• 4 min. read

Why and How to Set up an Employee Referrals Program

Asking your current employees if they know someone good for the role should be the first step of your recruiting process. Reaching out to candidates may require more recruiters and more resources than the ones your company has. Hence, a referral system that empowers all of your employees to help in sourcing often is the best way to achieve your recruiting goals.

Written by Daniela Costa

Employee referrals are a powerful recruiting tool. Research shows that referral programs allow companies to hire top talent in a cheaper and faster way. Referred candidates tend to get hired more quickly, perform better and stay longer in a position. Employee referral programs also help recruiters by reducing their workload and saving them time in the recruitment process. A great referral program requires employees to assess candidates for skills and fit and to sell them on the company. All of this leads to a higher quality of hire and a shorter time to hire, which makes referrals a powerful source of hire.

Asking your current employees if they know someone good for a role should be the first step of your recruiting process. Reaching out to candidates may require more recruiters and more resources than the ones your company has. Hence, a referral system that empowers all of your employees to help in sourcing often is the best way to achieve your recruiting goals.

What are the Main Advantages of Employee Referrals?

There are many advantages in turning your entire workforce into recruiters, but mainly, it is all about identifying top talent faster. Current employees have a deep understanding of your workplace practices and the company’s day-to-day demands. That makes them better equipped with operational insight than many of the recruiters in your HR department. Hence, referred candidates are usually aware of such requirements while candidates sourced through your career page or job boards often don’t.

Employee referrals allow you to:

1. Reach Passive Candidates

Employee referrals make it easy to connect with top candidates that may not be actively seeking a job but are open to new career opportunities suggested by friends or relatives.

2. Make Better Quality Hires

No one knows better than your current employees what it takes to be the right fit for your company. Before making a referral, employees make their own assessment of the person’s skills and qualifications to make sure they suggest someone that’s suitable, often resulting in higher quality hires.

3. Improve Your Employer Brand

By allowing your employees to recommend people from their professional network you’ll strengthen the bond they have with the company. Hence, turning your employees into brand advocates ultimately boosts your employer brand, improves your company culture and helps to attract the right talent.

4. Reduce Time to Hire

Being able to skip the sourcing activities of your recruiting process will definitely shorten the time it will take to fill a position. Additionally, given that referred candidates were already assessed by the employees that are recommending them, chances are that your pool of referred candidates will be filled with talent that is suited to the position. This can also shorten the time spent on screening activities significantly.

To ensure an efficient referrals process, make sure that your referred candidates are tagged on your recruiting software. This will not only allow you to prioritise those candidates but also track which employee made a recommendation.

5. Reduce the Cost per Hire

For all the reasons mentioned above, a referred candidate is cheaper to hire than a traditional candidate. By cutting spending on traditional sourcing channels (job boards, staffing agencies, etc.) and making faster hires, you’ll ultimately reduce the cost per hire, saving money you can use on other recruiting activities.


How do Employee Referral Programs Work?

Employee referrals consist of your current employees making recommendations of potential candidates for the company’s open positions. Usually, employees proactively go to HR and leave information about someone they know that could be a fit for a role. Then, the recruiting team reviews the person’s resume and professional background and evaluates the potential of the candidate, making a decision on whether to run role-specific assessments and conducting an interview. However, without a strong program, referrals may hinder your recruitment efforts instead of helping out.

Referral programs are a structured and organised way of requesting and receiving employee referrals. Having a clear and well-designed program in place allows team members to recommend potentially suitable candidates with a greater sense of responsibility and commitment, which can be harder to ensure when referrals are made in a more casual way. Thus, having a proper referral system with a clear flow and attractive incentives is essential to motivate your employees to refer high-quality candidates.

How to Set up an Employee Referral Program?

Your employee referral program must be part of your core recruiting strategy. Here are some important steps to create an efficient employee referral program:

1. Define the Process

Start by deciding at which stage of your recruiting process you want to use employee referrals to find qualified candidates. Next, determine if referrals will be used for every open position or just for specific positions that are harder to fill.

2. Engage Your Employees

To make your referrals program more efficient you need to make sure your employees are well engaged in the process. Create a dedicated site on your intranet and send everyone an email linking to it so that they know how the program works. Provide them with the key information: how they can obtain their refer code, how they can submit a referral and where they can check the available positions and the requirements of each role. It’s essential to communicate clearly about the process to ensure that your employee referral program is successful.

3. Motivate and Reward Your Employees

To keep your employees motivated toward your referral program, there has to be something in for them. Remember that recruiting is not their job, so a little incentive is needed. Create a bonus system that is attractive and has clear rules regarding what will be considered a successful employee referral and when in which terms an employee will be eligible for a referral bonus. Send a company communication announcing your employee referral program and explain how the incentives work.

4. Track Your Employee Referrals

Lastly, don’t forget to track your employee referrals on your recruiting software. This way, not only can you make sure to reward the employees that make successful recommendations, but you can also assess your referrals program efficiency.

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Thanks for reading and see you next time!

Your team here at skeeled

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