Here’s How Top Companies Run Their Employee Referral Programs
Looking for the next wave of top talent? Let your employees find it for you. Employee referrals are a great way of sourcing candidates, and according to LinkedIn, employee referrals are the number one strategy companies use to fill open positions. Leverage the network of the people that work for you and reward them for referring a highly qualified candidate.
Benefits of Employee Referrals
- High-Quality Candidates: Your employees want to refer the best candidates for a chance to earn extra money and rewards if they are hired.
- Higher Retention Rates: The employee referral process has the highest ROI of any recruitment method. Studies show that 46 percent of the employees hired through the referral method stayed with the companies for at least one year.
- Faster Hire: It takes about 55 days to fill a vacant position with traditional hiring methods. It takes about 30 days to hire via employee referral.
- Lower Costs: Ditch the headhunting company’s 20% fee and pay your employees to find a talented hire. A $5,000 referral bonus is a lot cheaper than 20% of a $150,000 salary.
Employee Referral Strategies
When a competitive amount of money is offered to bring in top talent, your employees will be on the search so they can make some extra cash. You don’t have to offer $20,000 per referral like startup Thoughtspot did in 2014. Generally, employee referral programs pay the referring employee anywhere between $250 - $10,000 after the new employee works for a certain amount of time. Here’s a look at some of the payouts from other incentive programs:
- Hubspot offers $10,000 to employees who refer successful developer applicants that work for at least 4 months.
- Atlassian offers $10,000 to employees who refer successful applicants.
- Ubisoft offers $2,500 for director-level positions and $1,500 for lower level positions upon hire of the referred applicant.
Take a page out of the Salesforce book. They gave employees San Francisco Giants tickets for just submitting a referral, regardless if the candidate was hired or not. This creates a sense of excitement among employees to find new candidates.
Generate buzz about referrals and encourage your employees to participate by hosting a recruiting event. Encourage employees to invite others in their professional networks to learn about the opportunities at the company. This is also an excellent way for employees to help their referrals meet with hiring managers in person, potentially increasing their odds to get hired.
Create a Game Culture + Win Swag
Create a fun and competitive environment by creating a points system to win prizes for employee referrals. Fiverr turned to social media to track social job sharing and offered points to employees for sharing jobs and referring friends. Salesforce, uses deadline based contests, rewarding employees who submit referrals during a designated time period. Distillery offers new tech gadgets like iPhones and Apple watches as rewards to employees for recommending great candidates.
Include a Charitable Donation
Sometimes your employees will care about a specific cause more than a $3,000 bonus. Try offering a charitable donation with the bonus. A 2017 case study on DigitalOcean showed that the company introduced a structure where the referring employee received a $3,500 referral bonus. In addition to this, the incentive included a $1,500 charitable donation paid by DigitalOcean on the employee’s behalf. The study shows that 40% of DigitalOcean’s new hires were acquired through referrals.
Overall, the referral process should be simple for your employees to learn about and to participate in. Make sure that your staff knows about the employee referral program through multiple channels, including social media. Be sure to keep the team in the loop when a new position opens. Ditch the long referral forms and have a process where only a resume and short description of why the candidate should be selected, is needed. By incorporating these strategies, you’re building an employee program that incentivizes participation and is seen as a win, win for employees. Remember, this isn’t a one size fits all approach. Use the strategies that work best for the interests of your team. If one strategy isn’t working, be willing to adapt and shift to another strategy.