How to Create a Successful Employee Referral Program

It can be challenging to locate quality candidates. There are fewer employees to fill jobs, especially in specialized positions. You might find the candidates you’re looking for by tapping into your current employees’ networks. Your employees likely know someone who is searching for a job or has the skills you are looking for. If you set up an employee referral program at your business, you can give your employees an incentive to share their contacts.

Tips for creating an employee referral program

Before you try to gather employee referrals, you should set up a hiring referral program. Use the following employee referral program ideas.

Make referrals easy

The less work your employees have to do to refer candidates, the more successful your program will be. Employees shouldn’t have to jump through hoops to refer someone they know.

If employees have to fill out a long questionnaire about the candidate, many won’t take the time to fill it out. Remember, your employees are working and busy.

Simplify the referral process as much as possible. Cut out all unnecessary steps. If you don’t really need employees to fill out a long survey, don’t have them do it. You might only need contact information for the candidate. You might ask the referring employee to submit the candidate’s resume so you have more information to make a decision on. Or, you might simply reach out to the candidate and ask for more information yourself.

Create a reward

An incentive is part of the employee referral program. Think of this as a gift you give an employee for placing a good candidate in front of you.

You might develop a referral bonus program. Giving a bonus paycheck is a common way to reward employees for their referrals. You set a standard bonus that employees can receive. The bonus might be anything from a couple of hundred dollars to a few thousand dollars. When you hire a referred candidate, you pay out the bonus.

You can give other types of rewards, too. For example, you might give out discounts and vouchers to local restaurants and activities. You might also give time off from work to reward the employee for their help.

Write a plan

You should write out a formal employee referral program. The written program informs employees how they can participate and what they can expect from you. Also, the plan holds you accountable on your end of the deal.

Include how employees can refer candidates, what their reward is, and when they will receive the reward. For example, you might tell employees to submit the referral’s candidates to you. Then if you hire the candidate, the referring employee will receive a $500 bonus after the referred employee reaches 90 days of employment.

You might include the written program details in your employee handbooks so your workers can easily view it.

Explain the program

After you finalize the employee referral program details, you need to teach your employees about the program. Employees need to understand exactly how the program works to make it successful.

How you teach employees about the program depends on your staff size and locations. You might gather your staff together and give a presentation. Or, you might send an informational email or slideshow for employees to review.

Set your expectations

To get employees to refer good candidates, they need to know what you are looking for.

Tell your employees exactly which candidates you want to see. Let them know which positions you are hiring for. You might let employees view the job descriptions.

You might also tell your employees what types of candidates you are not looking for. Not every friend and family member is a good fit for your business. You might list qualities that are bad and good fits.

Give reminders

You should periodically remind your employees about the employee referral program. If you don’t, they might quickly forget about it.

When you’re ready to fill a position, send a reminder to your employees. Reexplain how they can refer candidates and what the reward is for hired candidates. Tell your employees what type of candidate you are looking for at this time.

You can also promote the referral program when you aren’t actively hiring. An employee might refer a candidate you can’t pass up. And, you can develop a list of candidates to consider for future positions.

If you compensate your employees for candidate referrals, you must include the compensation in your payroll. Patriot’s payroll systems for small businesses can help you accurately withhold taxes and pay employees. Get your free trial today.

This article is updated from its original publication date of August 10, 2012.