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Employee Referral Programs: 7 Things the Best Ones Have in Common

Employee Referral Programs + Recruitment Process Outsourcing Companies

Did you know that employees who are hired as a result of a referral are 20% less likely to quit their jobs? They also stay at the company longer, are more productive, and cost less to hire and train than traditional hires do. If that's not enough reason to develop a strong employee referral program, consider this: LinkedIn data shows that not only do referred employees stay at your company longer, but so do the employees who referred them. And, recruitment process outsourcing companies can help you get results.

To get these results, you need a referral program that benefits everyone and moves your organization closer to your talent goals. Let's look at seven characteristics shared by the best programs.

  1. Concrete Goals. Do you need to build out a specific department? Are you aiming to increase diversity? Are you getting some referrals, but want to increase your percentage? Are you looking for employees with a specific skill set? These goals will influence how you shape the referral program for your team. For example, if you want to hire software engineers, emphasize the program with your IT team and offer an incentive for specific kinds of referrals.
  2. An Understanding of Referral Psychology. Quality begets quality. Research shows that star players tend to refer other star players, while mediocre employees are more likely to refer employees who perform at levels equivalent to or worse than themselves. There are many factors that contribute to these results, but one key reason for the findings is that second-tier employees don't want to refer someone who may outshine them. As long as hiring managers understand this tendency, they can build incentives into the program to encourage quality referrals.
  3. User-Friendly Processes. The easier it is to refer someone, the more likely your employees are to get involved. Remove as many barriers to success as possible. If you can get away with asking employees to provide simply a name and contact number, go that route. You can use your ATS to manage contact information, but generally the less work an employee has to do to submit the referral, the better.
  4. Clear Expectations. Train your employees about how to refer someone and what will happen when they do. Teach them what you're looking for in a candidate and explain the process. Will you always contact the referral? Will you contact only referrals you consider qualified? How much lead-time should they expect? Your employees are going out on a limb to recommend you to their friends and associates, so make sure you follow through on the process you've communicated to them.
  5. Positive Feedback And Incentives. Positive feedback is the best way to keep referrals coming. This could take the form of a cash bonus, but it can also mean a personal thank-you from the recruiting team or recognition at a staff meeting. Be careful that you don't set up an incentive that is unsustainable, however. For example, don't offer cash bonuses initially and then scale back to company swag in an effort to save money. That's a surefire way to create morale problems.
  6. Good Communication. If you want your employees to keep referring, make sure they know you have followed up on their suggestions. Be careful not to compromise privacy, however. The Society for Human Resources recommends letting employees know that you have contacted the referral, but not giving them access to track the process unless the referral opts in and agrees to share that information.
  7. Measurable Results. Keep your eyes on metrics like percent of hires from referrals, percent of qualified referrals, employee participation rates, and retention rates of referred hires. If you're not satisfied with what you see, look at your program for weaknesses. Remember, however, that extenuating factors such as project workloads and time of year can contribute to lower referral rates.

Referral programs offer one of the best ways to source quality candidates quickly. When you take the time to build a program that benefits both referred candidates and referring employees, you'll make it easier for your recruiting team to fill your open positions with the best talent.New call-to-action