Referred candidates are proved to get better ROI, reduce time-to-hire and cost-per-hire. Get in-depth tips on how to build a great employee referral program with examples from top companies.
With 88% of employers believe that referrals are the number one best source for above-average applicants, companies are incentivizing their employees to find qualified candidates among inner circle.
As a company, if you can not properly tap into the potential of having an employee referral program, you may miss out on some of the most outstanding talents. Worse, you would miss the opportunity to create an engaged workplace. So how can you create a successful employee referral program?
In this article, we first take a look at why companies should have an employee referral program and check out 6 examples of the most effective employee referral programs run by top companies.
What is the employee referral program?
An employee referral program is a company-organized internal method for recruiting. It is a structured program through which an existing employee recommends a candidate, most likely a friend or a relative, for a job.
Most employee referral programs come with a reward. While in many companies only incentivize the referrer of a successful hire is rewarded, other companies reward every employee regardless of whether their candidates were hired or not.
Benefits of implementing the employee referral program
The reasons why every company should have an employee referral program are:
- Reduced hiring time: Traditional hiring method usually takes 39 days to fill a position. By implementing a structured employee referral program, you could cut your hiring time down to 29 days.
- Low recruitment costs: Having an employee referral program means you do not need to pay to advertise your jobs to candidates as your employees will do that for you. This saves you cost in terms of job board advertisements and social media targeted ads.
- More engaged workforce: Encouraging employees to bring their friends and relatives to fill open positions will help you create a connected and highly engaged workforce. There will be a high level of trust among your employees as you are likely to get candidates who share the same value as your employees and organization as a whole.
- Increased retention: Employees hired via referrals stay longer in an organization than those gotten via traditional means. According to a study, 50% of referrals will stay at their job for more than 3 years while the non-referral hires stay for less than two years.
- Highest ROI: More than 80% of employers rated employee referrals better than other sources of recruiting in terms of return on investment (ROI). That is, employees gotten via referral perform best at their job when compared with non-referral hires.
6 inspiring employee referral program examples
1. Accenture - Get referred
Accenture runs one of the most unique employee referral programs. The professional service company targets its referral program at candidates. It allows candidates to join their “Get Referred!” program by first asking them to connect their social media account (preferable Facebook and LinkedIn) to the company website. This site scans their profile and comes up with a list of current employees that candidates know. The employee will then serve as a referral to the candidate.
The approach aids the quick assimilation of new hires into the organization as it engages them from when they are just candidates.
2. Intel - Double bonus
Companies looking to solve their employee diversity problem may adopt the Intel employee referral program strategy. The company looking for a creative solution to its lack of a diverse workforce decided to award double referral bonuses to employees that refer to a female, minority, or veteran candidate. However, the candidate must be successfully hired to receive the bonus.
3. Salesforce - Happy hours
Many companies rightfully use orientation and other similar programs to introduce new hires to their workplace. However, Salesforce, the cloud-based software company took their employee referral program strategy a notch higher by doing something similar for their referred candidates. The company organizes a get-together where employees invite friends or families they want to refer. The event, called recruitment happy hours, serves as a form of an informal introduction to the workplace and puts candidates at ease as they get to meet the company’s recruiters for the first time.
Another example companies can learn from the Salesforce employee referral program is the reward system. The company offers thoughtful gifts to every employee that refers to a candidate, regardless of the hiring outcome. Overall, the Salesforce approach has been deemed successful as more than 50% of new hires come from current employee referrals.
4. Hewlett Packard - Public recognition
Praising your employees is one of the great ways to get the best out of them. Hewlett Packard knows this and integrated the idea into its employee referral program by publicly recognizing employees who bring successful hire. By showing appreciation publicly to its employees, the company makes them into role models for other employees and motivates them to do better.
5. Distillery - Special rewards
What do your employees really want as a reward for their referral?
Financial incentives may not be the right answer all the time. This is why Distillery, a software development company, chooses to reward its software developers for successful hires with the latest iPhones or Apple Watches. The organization discovered that these new gadgets are difficult to get around and hence are valued more than money rewards by their employees.
The lesson here is that companies should try to figure out suitable rewards for their type of employees that can serve as better incentives than money.
6. DigitalOcean - Charity donation
The DigitalOcean employee referral program has an interesting approach. For every successful referral hire, the company pays the referring employee a certain amount and donates another amount on behalf of the employee to a charity organization. This has helped the company attract top talents as 40% of their new hires come from referrals.
Focusing on both individual good and social commitment, this approach will make your employees feel good about themselves as they are helping a friend get a job and contributing their part to the community.
It's not one-size-fits-all
Motivating your employees to actively participate in your referral program goes beyond increasing your referral bonus. Trials and errors are parts of the process to find the most effective for your company. By testing different methods, you can see which one doesn't fit and which one should be enhanced.