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5 Steps of a Successful Employee Referral Program

successful employee referral program
boost recruiting through employee referrals

5 Steps of a Successful Employee Referral Program


While employee referrals have been the gold standard for talent acquisition for decades, engaging employees to participate in talent acquisition has always been a hurdle to a successful employee referral policy. There are, however, proven tactics to increase participation and engage your employees in their referral program.

The average business is getting between 8% to 15% of their hires from referrals, while successful programs are sourcing 30%+ hires.

How are they accomplishing this?

By unlocking the potential of employee-powered hiring with proper incentives and engagement. The benefits that come from increased referrals can be extensive, with a direct return on investment and an indirect return on investment.

There are a number of benefits that come from employee referrals, but how do you get the most out of your employee referral policy?

To see an increase in referrals you first need to make sure you are providing the right incentives and effective engagement tactics. The good news is you don’t need to start from the ground up, you can use your current employee referral policy by just adding a few extra man-hours and 5 proven tactics to get employees to participate.

The 5 steps of a Successful Employee Referral Program

  1. Business Case: A Burning Platform & Investment
  2. Policy (Bonus) Strategy: Invest in your outcomes
  3. Scale: Technology enablement & User Adoption
  4. Marketing: The hidden Superpower
  5. Momentum: Learn, Adjust, Keep Going.
Business Case: A Burning Platform & Investment

If you have a burning platform and investment it’s important to take a look at a number of things:

Start with how many hires you were producing from your original employee referral program.

To inspire a level of transformation you want to first establish your baseline percentage of hires. After you figure out your goals it’s time to use your best resource; your employees and ignite the top of the funnel.

From a referral perspective and an empowering employee perspective, it can be a struggle in lighting up your top of the funnel and taking advantage of the employees you have.

How do you get your internal colleagues much more engaged in our talent acquisition challenges and opportunities?

Moving from a reactive mindset to a proactive one and how can you engage your employees on a daily to weekly basis and let them know their opportunities at hand? How do I manage some of these policy-level things that are important in the employee ecosystem? What’s in it for your employees to recruit on their behalf?

Hiring will always be front of mind when it comes to a business, but it doesn’t have to be difficult to find the right candidate. Your employees know your company best, so why not have them become your best recruitment tool? Referred employees are known to have a lesser turnover rate and a longer employee lifespan. If your employee is referring to hardworking, reliable workers that they would like to work with then they will also want to stay longer.

Keep your cost per hire competitive.

Keeping your recruitment pipeline full of great candidates is worth the investment. In the long run, you are saving money on recruitment costs and focusing on a better ROI.

After you put thought into all of your expenses like bonuses and prizes, your team that will run the program, and the overall technology investment, you will find that you are keeping your cost per hire low while benefiting the organization altogether.

Policy (Bonus) Strategy: Invest in your outcomes

The referral policy has already been created, but how do you standardize it for maximum effectiveness? Consider your referral policy as the base or the root of your overall hiring goal.

Take the next step in transforming your policy to build out your employee referral program. If you let different parts of your organization do their own thing it can become complicated and messy. At the moment it may not seem like a big deal, but it ends up being your overall downfall for an effective referral program.

The most successful programs have a day-one onboarding of the employee referral platform. The first day you have an employee start ask them what three people they would want to work with. It’s as easy as having them write the names down on a piece of paper. That is three immediate leads that you didn’t have before. This helps to engage users and also let them know that your employee referral policy exists from the very beginning of their employee lifecycle.

Scale: Technology enablement & User Adoption

How do you scale your business when you’re dealing with a handful of different types of employees? No employee is the same you could be a healthcare company with a registered nurse who is not thinking about talent acquisition in any way but is entirely focused on their job.

This is a great source to tap into for candidate flow. This person is passionate about their career and goal-focused. If you consider the network that you can build from employee referrals that becomes the starting point of scaling your business.

Marketing: The Hidden Superpower

Finding new and novel ways to find and engage talent is very difficult. Talent acquisition has attempted for years to scale word of mouth through their referral program, yet has generally failed at doing so. This leads to recruiters tolerating an average of 5-15% of their hires coming from referrals.

The most powerful marketing tool is right at your fingertips. Take advantage of word-of-mouth marketing in your day-to-day. Everyone knows referrals are the best source of high-quality talent, which comes from word of mouth.

The easiest way to start filling positions is by having your employees talk about your company. This leads to a longer employee lifespan and increased satisfaction.

Let your employees become your billboards/walking advertisements. If an employee is happy at your company and within their position, they are going to talk about it to other people. This is the best method of recruiting because everyone wants to love what they do and who they work for. Having referrals is a great indicator of employee happiness. if you are losing more people than you are taking on then you have another issue on your hands.

If you have culture problems, an exhausted employee, or an employee who isn’t happy within their position this could be a huge blocker for growth and lead to other issues within your company. The highest performing employee referral programs deliver 35-50% of their hiring from referrals. Employee-powered hiring is an effective source in engaging employees to refer while helping them to feel empowered in your recruitment efforts.

Momentum: Learn, Adjust, Keep Going

Spark the initial positive outcomes. It can take 66 days to build a new habit. Knowing that focus on consistency with referral sourcing and best practices over a period of 66 days. Arm your TA team with the right resources. This can be emails, handouts, and overall messaging you want to get across to your employees.

Make it easy for your recruiters. Obviously, employees like to be rewarded, but if you can make it competitive it can drive your team to not only work harder but can help teams/departments to work together towards the same goal and help engage across the organization. Keep up the momentum with your employee referral program.

If your TA team isn’t making referrals a priority why should your employees? It is very common to see immediate results, but you need to keep things consistent and focus on adoption for the ultimate results.

The Key Takeaways:

Employee referrals will always be a great hiring tool, take advantage of your referral policy to establish goals in your recruitment efforts. Invest in the outcomes you want to see by first establishing a baseline.

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