Benefits of the Employee Referral Program and How to Make it Successful?

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Benefits of the Employee Referral Program
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Employee referral is one of the most productive recruiting strategies in the recent era. It encourages company employees to refer qualified candidates from their contact in return for incentives.


It is proven that when the referred candidates become employees, they come around with the best result for the organization in specific ways like

  1. Better quality candidates
  2. More affordable hires
  3. Stays longer with the company
  4. Makes hiring quicker.


There are numerous employee referral programs measuring specific goals and offering different incentives. Still, in the end, the main aim is to encourage employees to the quickest hiring process.


Benefits of Employee Referral Program

In every recruitment process, an employee referral program is one of the best practical ways of hiring quality candidates. This process allows the employees to provide references to their friends or known resources to join the company. It is most effective for both the employees and the organizations.


The employees can get the opportunity to promote an open position for their friends and family. And as employees are doing the responsibilities of searching for candidates, the organization can skip the extra burden of advertising for candidates on various portals and avoid the primary selection procedures.


The Benefits of employee referral programs are,

Better cultural fit

The company culture vastly improves when every employee gets along with each other. With Referral programs, employees bring in candidates they already trust. It ensures that they become work buddies who can blend with the existing company culture faster.


Besides, hiring referred candidates not only boosts the bond between the referrer and the company but also helps to boost the employee retention rate.


Quick hiring process

Employees act like a bridge between your organization and the referred candidates. They not only know their referred candidates’ expertise but also sincerely are aware of office culture and strategies.


So with the referral hiring program, organizations can easily go through the selection process quickly without facing the usual hassles of the candidate search process.


Moreover, it makes sense that new hires feel intimidated by asking questions about things they’re confused about, which tends to slow down the onboarding process.


It is common for the new hire to feel tense in their new position. But, they can open up more quickly if they have the required details about the company. It leads to saving both time and money for the company.


Employees stay longer

It makes sense that a candidate hired through an employee referral process stays longer than the generic hiring. The existing employee already knows what to expect in the company for particular vacancies. So, they would refer those candidates who already have an idea about the workplace and its culture.


As a result, these candidates will stick around in your organization for an extended time. Eventually, they will refer new candidates, creating a hiring pipeline for future needs.



Lower your cost per hire

You can save money through employee referral as an organization doesn’t have to take care of agency fees, random pre-screened process, advertising, recruiter commission, etc.


Moreover, the existing employees already know their referrals, thereby avoiding the pre-screening process, which means less time while being more cost-effective.


Furthermore, the cost of providing a referral bonus or any other award is much lower than the expenditure on the hiring and onboarding process. So, with your employee referral program, the company gains the dual advantage of cost savings and quality hires.


Better quality recruiting

For the successful employee referral process, existing employees think about their reputations first. They’ll be careful about what to expect from the company and only suggest candidates who are high performers and have good experience in their domain.


So, with this referral hiring program, organizations enjoy a better productivity rate and increased retention rate.


How to make an Employee referral program successful

Firstly, knowing the why, how, and when you hire employees through a successful employee referral program is essential. Though there is no particular way to create a schedule, here are some essential tips that make it easier to get quality candidates for future growth.

  • Select the key component of employee referral programs.
  • Ensure candidate-role compatibility
  • Educate your employees about the programs
  • Make simple but effective strategies
  • Organize events for a quality referral program


Select the key component of employee referral programs

In every business, existing employees refer someone either in informal or formal ways. Sometimes someone asks about the vacancies for his sister or roommates who belong to the same background. Alternatively, the entire employee referral program is undertaken strategically where the existing employees recommend their candidates to HR.


A successful employee referral program has several vital components like

  • A set of policies that defines a formal strategy.
  • A simplified technique to refer candidates directly to HR.
  • Providing rewards or benefits for successful referrals.
  • Spread awareness of the program.


Ensure candidate-role compatibility

The first step of an employee referral program is to get the best referrals from the employees. First, build the ideal candidate persona. Secondly, fix a meeting with the existing employee to explain the whole referral process. The list of things that you want to identify are:

  • The specific designation
  • Years of experience and education
  • Specific expertise and skills
  • The geographical location.


Educate your employees about the programs

To ensure your employee referral program is successful, it is essential to train employees about the rules & regulations, strategies, the candidate persona, prioritizing which position to be filled, and the selection process. You should also inform how they can smoothly refer any individual.


When the employee referral programs run at your organization for a long, it is often essential to host an event to discuss the job description and the desired qualities of the vacant position. You can arrange a meeting with existing employees to provide some quick tips on how they can approach people in their network.


It is often effective to provide some allowance to your employees for sharing the vacancy information over their social media profiles. It provides added visibility for the vacant position.

Also Read: 5 Ways of Countering the Great Resignation

Make simple but effective strategies

Once employees understand the rules, it’s time to finalize the design and strategy of every detailed process for the employee referral programme. You can often be confused by:

  • What is the best method for your company?
  • What are the long-term goals you will meet by introducing this type of recruitment?
  • What will be the ideal outcomes?


One of the finest strategies is to use an employee referral software or mobile app. It is not only less time-consuming with more ideal outcomes but also encourages employees to connect through a mobile app. Integrating the intelligent automation technique gives quality candidates, and your employees enjoy referral rewards or employee referral bonuses.


Some types of employee referral software are,

Employee-to-employee software

It is for running, keeping track of, and managing a campaign to encourage the existing employee to refer quality candidates for future jobs. Most employee referral software only runs employee-to-employee referral campaigns.


Employee-to-customer software

This system helps existing employees run, keep track of, and manage programs that encourage employees to share products and services with peers.


Flexible employee referral software

This software is fully customizable; employees can use this software to refer candidates or share product and service details with peers.


Organize events for a quality referral program

Hosting an event and announcing the referral details to everyone is one of the best options for hiring quality employees for your organization. Moreover, a fun gathering among employee referrals could also enhance team bonding.


In these events, HRs work with employees to assist them in scanning and tackling processes by using networks such as their LinkedIn accounts and other job platforms. Often recruiters offer employees “double referral awards” for searching for some immediate vacancies or higher positions.


Importance of rewarding candidates for quality referral

Employee referral rewards and bonuses encourage employees to connect with quality candidates for their organization. Often, companies gamify the referral process to ensure healthy competition and encourage everyone to participate in it.


Some good employee referral reward ideas are,

  • Give days off or a bonus.
  • Give a small gift to unsuccessful employees for trying harder.
  • Sponsor lunch/ introduction party for the new hire and the referrer.
  • Fund as per the employees’ choice.
  • Plan a holiday or a day tour voucher as a reward.
  • Provide Gift Vouchers or Corporate gift baskets.
  • Certificate of appreciation.


Some encouraging Case Studies of the Employee Referral Program.

  1. Accenture has emotional rewards like employees donating a part of their referral bonus to some charity or community.
  2. The American tech enterprise Intel has a double referral bonus system, in which any employee referring people from underrepresented groups will be awarded double bonuses.
  3. Google has a unique ‘Aided Recall’ option as their employee referral system. Instead of investing in comprehensive and demanding rewards, Google asks their new employee a few tricky questions; like, ‘who’s the best software developer you know in Washington DC?’ or ‘who’s the best marketer you know?’. With these queries, employees think harder and respond with the name of the referrals.
  4. GoDaddy follows the coding format for delivering referral messages to the existing employee. It puts a poster in a coded format, with the following content: ‘If you know of a coder in your network who kicks ass, refer to GoDaddy Recruiting.’ The process is natural, yet the informing strategies encourage the existing coders in the room.


Come to the end

To summarize, when it comes to a traditional hiring process, is time-consuming. For the busy work schedule structure, employee referrals are becoming mandatory for any business.


Maintaining transparency within the referral process is key to a successful outcome. Hence, along with creating an effective employee referral program, you must ensure that it is accessible to all employees.

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