As several industries across the US continue to peg talent recruitment as one of the most difficult business needs to fulfill—a point made evident by the 93% of CEOs who believe their strategy for attracting and retaining talent needs work—many companies both domestically and abroad are starting to re-think their hiring solutions.
One result born from this shifted mindset is the implementation of employee referral programs. With this concept to attract talent, companies can revitalize their recruitment strategies and enrich their talent acquisition programs as a whole. Not only does the right referral program improve the quality of the applicants you receive, but referred employees come with higher engagement levels and higher retention rates, among other benefits.
We’ll show you the necessary steps for creating an employee referral program that drives measurable value and yields actual results—for both your company culture and your bottom line.
Why Everyone Needs An Employee Referral Program
Not only is it increasingly difficult to find the right candidates for crucial roles, it’s also often a challenge to convince those people that your company can offer them what they’re looking for.
According to experts, the best referral program examples lead to significant results for growing companies, including:
- A higher quality of applicants: Referral hires can be five times higher in quality than candidates sourced elsewhere. After all, your current employees are unlikely to put their job online for just anyone. They want recognition for an exceptional hire.
- Better employee engagement: Employees referred by a friend have lower turnover rates and turn into better overall hires. In fact, 44.5% of people say they are more likely to apply for a job if they discovered it through a friend’s social feed vs. another medium. Yet only 9.4% of employers say they use social media to help their company with recruitment.
- Time-saving for recruiters: With an employee referral program, you ask your employees to get involved with the hiring process, which reduces the cost in time and resources usually attributed to talent acquisition.
Reports suggest that employee referral programs are simply more effective. One in seven referral hires lead to a job offer, compared to one in one hundred general applicants. So, how can you create a program that works for your business?
Step 1: Create an Environment Employees Are Proud Of
The first step to creating a strong employee referral program is also coincidentally the one that companies frequently forget. It takes more than just allocating a little extra budget towards incentivizing in order to craft a good employee referral program.
Any exceptional process begins by designing a work culture that has a positive impact on your employees. In other words, you need to create an environment that people actually want to refer their friends to.
In other words, the foundation of any successful referral program is an exceptional company culture. You need to cultivate a positive environment that encourages strong internal communication and healthy employee engagement. Ensure that your company is worth recommending by communicating with staff, rewarding hard work and providing opportunity for growth.Without these areas in check first and foremost, no amount of effort will prompt workers to refer your brand to others.
Paying attention to little things in daily employee interactions or identifying impactful ways to recognize key contributions can be a great deliver stronger relationships with employees. Those relationships are the pillars on which you’ll build your employee referral program.
Step 2: Center Your Employee Referral Program Around Strong, Clear Messaging
A disjointed message can be a threat to even the best referral programs. When you’re leveraging employees as an extension of your hiring team, it’s important to make sure that everyone is on the same page about company goals, motivations and aspirations.
One way to achieve this is by creating an employee referral program outline (along with referral program examples) to help guide the process. Detail exactly how you want employees to describe your company and its culture, as well as more practical details like:
- How employees can make referrals (e.g. with links, social media posts, emails, etc.)
- What types of people referrals should be made to (who is your ideal candidate, which characteristics do you want to avoid?)
- How employees will know when job roles become available
- How employees will learn if their referral is hired
It may also be helpful to educate employees on the value of an employee referral program. This will enable them to understand what they’re giving back to the company and may make them think more carefully about the suggestions they make.
By outlining statistics such as “47% of referrals stay with companies for more than 3 years” or “60% of employers consider referrals to be a better fit to company culture,” you’ll show employees the value of their networks and the opportunity they have to make your business a better, more successful place to work.
Step 3: Create a Strong Framework to Support the Program
43% of companies find their best candidates through an employee referral program. If you want to get your hands on those kinds of results, you need to be sure that you develop a strong, foundational framework for employees to use and build off of.
User-friendly application processes are essential to not only convincing new candidates to apply, but also encouraging existing employees to get involved with your program. If your referral process is lengthy or complicated, you’ll probably struggle with adoption. In fact, one-third of the companies with an employee referral program leverage software.
By leaning on technology, you enable recruiters and hiring managers to quickly (and easily) send out referral requests for specific positions—keeping everything within a centralized platform. Additionally, employees are empowered with on-brand and consistent messaging in order to attract the right kind of candidate to join your team.
Step 4: Celebrate Employee Engagement
Any new employee sourced from a referral program produces 25% more profit for a company than hires from external sources. This clearly shows how important it is to show employees that you appreciate their contributions. Just as employee engagement programs are improved with regular rewards and acknowledgements, referral programs can benefit from incentives simple as celebrating employee engagement.
Employees are more motivated to refer hires if they know there’s an opportunity in it for them to gain something. Though there isn’t necessarily a list of hard and fast rules to follow when deciding which incentives to offer or what kind of achievements to recognize, a good first step is making sure that you’re actually acknowledge staff participation as it stands today.
Celebrating moments of exemplary employee engagement will help to perpetually remind your team about the benefits of an employee referral program. Not to mention, you’ll garner the interest of other employees if they see their peers recognizing these benefits.
Essentially, what this means is you can’t quietly slip a few extra dollars into your employees’ paychecks. Create a bit of friendly competition by announcing when referrals are hired and take action to show other staff members that they’ll be rewarded likewise. Remember, monetary awards aren’t the only option. Try to publicly recognize your referrers in a way that appeals to them (e.g. acknowledgement from the CEO, call-outs in a group meeting). Besides rewarding your staff, remember to take their referrals as seriously as possible—they should be given extra weight over standard applications.
Although candidates accessed through an employee referral program don’t have to be an instant hire, it’s important to make sure that you at least offer them an interview and communicate quickly and effectively. By providing referral candidates with a strong hiring experience, you’ll reduce the risk of tainting the relationship between you and current employees.
You can also establish a feedback system for referrals to improve employee engagement. By doing this, you let employees know that you truly value their suggestions and establish a benchmark for future referrals employees might send over. Feedback options will help to cultivate a higher quality of referrals, who are better suited for your company.
Step 5: Know What to Track Along the Way
The benefits of understanding employee referral program best practices speak for themselves. Referral programs can save you $3,000 per hire, but it’s equally as important to make sure your strategy includes the right results for your brand.
When implementing an employee referral program, remember to consider what kind of long and short-term goals you, your team and company at large want to achieve. This will help to clearly identify which metrics should be used as benchmarks on the track to success. For instance, your goals might include:
- Improving the quality of job applicants
- Increasing employee retention
- Boosting employee satisfaction
- Fostering alignment with company culture
There are various ways that you can track each outcome—from measuring costs of employee recruiting against traditional hiring practices, to considering the amount of time saved by your referral program. You can even look at productivity and production levels of new employees to determine whether referral candidates yield a better outcome than external applicants.
Building the Right Employee Referral Program
The right employee referral program can do wonders for helping a talent acquisition team to better source and track down candidates within the right employee networks, streamline the hiring process and reducing cost-per-hire.
The Yello Recruiting study found that 94% of employees would refer their current company to a friend. That means that these programs can work, you simply need to learn how to make them work for you. If you use the steps outlined above, you should find that you end up with better candidates, delivered by people who are familiar with the characteristics and skills most essential for your company.
Steps to Building an Employee Referral Program That Drives Measurable Value
Written by Kevin King on June 19, 2017