Employee Referral Bonus Structure Ideas
What should an employee referral bonus structure look like at your company? Or better yet how should an employee referral bonus look at your company?
Employee referral bonuses are a great incentive to attract top talent through your employees. Employees don’t work for free (most of the time). Employees will often take on extra responsibilities and should be given extra compensation for those efforts. Bonuses have plenty of benefits like creating a drive for your employees to go the extra mile.
Now, keep in mind that when it comes to bonuses, no two companies’ needs are the same. There is no easy way to outline a specific referral bonus structure that will fit every company, but there are ways to build one based on factors within your company.
When it comes to referral bonuses you will see a more proportionate bonus based on the salary of the employee or the position itself. However, when it comes to a bonus structure there are many factors that come into play like; size, employee wage, and industry.
Company sizes can vary especially depending on the industry, but if you are looking at a company with up to 500 employees you may see a referral bonus structure that is more straightforward, whereas a company with over 1,500 employees who have different subsections to their bonuses and a more detailed referral bonus policy.
A bonus structure needs to have two things within it to be effective:
- Tiered bonuses help with engagement and company loyalty/retention. The most effective way to tier out a bonus is, to begin with 30 days and then a 90-day waiting period. The longer you tier out your referral bonuses, the more you will decrease turnover in your referrals. The initial 30 days can be the most tumultuous time in a new hire’s time at your company, and giving the employee a reason to stick around will help keep your new referral from leaving.
- Dynamic bonuses help recruiters to stay on top of their own hiring needs. For example, if a position is harder to fill, then it should be compensated proportionately. The perks of keeping bonuses dynamic are twofold; they allow the company to tailor its bonus policy to their own needs while also incentivizing employees to refer to positions that need to be filled more rapidly.
Although tiered bonuses and dynamic bonuses are the most important base for creating the perfect referral bonus structure, they can easily be translated differently depending on the industry.
Employee Referral Bonuses by Industry
If we take a look at the tech, service, and healthcare industry their referral bonus structures will all look vastly different.
Tech companies tend to offer higher bonuses due to requiring more skilled labor. The average bonus can be $1,500 for an entry-level position, while the average for someone like a technical engineer can be up to $5,000.
As for the service industry, you will see lower bonus payouts due to the lower wages. An average bonus for the service industry can be anywhere from $100 to $500.
This can change depending on the service, employee wages, and scarcity of staff. When it comes to healthcare, bonuses are usually based on the job type and you will see a fluctuation in the bonus amounts. The average healthcare referral bonus tends to be around $2,000, but can go up to $10,000 based on the position and experience level required.
Employee Referral Bonus Program Strategy
As you can see, many factors play a role when it comes to not only a bonus amount but the referral bonus structure you may offer. Referral bonuses should be directly proportional to the difficulty of finding a candidate you are looking for based on the industry they are in.
Although, there is no definitive answer to what your bonus structure should look like there are takeaways to keep in mind. Focus on the industry your company is in and take a look at what positions you have available and consider what those are worth to you. Look at your referral policy and align your bonus structure with the goals you have.
Most importantly, focus on tiering out your bonuses and keeping them dynamic. Your employees are important assets to your company and your bonus structure should reinforce that.