employee referral program

An employee referral program is a great source of fresh new talent for your business. A 2017 study found that more than 30% of new hires came from employee referrals. Many companies have established programs that reward employees who make a referral leading to a successful hire. 
The best referral programs can turn employees into ambassadors for their company. They act as an extension of their companies’ recruitment and talent sourcing functions, making it easier for their organizations who hire the best people.
However, a referral program can be run badly. At worst, a badly run employee referral program can waste the time and energy of recruiters, hiring managers, employees, and applicants. 
If your employee referral program isn’t producing the desired results, you might need to take some steps to optimize it. Here are five things you could do to transform your program into one that attracts top talent and rewards the people who bring that talent into your organization.

1. Educate your employees

Before you launch an employee referral program, you need to educate your employees about it. Before the program begins, everyone in your organization should understand how to refer a candidate and determine whether someone is worth referring.
Create a simple and streamlined referral process and run some training for your whole team. When your recruitment process is going through a transformation, your employees should be kept updated. In the future, including the referral process in your new hire onboarding program. This allows you to embed knowledge of the program at all levels and make the most of new hires’ enthusiasm and positive energy.
Employees also need to understand how to determine whether a referral is a good fit. You should provide training on how to interpret job descriptions, analyze a resume, and decide whether a person will thrive in the company culture. 
Provide training on your referral program to employees at all levels. Both newer employees and those who have been with the organization for a long time have something to bring to the table. But just because someone has worked for you for many years, do not assume they understand what makes a great hire. Likewise, do not assume a newer employee cannot make a great referral. 

2. Choose the right software

As you hire for more roles, you’ll need a simple way to keep track of applications. Insisting on manual tracking methods could result in promising prospects falling through the cracks. 
Automating the referral process will ensure that every application is seen and given a fair chance. It also means your employees will be more inclined to keep submitting suitable referrals. You can automate every step of the process, from referral to hiring and giving your employee their referral bonus. 
Examples of suitable software include Smart Recruiters, Taleo, and Brassring. Your employee referral program software should meet these three criteria:

  • ATS integration. Your referral automation platform should be able to move referrals into the hiring funnel quickly and easily. 
  • Hiring funnel visibility. Your employees will want to see where their referrals are in the hiring funnel. The solution you choose should offer that sort of visibility. However, ensure you respect candidates’ privacy, too.
  • Ease of use. Your solution should have a simple and intuitive user interface that your employees can easily learn how to use. 

Choosing the right software solution for your referral program is vital in ensuring your employees are able to submit and track their referrals quickly and easily. If you make it simple for them to do, they’re more likely to send great referrals your way. 

3. Encourage the use of social networks for talent sourcing

One study showed that 78% of recruiters say they found their best candidates through referrals. However, social and professional networks are not far behind. 56% of recruiters said that they had also found great candidates on LinkedIn.
LinkedIn is a fantastic recruiting tool, especially thanks to its useful integrations with applicant tracking systems and the EasyApply function. Facebook Jobs is another platform that more and more job seekers are using:
Many referral platforms have Facebook integration built-in. If you implement social media into your employee referral tool program, you’ll be able to expand your reach beyond your workers’ immediate friends and family networks. For example, your employees could share job descriptions within their industry, alumni, and interest groups, allowing them to cast a wider net to help you bring in great candidates. 

4. Set up an incentive structure that rewards quality, not quantity

Most employee referral programs offer rewards to employees who submit a referral that leads to a successful hire. Cash rewards are most common, but many companies also offer rewards such as gift cards and additional time off. 
Offering desirable rewards has the obvious effect of increasing the number of referrals coming into the company. As a result, hiring managers can find qualified candidates more quickly and efficiently. 
However, your referral program must reward quality over quantity. If you offer incentives based purely on the number of referrals an employee makes, some will take advantage of the system and begin to submit candidates without any regard for the referral’s qualifications or suitability. The last thing you want is for your HR team to end up sorting through a pile of irrelevant CVs to weed out those who are not qualified for the position. 
By rewarding employees whose referred candidates are hired, you encourage them to make quality referrals. If you wish, you could also reward those whose referrals are not ultimately hired but make it to the final round of interviews. 

5. Measure and make adjustments to your program

Your employee referral program might not run perfectly as soon as you launch it. Determine how much time you want to invest in setting up the program. Use appropriate scheduling software for timekeeping, and track the outcome of your efforts. There is likely to be a learning curve on your employees and your recruitment and HR teams. Stick with it, though – the rewards will be worth it. 
You’ll need to make adjustments to your program as needs and circumstances change. Here are some of the times when you’ll need to revisit your program and make changes: 

  • Changes in the nature of the open roles. Your hiring needs may change as your business needs do. The referral structure could change accordingly to reflect the demands and pay-grade of the open positions.
  • Operating budgets: If you have to make budget cuts due to financial losses, you might need to cut back on the amount you offer in incentives (or tighten the rules around receiving them). On the other hand, if you have a great year and profits are booming, you could increase incentives to boost employee morale.
  • Employee knowledge levels: Your employees might know that there is a referral program, but not how to use it or precisely how it works. Undertaking some process analysis will help you identify knowledge gaps and ensure your employees feel empowered to make use of the program. 
  • Working environment: If you’ve moved to remote working in the last few months, your hiring needs and recruitment process have probably also changed. Shifting to a cloud-based solution can ensure that the referral program keeps running smoothly whether or not your team is physically in the office. 

The key to a good employee referral program is continuous improvement. Listening to employee and candidate feedback and performing predictive analytics on recruitment funnel data will allow you to make adjustments and build a program that yields high-quality candidates.


An employee referral program that focuses on skills matching and culture fit takes time and resources to build. Optimizing the program is also a continuous process that requires patience, trial and error, and ongoing investment. You’ll need to train your employees, ensure you have the right tools and software in place, and consistently monitor the program to make sure it is still working as intended. 
However, it is worth putting in the effort to optimize your employee referral program as the potential return on investment is high. Employee referrals often lead to highly qualified candidates who stay in your organization longer and grow into leadership positions. Your employees’ knowledge of your corporate culture and the required skills to excel at your company are great assets to build a referral program that makes the most of them. 
Wherever you are in your referral program journey, we hope that these steps will help you transform your program into an integral part of your people management and recruitment process.
Here’s to making your next great hire!

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