What is an Employee Referral Program

What is an Employee Referral Program?

by Callie Hansen

There’s no denying that having strong connections will help you get a good job, but can strong connections help you hire smarter? Of course; which is why employee referrals are so important. If you aren’t finding quality applicants, the solution may very well lie with your current employees. More often than not, employee referrals bring in quality candidates and tend to have a higher retention than other hires. Introducing an employee referral program in the workplace seems like the obvious solution—especially if there’s incentive offered.

What is an employee referral program?

An employee referral program is an internal way of generating new hires for your company by having your employees refer their friends and family for your open positions. Most often, employee referral programs include some sort of incentive for the employee who refers the candidate who ultimately gets hired, typically a bonus, cash reward, or something similar. Some companies don’t have budget or a monetary way to incentivize your employees. Creative companies have offered up a paid day off, the coveted parking space, or even lunch with the boss

An automated employee referral program allows is a nice way to keep track of all your referrals and know who the applicant is and where he or she came from. Without automation, it can be done but comes with some pitfalls. Accuracy and shareability can suffer. More on this later.

What are the Benefits?

An employee referral program not only keeps track of referrals but it benefits your employees and your company in the long term. Implementing this program into your hiring process may just be the solution you need to solve your hiring problems. Here are four major benefits that come with an employee referral program:

1. Faster Turn Around Time

When you lose an employee, several weeks can go by, maybe even months, before a new hire is made. With an employee referral program, that turnover time is practically cut in half. In a recent study, research shows that on average, employee referrals were hired at least 10 days earlier than other candidates. If you’re looking to fill an open position fast, look first to your employees. More often than not, they will know somebody in need of a job who would be a quality candidate for the job.

2. More Likely to be a Quality Hire

Hiring someone who looks good on paper and performs well during an interview, can run the risk of getting a bad hire. With good screening processes in place, especially through the use of an applicant tracking system, that risk is low, but it’s even lower when you hire an employee referral. The employee personally knows the person referred, as well as his or her work ethic. The hope is that an employee wouldn’t refer someone for the job that wouldn’t be a good fit. If they do, then your company has a culture problem, which is a bigger problem in itself. A recent Forbes article discussed that issue and ultimately how to improve company culture.

3. Improves Company Culture

With a good company culture already in place, hiring an employee’s referral will only make it better. Like doing anything new, getting a new job and learning the ways and culture of a new company can be difficult. But with an employee referral program, the new hire already knows the employee who helped him or her get a job. Knowing at least one person in the company improves the company culture and the overall job satisfaction. There is a connection and friendship already in place, which allows room for both employees to grow in their positions, not excluding the other members of the team. It improves team moral altogether, because everyone wants to be at work, they like being there, which means more work gets done.

4. Longer Employee Retention

With an improved company culture, surely enough, your employees will want to stick around longer than others. There is already an established relationship, and once that relationship is built with the company during a standard training period, your new hire is sure to stay on. This, in turn, completes the hiring circle. Hiring employee referrals decreases the amount of turnover you have because your employees enjoy working for your company and are therefore willing to stick around longer.

Where to begin?

An employee referral program is often easily integrated with an applicant tracking system, like ApplicantPro. All employees need to do is log in to the employee referral portal. There, they can view all open jobs available for referral, and can then send the job link to whomever they think would be a good fit for the job. This can be done through email, LinkedIn or other forms of social media. The link is unique to the employee’s login, so whomever applies through the link the employee shared, each applicant will have a source attached with your employee’s name on it. That way there isn’t any question about who gets the incentive when the applicant is hired.

There shouldn’t be any hesitation when you’re hiring to first go to your employees and then advertise to online job boards. Don’t let that opportunity go to waste, your employees may be connected to your next amazing hire.

To learn more about the employee referral program and how to implement it into your hiring process, contact us today.


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