Employee referral programs pull quintuple duty. They are powerful recruiting tools, empower your employees, increase satisfaction and loyalty levels, increase retention and tenure rates, and act as a diagnostic tool of your organization’s culture.
Research has shown again and again that employee-referred hires are better performers and stay at the company longer than hires recruited through other methods. Meanwhile, the employee referrers also have longer tenures at their companies.
Is it the right choice for you to create an employee referral program?
Employee referral programs exist in a unique space wherein you empower your employees to become brand ambassadors and recruiters. A strong employee referral program builds community because new hires that come in through the program already have ties to the company. They know at least one employee (maybe more) so they are, on average, more dedicated and more likely to stick around for a while.
On the flipside, organizations with low employee morale will struggle with instituting an effective employee referral program. After all, what friend is going to refer someone to a company they dislike? But that also means that it is a great way to put your finger on the pulse of your organization’s culture. If you have referrals rolling in, it means your employees are happy.
Create an employee referral program to cut costs and find star employees.
These programs pull double duty – they’re leagues cheaper than traditional headhunting prospects and they also tend to perform better and stay longer, which further reduces the cost of hiring. In fact, some people suggest that employee referred new hires might even require less onboarding because they will be more comfortable and a better culture fit, on average, than a new hire recruited another way.
Even with all of the benefits, there are still a few things that can go wrong. It is not a program that you can set and forget, but once that requires planning and communication for success.
If you want to learn how to create an employee referral program, these are the six steps you should take.
1. Nail down your vision.
As with starting any endeavour, it’s important to know what results you want to see, otherwise there’s no way to tell if your program is effective. Ask yourself, “Why do I want to create an employee referral program? Do I need to increase diversity? Improve morale? Reduce the cost of recruitment? Improve retention rates?”
Once you’ve nailed down the reason for starting the program, attach metrics to it. For example, say you want to reduce the cost of recruitment by 20%. Later, you will be able to check in and determine whether the program is helping you achieve your goals.
2. Make it so easy it’s impossible to say no.
As with everything in life when you are asking someone else to do something for you, you want to remove as many roadblocks as possible. Avoid creating paperwork for your employees to complete. Ideally, your employees will be able to forward the name and contact details of a referral to your recruiter. This will be information they already have (unlike a resume, which they might not), which makes it more likely your employees will refer their friends. You want to encourage your employees to offer referrals and not penalize them with an overly complicated or paperwork-heavy process.
3. Be clear about who should be referred.
Now that you’ve got the metrics and system in place, it’s time to train your employees. This doesn’t necessarily need to be a formal training situation, but you want to make your expectations clear. Even if you’re employees can instinctively tell who might be a good culture fit, they might not necessarily know what qualifications you want. This is especially true if you have employees referring people across departments. A sales person likely won’t know what you want in an accountant, for example. You can make this clean and simple and send out qualification criteria attached to each job so your employees know what you want.
4. Communicate x3.
The key to create an employee referral program that works is communication across the board. Tell your employees when positions open and you’re looking for referrals. Tell your employees what qualifications or skills you want. And then once a referral comes in, contact them quickly. Unlike prospects from a head hunter, these referrals aren’t strangers. It will be awkward for your employee if you leave them hanging.
If you do not choose to go ahead with an interview or a job offer, update your employee. Thank them for their time and the referral and encourage them to continue to refer their friends in the future.
5. Reward your employees.
Your referral program is up and running, names are pouring in, and you’ve found someone you want to offer a position with the organization. Congratulations! Your program is working.
Once you’ve decided to hire an employee referral, it’s time to thank the employee as well with monetary compensation. The cost of a traditional hiring process can range anywhere between $4,000 to $18,000 per hire so offering a $1,000 bonus to your employee not only further incentivizes them to offer their most-qualified friends, but it’s a total bargain from a cost perspective.Create an employee #ReferralProgram to cut costs and find star #Employees. #Recruiting Click To Tweet
6. Is it working?
It’s time to check in and see whether you’re hitting your metrics from step one. Once you’ve begun to hire from employee referrals, it’s a good time to take stock of the program and see what’s working and what isn’t.
If you aren’t hitting your metrics, you can re-evaluate to determine what can be tweaked or changed to reach the success you want. If you are hitting your metrics, congratulations! Pat yourself on the back for a job well done.
Learning to create an employee referral program can be an incredibly rewarding experience for a company, both in terms of cost savings and culture.
What are you tips for crafting that perfect program? Let us know in the comments below.