An Employee Referral Program Can Support Recruitment

In some organizations, employees are on the front lines when it comes to recruiting. How? Through an employee referral program.

Employee Referral Programs at a Glance

Employee referral programs encourage employees to refer qualified candidates for job openings. They build off the idea that when employees refer candidates, the eventual new hires have an easier entry into the workplace.

  • A referral program can help ensure that a candidate is a strong match, since your current employees will have a good sense of what it’s like to work there. This can also help new hires blend into your company’s culture more seamlessly.
  • Your employee referral program can create new ways for current employees to engage with the workplace. Referring candidates to openings gives them a hand in the hiring process.
  • Where your recruiting dollars are concerned, employee referral programs can be a more cost-effective way to recruit, especially if your people make targeted suggestions.

HR plays a major role in creating, launching and managing an effective employee referral program. Below, we’ll review some of the key pieces you’ll want to know.

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HR’s Role in Employee Referral Programs

According to SHRM, employee referral programs are a top source for hires—they account for as many as 30% of all hires, and 45% of internal hires. That means plenty of leaders and HR managers are seeing the benefit, and enjoying the rewards, of turning their employees into recruiters.

For HR, there are a number of steps to consider when you’re exploring an employee referral program. Here’s a look at a four of them:

1. If an employee referral program is right for your organization, start building your case.

An employee referral program might be a new idea for your senior leaders. To build your business case, and to create buy-in, start by explaining the strategic benefits, including:

  • A targeted, more cost-effective recruiting process
  • An easier onboarding experience
  • New ways to cultivate the employee experience, which can support retention

While the benefits may ring clearly to your audience, be sure you also bring up current challenges you may be having in your organization. For instance:

  • Has recruiting been a challenge of late?
  • Has the onboarding process become too labor intensive, or are you losing recent hires at or around the six-month mark?
  • Is the organization trying to solve an issue with employee morale, or drive new levels of engagement?

2. Begin designing your employee referral program, with an eye toward outcomes.

Here, you’ll make specific decisions about strategy, processes, employee involvement and more. As you do, consider the outcomes you want the program to achieve. For instance:

  • Lower recruiting costs
  • Speeding up time-to-hire
  • Deepening your pool of qualified candidates

Also note that even though employee referral programs come with a lot of positives, they can lead to some negative consequences without the right checks and balances.

For example, an employee referral program might inadvertently skew referrals to certain types of candidates.

  • What if all referred candidates tend to be of the same race, religion, national origin, or another protected class?
  • How can you ensure diversity of thought and skills, especially when employees are on the hunt to refer friends, family, or past colleagues?

Here are a few ways to make sure that you still have access to as robust a list of candidates as possible:

  • Continue to use other recruiting methods, such as job boards, social media, job fairs, and your website.
  • Make sure your referral program is open across the entire organization, and not just select workgroups, or employees at specific levels.
  • Evaluate, interview, and check backgrounds of referred candidates the same as you do for job seekers who apply in another way.

3. Devise rewards and communications to drive employee participation.

As you turn employees into recruiters, consider how you want to reward them for their qualified referrals. A few “payment” options include:

  • Offering bonuses
  • Extra PTO
  • A points accrual system that lets employees apply points toward larger awards, events, gift cards or other experiences

Communicating about the program is also key—both to promote the program, and to follow up with employees concerning referrals.

  • Weeks before you launch the program, let employees know that it’s coming, and give them the steps they need to follow in order to refer a candidate. This can help generate buzz around your workplace.
  • Keep your employees up-to-date about their referrals, and whether the candidate is a match or not. 
  • Provide employees feedback. Let them know how and why some referrals are stronger than others. This will improve the types of referrals you receive.

4. Use your applicant tracking system (ATS) to stay organized.

Your ATS can help you track referrals. This includes the date you receive a referral, notes related to contact and conversations you have with the candidate, resumes and more. You can also use your ATS to track the way you’ll reward the candidate, and the date when they will receive it.

Ideally, your employee referral program will make it easy for your workforce to have a hand in the recruitment process, and will bring you qualified candidates who are aligned with your culture and ready to jump into work.

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