The employee referral program can help you enhance company culture to attract top talent and reap multiple benefits. There are multiple factors that make employee referrals one of the best strategies for recruitment. Data from recruitment software have shown that such recruitments are faster and more efficient. In addition to that employee referrals result in lesser turnover. Furthermore, employee referrals are also likely to be more engaged and productive at their job.
In this blog, we will explore how to tailor a program that drives engagement, boosts retention, and transforms your workforce.
What is an Employee Referral Program?
The employee referral programs are part of the hiring process where the company asks the employee to give a reference for the vacant position from their network.
In this process, the HR and the recruiters look inside their company and utilize the network of their employees rather than exploring external resources to find a good fit for the open position.
Employee Referral Program Examples
We can refer to multiple examples set by companies all over the world to understand the impact of employee referral programs. Some of the major ones include:
1. Google
Google has created one of the best employee referral programs in the industry with a focus on finding the best employees possible. For example, instead of the generic “Employee Name”, they begin with “Who is the best software developer in your circle?” Such focused questions make the employees think harder to refer the best person they know instead of settling for someone who is on top of their minds.
2. Intel
Intel has a different strategy for their employee referrals, which focuses more on diversity and inclusivity. They provide double referral bonuses for their employees who refer others from minorities and if they are women. It also enables them to find talented individuals within these minorities, making their workplace truly inclusive in nature.
3. Accenture
Accenture also has a unique approach to its employee referral program. They actively encourage their staff to donate a part of their referral amount to a charity of their choice, while also donating the same amount to the same charity. Such a gesture of goodwill enables the staff to identify with their organization and increase their engagement with their company.
4. Salesforce
Salesforce has ‘recruitment happy hours’, in which employees can invite their referrals and provide them with an idea of the company culture. Being in an informal environment, the recruiters can also get involved in these events and get to know potential candidates. It also enables the candidates to understand the company and its culture and make an informed choice.
5. Fiverr
Fiverr gamified the entire process of employee referral by awarding the employees with points for each step they take during the referral process. It also notified the employees of the progress of their preferred candidates, and, at the end of a quarter or year, the employees who had the most points would be awarded prizes. They also included a leaderboard to make the employees competitive and ensure good quality candidates.
6. InMobi
InMobi also took a gamified approach towards employee referrals as they provided a specific incentive to each successful referral of engineering managers: a brand-new bike. However, they customized the incentive to suit their office locations, for example, the bike was a Royal Enfield in India, while it was a Vespa in the USA. If they were not interested in the vehicles, they also had the option to take a trip to Bali. Additionally, the prize vehicles were parked at the entrance of their offices, increasing the referral rate considerably.
7. PURE
American insurance provider PURE has a different approach towards employee referrals as they ask their new employees to refer more individuals within a month of their joining. It results in an increased number of referrals, which also leads to an increased satisfaction rate among the recruited employees. Utilizing this strategy, PURE has been able to source almost 60% of its staff with referrals.
Benefits of Employee Referral Programs
Employee referral programs can be revolutionary in modern recruitment strategy. They not only streamline the hiring process but also enhance employee engagement and retention. It is commonly observed that employee who joins through an employee referral program are likely to stay in the company for longer. Let’s look at the benefits of having your employee referral program at the company in detail.
➔ The Quality of Hire
One of the benefits of employee referral programs is that your employees personally know the candidates and are also aware of the specific requirements of the open position in your company. So when you hire through employee referrals, the candidates tend to be a better fit for the company culture as well as the responsibilities of the respective position.
➔ Cost-effective
Employee referral program is a great time and cost-saving strategy for any company when it comes to recruitment. You don’t need to spend on all the listings and advertisements. With an effective employee referral program the cost-to-hire drastically decreases compared to the traditional hiring process.
➔ Time-Saving
Finding a candidate who can be a good fit for a firm takes a lot of time. When you use a referral program and leverage your employee’s connection the process completes swiftly. Whereas if you try to find the right candidate without an employee referral program you have to spend a lot of time finding the ones who have the skills and experience. As your employees are aware of the exact skills of the candidate, you can skip many screening rounds and speed up the hiring.
➔ Higher Employee Retention
Your employee referral program is a tool for higher employee retention in the company. One of the leading factors that make employees stay longer in the company is the interpersonal relationships at work, in simple words their bonding with their colleagues.
An employee referral program is a huge boost to your employee engagement and retention. Because the referrals work both ways, as the employee gets the person who is the right fit for the company, the employee is also walking into the company that matches their expectations.
Normally the new hires may have certain expectations about the company and also from their roles which doesn’t fit the work culture at your company. The candidates you hire through the employee referral know what is expected from them as well as what they should expect in their role. Having a friend in the same company also helps them to get constant support and they are more likely to be engaged and satisfied with their work which motivates them to stay longer in the company.
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➔ Swift Onboarding
One of the benefits of the employee referral programs is that most of the referral candidates are familiar with the culture at your company. They have a prior knowledge of the dynamics of the organization.
Like most new hires, they don’t need to wonder about the unknown and try hard to make new friends. This helps them to adapt quicker and learn all that they need to learn faster as a result, they quickly become productive at their job as compared to other candidates.
➔ Enhance Diversity
Through the employee referral programs, you can conduct the recruitment for specific groups that are underrepresented at your company. Encouraging your employees to provide references for candidates from diverse backgrounds will make it easier for you to maintain diversity in the organization.
Steps for designing an Employee Referral Program
Employee referral programs can be the best recruitment strategy for your organization. However, you need to design an employee referral program that works perfectly for your company. Here are a few tips and guidelines to help you design a referral program that works perfectly for your company.
1. Set Goals
Employee referral is a strategy like every other strategy needs a goal. So you need to start with defining an objective for your employee referral program. You can set any goal such as increasing the percentage of hires through referrals, reducing time-to-hire, or enhancing diversity within the workforce.
When you have a clear and measurable goal for your referral program it helps you to hire the candidates more effectively as it also helps employees to understand the specifics of the requirements.
2. Communicate Clearly
Communication is the key element for the employee referral program as they should have a very clear idea about the requirements of the open position in the organization in addition to the incentive they will receive if you find their candidate right for the company and hire them.
In addition to that the company should keep in mind that communication is important at every stage in the hiring process irrespective of the result. Lack of communication can be very disturbing and discouraging for the employee referral.
For example, if you approach the candidate suggested by your employee and find them unsuitable for the position you should let your employee know about the same along with thanking them for their contribution. This helps ensure that employees feel respected and is likely to suggest more candidates in the future.
Communication can also benefit the company in many cases. For example, if you are unable to reach the candidate, your employee can help you with it. That way you don’t lose a potentially perfect employee for your company.
3. Establish Incentives and Rewards
The best way to motivate your employees for employee referrals is to offer rewards and recognition for successful hires. You also need to understand that most employees will want to refer in future if their efforts are recognized.
Ensure that you recognise your employees properly such as you can give recognition to employees who have provided the most successful referrals for a company. This will motivate your staff to refer someone in future for an open position. You can utilize your company’s performance management system to ensure the right rewards and gamify the process.
In addition to that monetary incentives and paid leaves or a vacation also work wonders as a reward. In return, you get a shorter hiring process and employees that fit perfectly in your company.
4. Adapt Quickly
Your employee referral program should be flexible and be open to feedback and modification as the time demands. The talent market is always competitive as technology changes so do the skills that a company needs to succeed in the business.
As good referrals are dependent on multiple factors you need to be on your toes when it comes to collecting the feedback and finding the solution for a favourable output. These changes can be related to the structure that you have in place for the employee referral program such as incentives, rewards, communication, submission and more.
5. Utilize Technology
You can use any referral management software to ensure that the process runs smoothly. So you can make it easy for your workforce to look for open positions for referrals in the organization if they want to refer and the requirement. Automate tracking the referral success and the reward distribution.
6. Track Progress
It’s essential to measure how effective referrals are in the employee referral program. When you measure factors such as successful hires through the referrals, retention rate and the performance of these employees you can understand the effectiveness of your employee referral strategy and make changes to improve the performance.
Summing it Up
Employee referrals are a very effective recruiting strategy that helps you to improve the effectiveness of the hiring process while reducing the overall time to hire. You should utilize your employee’s network for your company. Also, provide rewards and recognize your employees for their efforts to keep them motivated so they will participate in employee referral programs.
