“I know the perfect person…”

Boosting recruiting and retention through employee referral programs

Talent Referral

Posted by Robin Erickson on October 21, 2014

Tapping current employees to source new candidates is a viable recruiting strategy for many reasons: high return on investment (Bersin research found that 9 percent of the overall spend for sourcing went to employee referrals, delivering 16 percent of new hires1 ); good cultural fit (employees tend to refer candidates with similar skills and attributes); access to specialized or hard-to-find skills (people typically network with others in similar roles); and long-term effectiveness (one study showed a 42 percent retention rate after three years for employees hired through employee referral programs vs.32 percent for employees hired through job boards and 14 percent for career site hires2).

These are compelling reasons for the organization to get on board with a referral program. But what are the compelling reasons for employees? Certainly, financial and other incentives are important motivators. But your referral program stands a better chance of success if your employees want to participate for more than awards. How you brand the effort can keep it from becoming just another business process, and making it fun and compelling will drive engagement and usage.

Get the word out: Inform, educate, excite
Communication and awareness campaigns can help garner and maintain employee interest and support, particularly in the beginning. You will also want to educate your employees about the value their participation can bring to the workplace and provide coaching on how to position the company and its culture to friends and potential referrals. This is a great chance to reinforce your employer brand and really articulate what it means to be part of your organization, its differentiators, and the value of working there from the employee perspective.

If making a referral is a difficult process, employees will lose interest and not want to participate. So first of all, don’t make the process difficult. Second, if employees don’t feel their referrals are being considered or don’t receive status updates, they will stop referring their friends. So communicate proactively with employees who have made referrals—it’s okay to acknowledge that the potential candidate is not qualified for the position.

Keep the momentum going
Defining the strategy and getting employees on board is so important. Equally impactful is how you get employees involved in the program beyond just submitting referrals. Having employees become true brand ambassadors is key. You can do this by encouraging employees to:

  • SHAKE THEIR TREES AND SEE WHERE THE APPLES FALL. ASK THEM WHO THEY KNOW EVERY CHANCE YOU GET. TALK ABOUT THE EMPLOYEE REFERRAL PROGRAM WITH NEW HIRES, EVEN BEFORE THEY START. IT’S A GREAT WAY TO GET THEM ACCLIMATED INTO THE BRAND AND CULTURE.
  • LEVERAGE THEIR SOCIAL NETWORKS. IT’S OKAY TO ASK EMPLOYEES TO ASK THEIR NETWORKS FOR REFERRALS. THE “PAY IT FORWARD” CONCEPT WORKS WELL.
  • TALK ABOUT YOUR COMPANY. GIVE EMPLOYEES GOOD CONTENT TO SHARE WITH THEIR FRIENDS, FAMILY AND NETWORK. LET THEM KNOW YOU VALUE THEIR CONTRIBUTIONS AND WANT TO KNOW WHO THEY KNOW. Be clear in your messaging and in the way you communicate open positions. Also give employees simple language or taglines/hashtags to use in their own communications (e.g., Great opportunity at my company! or #WorkWithMe).

Deliver on the promise
When defining awards, consider the job level, whether the skills are critical or in short supply, and other factors, such as difficulty in filling the position. To date, there is no standard or formal process for determining these variables. The average range for bonuses is $500 to $4,000, depending on the job. In times of employee shortage or for specialized positions, these awards may range from $2,000 to $5,000.3 Your company should define its own bonus structure based on its budget, culture, available resources, and hiring needs. Noncash incentives are also a viable option—for example, time off, public recognition, a reserved parking place for a week, or a donation to a charity of the referrer’s choosing.

Whether incentives are cash or some other type of reward, establish award payment timing before beginning the program so employees know what to expect. You can consider making payment after a certain number of months have passed, 2 to 6 months, for example, or splitting payments, such as 50 percent at time of offer acceptance and 50 percent after a certain number of months.

It’s worth the effort
Considering the potential benefits to the organization—high ROI, lower recruiting costs and higher success rates, improved retention rates—employee referral programs are worth the effort. The downsides are few (one possibility is that employees are hurt or irate if someone they refer doesn’t get hired, which makes it important to emphasize that referrals are not assured of a position)—and are far outweighed by the advantages. So if you don’t yet have a program in place, consider starting one. And if your current program isn’t living up to your expectations, explore ways to revamp it.


Robin Erickson, Ph.D., is the Vice President for Talent Acquisition Research at Bersin by Deloitte, Deloitte Consulting LLP. She writes about various topics in talent acquisition, including integrating with talent management, improving quality of hire for critical jobs, leveraging social recruiting to build talent pools, and building a global recruiting function.
Follow Robin on Twitter @RAEricksonPhD and visit her blog, Talent Magnetism.

1For more information, The Talent Acquisition Factbook® 2011: Benchmarks and Trends in Spending, Staffing and Key Recruiting Metrics, Bersin & Associates / Karen O’Leonard, November 2011. Available to research members at www.bersin.com/library or for purchase at www.bersin.com/tafactbook.
2 Source: Katherine Jones, Ph.D., & Kim Lamoureux, Creating an Employee Referral Program: Guideline for Getting Started, Bersin by Deloitte, December 2013.
3The Talent Acquisition Factbook® 2011.

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