program can be key to finding quality candidates.

A strong employee referral program can reduce time to hire, increase retention, improve the quality of hires, and can help you reach passive candidates. Referred candidates tend to be good culture fits for the company since many referrals have similar interests with their referrer.

We put together some employee referral program ideas to help you try to increase your number of referrals. While not all of these strategies may work for you, the key to any great employee referral program is to tailor it to the needs of your employees.

Share Jobs with Your Employees

This might be obvious but many employers don’t have a consistent way to share open positions with employees. Anytime you have open positions you should be sure to communicate them to employees. Share job descriptions and any other relevant information so your employees can refer qualified candidates. This can also help employees share open positions within their network and on social media.

For small businesses, this could be sending out an email or telling employees in person. For bigger businesses, consider reviewing your referral process with new hires so they know where and how to refer employees.

Incentivize Referrals After the Hire is Made

Some employee referral programs tend to fail because there is an incentive offered when someone is referred but before they are hired. It’s not a bad thing to offer a referral bonus. If you offer it before a hire is made, however, you risk employees referring people just to receive an incentive. Incentives can be monetary rewards or experiential rewards (like gift cards or trips).

Maybe one of your employees really likes to golf and would enjoy a playing a round at a nearby club. Maybe one of your employees really likes Italian food and would love to check out that new Italian place that opened up down the street. Tailoring an incentive to an employee can make the reward all the sweeter.

Consider using an applicant tracking system to update referrers.

Send Hiring Process Updates to Referrer

After an employee offers a referral, the recruiting team should offer status updates of the referral during the hiring process. Most likely, the referrer is someone who is close to the referral. They will be personally invested in how their referral is doing and will want to know where their referral is in the hiring process.

Hiring managers should also prioritize referrals, especially those from successful referrers. Doing this makes the referrer feel like their opinion matters and creates a great candidate experience for the referral. If you don’t hire a referral, be sure to thank referrers so they feel their effort was appreciated. It can get them to continue referring employees.

Create Referral Tiers

Hotels have different tiers for customers based on stays, airlines have different tiers based on flights. So why can’t your employee referral program have tiers based on the number of referrals? Referral tiers are a great way to increase employee engagement among successful referrers.

Just like you might see for hotels and airlines, you can offer successful referrers rewards based on the number of referrals. This is a great way to increase employee engagement and improve referral rates, especially among successful referrers.

An example of this might be having rewards for 1 referral, 3 referrals, 5 referrals, and 8 referrals. The more referrals hired, the bigger the prize! This works especially well for entry-level, hourly positions where applicants may not need as many skills to become qualified candidates.

Make Your Referral Bonus a Charitable Donation

Worried that monetary rewards might muddy up your referral pool? Try offering a donation to a charity or fundraiser of the employee’s choice for successful referrals. Making your referral bonus a charitable donation can refocus your referral program to referring for a good fit rather than money.


Reward the Referral and the Referrer

Everybody loves free! Once a referral is hired, try to offer a shared experience for the referral and the referrer. This is as easy as paying for lunch for the referrer and the referral. When you do this, the referrer feels the good of a reward and the referral feels more comfortable starting their new job.

We have talked about the importance of having a strong onboarding program for new hires. This is just another way you can set up an employee for success.

Have a Referral Spot in Your Application (and use software to track it!)

Out of all of the tips we have to offer, this is the best, and easiest, way to improve your referral rate. Without a spot in your application for referrals to submit a referrer, it is difficult to track the success of your referral process.

Using an applicant tracking system (ATS) that can track referrals is equally as important as having a dedicated spot to submit a referrer. An ATS can keep track of all referrals, show referrers where their referral is in the hiring process, and create job links to share on social media.

This can make it easy to send updates and find your most successful referrers.

Final Thoughts

Strong employee referral programs are becoming increasingly important, especially as unemployment stays low. Here are some facts as to why you need to consider improving your referral rate:

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