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8 Steps To Create An Effective Employee Referral Program

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Do you know that referred employees are four times more likely to get hired? An effective referral program will help you smoothen the hiring process by saving additional hiring costs and efforts. Companies reap multiple benefits through an employee referral program.

Some key benefits include one of the most sought methods of yielding the best Return on Investment, a drastic reduction in hiring costs, and companies enjoy a higher employee retention rate

Companies must set up well-thought employee referral program strategies to enjoy the benefits. Following are the eight productive measures to make an efficient employee referral program that generates phenomenal results.


1. Identify different ways of incentivizing employees

Your employee referral program should have the right blend of financial and non-financial incentives. For instance, employees are happy with cash awards on successful hires, but they would also enjoy a paid vacation.

Another form of incentive could be fun prizes like headphones. While some employees are happy with the referral bonus, others crave a morale boost. Let’s say an employee referred many individuals. The majority were selected and placed in your company. Here, appreciation given by the CEO for multiple successful referrals is the way to go.

Google agrees with the fact that sometimes experience sells better than monetary incentives. This realization came from initially doubling the $2000 referral bonus. But with experimentation, the company realized the importance of surprising employees. Salesforce somehow manages to stand up to employees’ expectations. In one employee referral program, they surprised employees with free baseball tickets.

Remember that following a tier system is crucial while providing monetary incentives. Higher-level positions are generally hard to fill. When an employee refers to the right individual for such a position, he must receive the deserving rewards. Furthermore, sometimes companies even provide additional benefits if the employee successfully stays for six months or more.

2. Make your employees a part of the entire process

Communicating with your employees at every stage of the process is crucial. Keep them updated with the progress of the referred individuals. Even if you end up rejecting them, a thank-you email is a way to go. Include a satisfying level of transparency and ease in acquiring relevant information. Furthermore, design employee referral programs to make it easier for your employees to track referral progress.

For instance, Airbnb is one of the top companies known for providing a welcoming candidate experience. But back in the day, the employees were less involved in referrals due to a lack of trust in the entire referral program. As a result, they implement a storyboarding exercise to better understand every stage of the candidate's experience. Finally, they equipped a full-fledged applicant tracking system and effective communication with rejected candidates.

Clear communication is the way to receive successful referrals, whether you implement a system or handle tasks manually.

3. Offer clarity in job requirements

Your current employees might have enough knowledge about your company culture. But they are least aware of job requirements, especially if you are hiring for a different department. Prepare a detailed job description form consisting of all the needs of your desired candidate. Mention the mandatory skills and highlight what you are not willing to entertain.

Also, note that sometimes people refer individuals close to them without recognizing they are unfit for the position. Offer clarity from the beginning to avoid unnecessary delays in hiring. For instance, Yoh keeps in mind specific requirements of tech companies to provide talent that matches the company’s vision and mission to grow.

4. Use a referral platform to smoothen the process

No one likes going through a lengthy referral process. A referral software or platform will smoothen the process for employees and the management. It allows the recruiter to send referral requests and a clear job description for respective positions. After all, you must prioritize using the right technology for business growth.

Sometimes your employees have a social network consisting of highly skilled individuals. These aren’t friends or family members but individuals possessing skills required for growing your company. Increased usage of LinkedIn has helped people develop a great professional network. In addition, your employees can easily share the requirements with their network with referral software.

5. Set measurable goals for your program

What do you plan on achieving with your employee referral program?

For example, some companies aim at reducing their hiring costs to a certain percentage within a specific period of time. Identify your goals before researching different techniques for creating a successful referral program to engage your employees. Having measurable goals for employees will help you in evaluating and modifying your current employee referral program.

6. Use a blend of referral techniques

Have you heard of the aided recall technique?

Sometimes employees pay less attention to a direct approach of asking for referrals. The aided recall technique works well when faced with similar situations. In this technique, the recruiters ask questions to employees like, “Who is the best copywriter you know in your network?”

Such questions lead to deep thinking resulting in the desired responses. Instead of blindly referring to known individuals, they think it through before answering. This technique works well when companies search for a highly specialized individual. They target only certain employees who might have similar people in their network.

7. Using a creative approach in your referral program

Some companies rely on introducing fun to their hiring process. Salesforce is one of them and uses a fun method to get acquainted with their potential employees. The company organizes recruitment happy hours where employees accompany the referrals. In these meetups, recruiters get an idea if the candidates seem fit for the roles. It’s a fun way to get acquainted, and no one gets bored of free drinks.

Another great technique is introducing gamification to your program. For example, Fiverr, one of the biggest freelance marketplaces, gamified its referral process. Employees started receiving points for sharing jobs, and the progress appeared on a leaderboard.

While some referral programs thrive on creative approaches, others win with a straightforward method. For instance, PURE sources between 40-60% of its employees through referrals. They ask for referrals right after hiring employees. As a result, people are quick to suggest, and the hiring process becomes more manageable.

Lastly, keep up with recent hiring trends to create effective strategies leading to successful recruitment.

8. Take feedback from your employees

Understand why employees liked or disliked your program. Take note of the key points and implement changes. Sometimes you are one feedback away from making notable progress in your programs. Prepare employee engagement survey questions in advance and indulge in discussions regarding the same. Lastly, ask them about their opinions or suggestions regarding program improvement. Receiving employee feedback is the key to improving your employee referral program.

Key Takeaways

  • Use a blend of financial and non-financial incentives in your referral programs
  • Develop a straightforward communication channel with your employees and keep them updated
  • Be clear about the job requirements to receive relevant employee referrals
  • Introduce a referral platform for conducting an effective process
  • Use a blend of creative referral techniques like gamification in your process
  • Set measurable goals for a specific period of time to monitor progress and make suitable adjustments

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About the Author: Chaitanya Patel is an ardent writer at SaaS Brothers, who generates best-in-class posts on a wide range of SaaS tools and techniques. He also produces well-researched and factual posts on strategic solutions for SaaS.

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