What is an employee referral program?
Human Resources professionals know the benefits of employee referral programs. Streamlining the hiring process can help you save time and money, and if done correctly, it can also lead to far higher-quality employees. The average time to hire a candidate through an employee referral is 29 days, according to LinkedIn Talent Solutions. In addition, employee referral programs can help you keep more of your employees and lower the cost of hiring new ones.
This article will define employee referral programs and provide HR with the tools they need to create a successful referral program.
An employee referral program is an HR strategy that gets workers to suggest qualified people they know who would be good for open jobs at the company.
Employees participate in company referral programs and earn rewards when the positions they recommended are filled. The longer the referred employee stays with the company, the greater the award will be. Employees are more likely to suggest qualified individuals through this approach than they would be to suggest friends or relatives who are also seeking employment.
Internal referrals allow current employees to suggest current coworkers for open positions within the organization. Another option is for them to suggest qualified individuals who are not already working for the company but would be an excellent match for the role.
What employee referral programs can do for businesses
The advantages of establishing a referral program for employees are numerous. Forbes reports that compared to non-referrals, referrals bring in 70% more qualified candidates. The National Bureau of Economic Research found that these programs can cut employee turnover by 15%, speed up the hiring process, and save money on recruitment agencies.
Let’s take a closer look at the advantages of employee referrals:
- Save time and effort during the hiring process by connecting with qualified applicants directly instead of sifting through piles of applications.
- These systems guarantee a greater quality of applications by encouraging employees to suggest people they think would be great in the position, which increases access to qualified candidates.
- Less spending on hiring: Cut out the middleman and save money by not using recruitment firms and posting jobs on job boards for as long as necessary.
- Better staff stability is a result of higher employee retention rates, as research shows that referred workers remain with a company for longer.
- A better cultural fit: Workers have a better grasp of the kinds of people who might fit in with the company’s ethos and are more inclined to suggest applicants they like.
- Employee referral programs encourage participation and enthusiasm among staff members, which in turn creates a more pleasant workplace.
Three types of employee referral programs
Companies often use the following referral programs:
- Booking.com
Booking.com wanted more people who could speak English and Portuguese. Human Resources quadrupled the referral bonus and planned entertaining lunches with Portuguese food and a notice asking for Portuguese-speaking referrals to boost applicant referrals. A dramatic increase in referrals from Portuguese speakers followed. The corporation also began to rely heavily on referrals as a means of acquiring new employees.
- Intel
The key to every successful business is a varied workforce. Tech behemoth Intel provides a doubling of the employee referral incentive to promote diversity and inclusion in the company’s hiring practices. This means that workers can earn a monetary bonus for each successful referral, with the amount doubled if the suggested individual is a woman or a member of a minority group.
- Salesforce
Salesforce takes a unique approach to hiring, in contrast to the typical formal employee referral systems that require the submission of forms. They provide happy hours so employees may socialize with recruiters in a more relaxed atmosphere, and prospective prospects can also attend. Nobody has ever had so much fun when searching for the perfect candidate for a job.
A guide to creating and launching a referral program for your staff
If you want your employee referral program to be successful, you should do the following:
Step 1: Establish the objectives of the program
Make your goals for the program crystal clear. Is the goal to gather recommendations for certain jobs or a range of roles? The program’s vision can be more effectively communicated when its end goal is defined.
Step 2: Figure out how the program is structured
Programs to encourage employees to recommend one another can take many shapes, from casual get-togethers to formal corporate platforms for submission and tracking. Pick a layout that works best for your business.
Step 3: Develop attractive rewards for staff members
Identifying what would inspire staff to take part in the program is the next step after outlining its structure and goals. Employees might choose from a variety of incentives, such as monetary bonuses, catered meals, additional vacation time, branded merchandise, or even sponsored trips. It’s also worth thinking about a tenure-based compensation plan with different levels.
Step 4: Make the program forms you need.
Make your program a reality by making a specific website, making email templates, setting up meetings, or anything else that’s needed to put your program into action.
Step 5: Establishing a system to reduce bias
Hiring biases may creep into employee recommendation systems without the employers’ knowledge. Make sure everything is fair and unbiased by taking your time to examine everything thoroughly.
Step 6: Acquaint all staff members with the program
For the program to have an impact, it is critical that staff members know about it. Think about using it in your company’s onboarding process or other official announcements.
Step 7: Remind employees about the initiative on a regular basis
Remind staff on a regular basis of the program’s availability and advantages. Come up with innovative approaches to guarantee the consistent and regular dissemination of program information.
Step 8: Determine how to measure the program’s success
It is essential to track the value and development of any project. Find out how you’ll know if the program was successful and where you can make improvements.
How HR should handle hiring people through employee referrals
While there are many benefits to a referral program for employees, there are also some possible downsides. One example is how a lack of diversity in the workplace might emerge from depending only on internal networks. Consequently, HR must keep a close eye on the process and take the initiative to address any issues that may arise.
To help your employee referral program thrive, consider the following:
- Create a detailed policy for the employee referral program: A program is more likely to be successful if it has a clear framework. Consistent results are possible when there are well-defined protocols for both recruiters and referrers to follow.
- Although an employee recommendation program depends on personal ties, using online technologies can simplify the process of hiring. These systems make it easier to communicate with everyone involved and allow for better candidate tracking.
- Employee engagement is key to the program’s success, so make sure you train them on best referral practices. Employees can learn more about the program and the kind of candidates they should suggest to the organization at regular seminars.
- An inclusive and varied workplace is stronger and more creative because of it. Companies that hire a diverse workforce have a 35% better chance of making a profit, studies show. The employee referral program must make diversity and inclusion its top priorities. Intel, for example, increased their referral bonus for underrepresented groups.
- To make sure the program is working, watch the results thoroughly and evaluate them. It is possible to gain useful insights and find improvement opportunities by monitoring the performance and advancement of suggested personnel.
Important things to remember
One of the best ways to get the best candidates for a job is to have an employee referral program. Employers report higher levels of satisfaction with referred individuals in terms of qualifications, length of employment, and cultural fit. The initiatives can also shorten the time and money needed to fill open positions.
Incentives for employees to suggest qualified candidates encourage them to contribute fully to the hiring process. You can have greater faith that candidates possess the skills necessary to succeed in your organization.
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