One of the greatest challenges being faced by our clients, as well as ourselves is how to attract the best talent for open jobs.   If you are doing a great job of engaging and retaining your current employees, over 40% of your new internal hires and placement | fills with clients should be referrals from your current employees and candidates.   If that is not your reality, it may be time to upgrade or totally revamp your internal employee referral program.

As a leader, you must hire the best talent to achieve goals and objectives.  You can customize your internal employee referral program around the information you are receiving during stay interviews which reveal the reasons that your employees enjoy working for you and your company.

Most of the people who work for you know other people who could become great employees.  The difficult question is how do you encourage them to share the names of these contacts and friends?

Review the experience of the candidates interviewed who are hired by one of your clients. Then review the candidate experience of candidates you interview but do not place (95% of your candidate flow).  If their experience is positive, they will see the benefit in providing you with referrals to top talent.

Unfortunately, more referral programs fail than succeed.  Let’s review the details of the most successful Employee Referral Programs.

It’s not only about the money.

The amount of money paid isn’t the only contributing factor to the success of a referral program.  Employees and candidates must clearly understand what’s in it for them to participate.   If they think they are referring their competition, you will receive no referrals.

Program is managed by one specific person

The referral program should be delegated to and managed by one specific person.  This person should survey employees and candidates to see what would motivate them to provide referrals of future employees.

Easy to remember “theme”

The program should have a theme that is easy and memorable similar to “Got Friends?”  Southwest airlines provided employees with a referral card that resembled a boarding pass.   They promoted others to board Southwest as a new employee.

Set clear guidelines and expectations.

Make sure employees and candidates understand the referral program's guidelines and expectations, including who is eligible to participate in the program and receive rewards for referrals.

1. Program was assigned to one person
2. Training was provided to employees
3. Metrics were tracked, and revisions were implemented
4. Strong level of recognition

Give your internal employees what they need to refer.

Using employees to promote your company brand can be helpful especially when you have a referral-worthy culture.   If your employees are engaged and happy, more than likely they know others who could also become engaged and retained.  

Employees must be trained and informed to know how to ask for referrals and what type of employees need to be hired.

Offer incentives that motivate 

A study by World at Work found that 63% of companies offered some sort of referral bonus program. More importantly, 92% of those without a referral bonus program were looking at implementing a referral bonus program in 2022.  That’s a little more than 96% of all companies that either have a program or want one.

In the current candidate-drive market some companies have dramatically increase referral fees especially for hard-to-find talent.  Most candidates you interview could provide you with names of candidates you could place but will not be motivated to provide you with names unless they understand the benefit to them.

Establish Timing

Consider the timing of the reward as well. Most employers hinge payment on a referred hire's staying employed with the company for a set timeframe. Only 27% of employers offer a full reward immediately upon a referral's hire.

Promote the Program

Your referral program should be an ongoing marketing campaign. Investing in marketing and communication plans for the program can increase the likelihood that employees and candidates will participate. Swag can also add to the enthusiasm level for your referral program.

Hold Leaders and HR Accountable for Internal Referrals

One of the greatest complaints about internal employee referral programs is the lack of communication. The referring employee and the candidate should be kept informed about the status of the open job on pre-determine follow up dates.

Company leadership should be involved in the design of the program, should participate, and acknowledge the efforts of employees.

Study Results and Provide Feedback

Each quarter the person in charge of your employee referral program should review what is working and what is not so adjustments can be implemented.  Common metrics to review could include the following:

• The number of employees hired through referrals, compared to other methods.
• The number of candidates placed through referrals, compared to other methods
• The rate of employee participation.
• The retention of referred hires, compared to other sources.
• The performance of referred hires, compared to other sources.

A strong Employee Referral Program greatly improves your ability to place or hire the best talent for your clients as well as your internal team. It is worth your time to create, implement and continually improve.