Employee Referral Programs

The most powerful and cost-effective recruitment marketing tool

What if you could save your company over $7,000 per hire? You’d be a superhero, right? Well, it might be time to get fitted for your new cape. Because that’s what a good employee referral program can do for your company.

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Data from LinkedIn shows that “82% of employees rated employee referrals above all other sourcing options to yield the best ROI.” In a separate report, LinkedIn found that most companies hire 20-40% of their new hires through referrals, with the median being 27%.

Employee Referral Programs save time and money, attract top talent, reduce turnover and help keep your existing employees engaged, inspired, and loyal.

A-Players know other

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Here’s a scenario to consider. Let’s say you just hired two A-players. For the purposes of this discussion, let’s just call them A-player #1 and A-player #2.

A-player #1 just joined your organization from one of your competitors. Great hire! A-player #2 has been with your company for three months and has quite an impressive background in your industry. Another great hire. Both of these A-players will undoubtedly achieve measurable business results for your company.

But here’s the thing. It’s not just what they do that makes them incredibly valuable to your company. It’s who they know. Because you know who your top employees tend to know? Top candidates.


Employee referral programs result in better hires.

According to a survey on Indeed, “74 % of employers said candidates sourced from employee referrals were extremely qualified for the role.”

Data from LinkedInshows that “82% of employees rated employee referrals above all other sourcing options to yield the best ROI.” In a separate report, LinkedIn found that most companies hire 20-40% of their new hires through referrals, with the median being 27%.

Employee Referral Programs save time and money, attract top talent, reduce turnover and help keep your existing employees engaged, inspired, and loyal.

5 great reasons to make employee referrals a priority

Your employee referral program will not only save you time and money. It can serve as the foundation for your company’s growth and future success. Let’s take a quick look at some of the key benefits of employee referrals.

  • Number 1

    A report from Glassdoor shows that job interviews are much more likely to lead to an accepted job offer, and employee referrals boost the odds of a successful job match by 2.6 to 6.6 per cent. Employee referrals allow you to target candidates you know will be a good fit for the company, so the quality of hire will be higher. It also leads to other benefits.

  • Number 2

    When you have employee referrals in your database, there are a bunch of steps you can skip. Advertising your jobs, screening resumes, organizing interviews, and so on. All the things you have to do when you’re marketing your jobs externally. If you have referred candidates, you can move on quickly to pre-employment testing and interviews.

  • Number 3

    An employee referral program cuts costs throughout the entire hiring process. If you reward employee referrals with financial incentives, you will still see significant savings. In fact, by rewarding your employees, you’re making them happy. Happy employees don’t want to leave. So by rewarding employees for their referrals, you’re also investing in employee retention.

  • Number 4

    Your referral program will definitely help you attract high-performing candidates, and current research suggests that your new recruits will be great cultural fits. After all, they should already have a feel for your company culture through discussions with a current employee. The onboarding process can also be smoother for referred candidates.

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    When you’re recruiting for hard-to-fill positions, your employee referral program will be the tool that brings the best candidates to your doorstep. In highly competitive talent markets, like high tech and health care, turning your employees into headhunters can be your most efficient, productive, and profitable recruitment strategy.

5 Tips for a successful employee referral program

Okay, if you’re still reading this you’re probably on board with the reasons why having an Employee Referral Program is a good idea. So let’s run through a few tips on making it run smoothly.

  • Number 1

    Ideally, have one person responsible for managing and communicating the program. Whether you’re creating the program internally or working with an outside firm, it’s helpful to have a point person.

  • Number 2

    If your senior leadership helps promote the Employee Referral Program, it lets everyone know that it’s a serious initiative, not just a game. It adds even more incentive because employees know that their contributions are being recognized at the top of the organization.

  • Number 3

    Many Applicant Tracking Systems include employee referral tools, templates, and automation. By leveraging technology, it will be much easier to track referrals and communicate with employees. You can even use an automated reference-checking tool to make for an easy peasy candidate evaluation process.

  • Number 4

    Your employees serve as employer brand ambassadors when they’re referring candidates to your company. You want them to use their network to the fullest, but make sure they’re sending a consistent message and telling the same story about your company’s mission, vision, and values.

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    Sometimes great referrals come from customers, and while you may not elect to ask customers for employee referrals, you can still welcome them if they’re offered up. Candidates who make it to the interview stage can also lead to more referrals.

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    The REFER Approach

    For creating Employee Referral Program

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My method for optimizing the hiring process and getting the most results with the least amount of money can be summed up in one word: REFER

You can absolutely hire more A-players efficiently and cost-effectively by taking advantage of employee referrals. By following my REFER approach, you can create an Employee Referral Program that produces results. From my perspective, these are the five most important tips to consider when launching your Employee Referral Program:

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    Reward the referral, not the hire

As soon as a referral is made, acknowledge it immediately to create more engagement and excitement. If you acknowledge and reward every referral, your employees will make it a priority.

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    Easy for people to refer

If there are too many restrictions, and it’s too complicated, employees will be less inclined to spend time and effort making referrals. Make it easy for people to make referrals.

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    Fun is good, so if you can, make it fun

Like pretty much everything else in life, if you make it fun, people are more likely to participate and stay engaged.

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    Extension of our culture

The program should feel like your company and be aligned with your values. Your employees are employer brand ambassadors, so keep messaging aligned.

  • 18

    Remind people constantly

The more you talk it up, the more important it will be to your employees. If it sounds like a priority to you, your employees will make it a priority as well.

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Your most powerful recruitment marketing tool? It’s already in your tool belt.

Treat your employees like gold, because they’re not only doing the work that will make your company successful, they are your potential recruiters and as such, will contribute to your company’s growth.

Allowing your team members to become actively involved in your company’s recruiting process is a smart recruitment marketing strategy. They can help you build a team of A-players and lower your company’s chances of making costly hiring mistakes.

Leverage your own top talent to discover more top talent!

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