How Hireology can help you build a great employee referral program at your organization.
Employee Referrals - Hireology
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Latest articles about employee referrals
Employee referrals are extremely important to your business. Why? Because employee referrals are four times more likely to be hired on by your organization. Employee referrals also have the best return on investment, and have the best applicant to hire conversion rate. That means out of all your applicant sourcing channels, employee referrals are your cheapest and easiest way to get top talent.
So prioritizing the creation of an employee referral program if you don’t currently have one in place is paramount, as is creating an employee referral policy that covers the ins and outs of what you offer to employees who refer their peers and how they should go about doing so.
But getting your referral program right means you need to put thought into how you structure it. For example, how much will the reward payout be? How soon after the candidate is hired will you pay the reward? Getting the answers to these questions right will play a big role in motivating your employees to actually participate. Here are a few things to consider when building an employee referral program:
- Type of reward — what type of incentive you plan to offer employees that refer individuals to your open roles.
- Value of reward — how much you’re willing to pay for certain roles (often done in a tiered system where hard to fill roles receive a larger payout)
- Payout timing — how long does an employee have to wait to receive their payout
- Eligibility requirements — does upper management receive a referral bonus or is it just for individual contributors?
Consider these things when creating your referral program, as well as the following points that we’ve outlined to help you develop a great employee referral program.
Employee referral definition
The employee referral definition is a recruitment strategy where employers incentivize employees to submit qualified candidates for open roles at your organization in exchange for rewards. These rewards can be in the form of money, extra paid time off, or other benefits that appeal to your employees. Despite the reward money, employee referrals have proven to lower overall recruiting costs and improve employee retention over time.
You can customize your employee referral program to fit your organization, and it’s a good idea to poll your employees on what they want as their reward so that you can have a real impact. It’s important to think through how much you’ll offer for certain roles, as well, since some may be easier to come by, like individual contributors, versus those in upper management.
You should also express to your staff that there’s no limit to how many people they can refer so they have the ability to make a nice chunk of change. And you should be on top of communicating to your employees about the program so they are continually reminded of the incentives. It’s easy to let a great program fall to the wayside simply by lack of communication.
Benefits of employee referrals
The benefits of employee referrals are actually the main reason you should implement a program. Employee referrals are the best way to hire with limited resources. 45% of employees sourced from referrals stay for four or more years in contrast to only 25% of employees from job boards that stay two or more years.
Employee referrals are also conducive to quicker hires, escalating the importance of employee referrals in times of tough hiring, like what we’re currently in the midst of. Traditional recruitment takes 45-60 days to place a hire, whereas employee referrals take 30-45 days. Referrals make up to 40% of the workforce and are 25% more profitable than non-referrals. Lastly, two-thirds of referred employees refer at least one person to their company, so the cycle continues.
As you can see, there are many reasons why employee referrals are important, and even if you have some referrals coming through your business, you should always encourage your staff to refer more. And there’s a clear business case for you to outline to your upper management if they have any hesitancy with putting a formal process in place with monetary incentives.
Employee referral example
Sometimes it is tough to know where to start when launching a new program, so we’ve outlined some employee referral examples for you to base your program off of. Since every company is different and has different desired outcomes, these sample employee referral programs will vary, and you should feel free to make your own rules and requirements as well.
Hireology has an employee referral program that offers a tiered payout system where Tier 3 is paid the highest amount. Tier 1 is for non-technical roles (think marketing, sales, customer success, people, finance, etc.), Tier 2 is for technical roles, and Tier 3 is for hard to fill roles that are determined based on employment conditions. We pay out half of our bonus on the employee’s first day and the second half after they complete six months of service. And if you refer three people who are hired within a 12-month period, you will receive an additional bonus. Hireology also just recently acquired EmployUs, an employee referral platform, so it’s easier than ever to refer employees.
Google’s employee referral program has had a recent refresh because they saw the value it was bringing to their organization. Firstly, they doubled their referral bonuses, but that didn’t make the impact they were hoping for. So they instead decided to begin the referral process in new employee onboarding by asking every new hire “Who is the best (salesperson, engineer, developer, etc.) that you have ever worked for?” and “Who are 5-10 people you would want to work with again?” That’s a great tactic to get employees thinking about their network, and Google saw a 33% increase in employee referrals.
LinkedIn branded their employee referral program to get their team more excited about it. They also increased awareness through internal ads, dedicated recruiters to the employee referral program, and publicly recognized employees who were referring candidates. Lastly, they tell their employees exactly what they are looking for so that their team can think about who would be a great fit in their network.
These are some great employee referral program ideas that are all quite different but offer the same benefits — new talent brought on by your current team.
Employee referral software
To make your employee referral program streamlined, which can be difficult in many cases, we recommend investing in employee referral software. Before Hireology acquired EmployUs, we were tracking every employee referral manually, making it rather difficult for our People team to comb through the referrals, and we saw lower engagement from our employees. Now that we have the employee referral portal offered through EmployUs, we’ve been able to streamline our processes and make referring and tracking referrals easier.
Hireology customers and team members are now able to scan a QR code which leads them to a chatbot. They are prompted to fill out a questionnaire about the employee they want to refer, and they can sign up to receive text message or email communications about their referral so they know how they’re progressing.
The entire process takes under five minutes, making referrals easy to submit, which continues to encourage employee referrals. Imagine what the best employee referral software can do for your business.
Employee referral program guidelines
You should make sure to establish your employee referral program guidelines before you roll out any communication around it. Think about what type and how much you want to offer for your employee referral bonus, whether or not you want everyone in your company to be eligible to receive the bonus (including senior leadership and your HR team), what your employee referral bonus policy requires as far as employee lifecycle and timeline, and employee referral program benchmarks that you’ll look at to ensure the program is running successfully.
You can also consider doing some out-of-the-box referrals similar to Google to get employees thinking about their network from the start. Each of these considerations will help you make a better program, so make sure you decide on a plan for all of them.
How to promote employee referral programs
Once you’ve established your employee referral program, you’ll want to make sure you know how to promote employee referral programs as well. The best way to do this is through an internal communications campaign that targets your current employees. You can use all-company meetings, weekly or monthly email reminders, highlight a “job of the week” to get more awareness around the types of open roles you have, or go through your managers and remind them to continually remind their employees about the perks of employee referrals.
Hopefully these examples will help you decide how to get employee referrals at your organization.
Interested in starting a referral program at your organization? Hireology can help. Reach out to us to see a demo of our employee referral program, along with the rest of our all-in-one hiring and employee management solution.