Employee Referrals: 6 Ways to Build a Program That Works

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Today's Question: The best hires tend to come through referrals, but not every organization has a solid employee referral program (ERP) in place. What tips do you have to help organizations implement effective ERPs?

1. Build Relationships With Your Employees

Paying attention to the details of your daily interactions with employees and finding small but impactful ways to honor a job well done are key to building a strong and loyal relationship with talent. That in turn builds a base of referrals among other people who want to work with us.

— Dan Campbell, Hire Dynamics

2. Give Your Employees Some Guidance

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When employees refer prospective hires, they're acting as middlemen between their employers and the people they refer – almost like amateur recruiters. One problem, especially in a large company, is that unlike professional recruiters, these amateur middlemen are not vouching for the quality of the people they recommend. A recruiter who sends too many inappropriate candidates will eventually lose any chance of business with their client, but that incentive doesn't come into play for an employee making referrals.

You have to build in features to get what you're after. Otherwise, you'll at best get more of the same kinds of people you already have, simply because people tend to refer their friends, who tend to be like them. If you want to diversify your workforce, you need to be more specific about what you're looking for. Give your amateur recruiters hints about where to look for the right candidates (trade shows, LinkedIn networks, etc.).

— Marina Krakovsky, Author,

3. Incentivize Referrals

Based on my 20 years of experience in senior leadership and management in the staffing and recruiting industry, I believe a comprehensive ERP is most effective. This would include a plan that motivates employees to refer qualified candidates through extrinsic and intrinsic rewards.

Extrinsic rewards tie a monetary bonus to referrals that are hired. The amount of the bonus can vary depending on position level. The company should also recognize the employee that made the referral. This can be done in a newsletter, award ceremony, or staff meeting. The employee who referred the candidate could also be appointed as the new hire's mentor or trainer for the initial 90 days for successful orientation. Completion of mentoring could lead to more extrinsic incentives like time off or a thank-you lunch, as well as additional intrinsic recognition, perhaps in performance evaluations, a special parking space, or an employee-of-the-month designation.

— Melanie Klinghoffer, Powerful Transformations

4. Keep It Simple

Our company has a very simple ERP, which yields lots of referrals. We offer $100 for any candidate who we hire. We give it to employees on the day their referral starts. If it doesn't work out, they keep the money, because then it's bad hiring on our part! It's a great way to get the employees involved, give them a small bonus as a thank-you, and get some great new members on our team.

— Deborah Sweeney, MyCorporation

5. Build a Culture Worth Referring To

I think referral programs only work if you have a culture and company that is worthy of referrals. You could offer me millions of dollars right now to refer someone to my husband's employer, but I wouldn't do it. I know the ugly inside of their operations and I wouldn't subject someone I like and respect to the same thing. One risks a friendship/relationship/acquaintance when referring someone to a company that won't make good on the promise of a "great environment" that you made when you asked them to jump on board with you. That is why APQC works so hard to build a great internal culture to retain our employees. That way, they will be willing to make referrals when needed.

— Ashley White, APQC

6. Keep Employees Informed

Seventy percent of our hires in the past four years have been made through employee referrals. In order to implement an effective employee referral program (ERP), you have to first provide employees a tangible benefit to refer candidates. At Fifth Tribe, we provide a cash bonus for every candidate that we hire for a term of one year.

Second, whenever a position becomes available, make sure to notify your employees of the position before going public. If you end up making a hire through an employee referral, notify the rest of your staff so that they will be reminded of the benefits of the ERP and the associated bonus.

— Khuram Zaman, Fifth Tribe