Referral Programs that Work

January 20, 2017 Deb Broderson

Is your Employee Referral Program helping you win the war for talent,  or is it just there,  being used occasionally?  The reality is that not all Employee Referral Programs are created equal.

Employee referral programs are as different as carsJust because all cars have four tires and a steering wheel, does not make them all the same. That analogy is also true with legacy referral programs, some of which have real challenges, leading to less than stellar participation rates.

Achieving Referral Programs that Work

Assess the percent of your hires are coming from your referral program, versus recruiters.  According to Dr. John Sullivan,  a good Employee Referral Program can produce about 70% of your new hires.  To better understand why some referral programs work while others fail to produce,  let’s look at some core design and execution flaws.

  1. Use of web forms and/or emails for infrastructure may be adequate for a small company.  However, in a mid-to-large size company, you need both infrastructure and automation to facilitate success of the program.  Without a strong back-end solution, the program management will become unwieldy and the lack of analytics will limit your ability to make smart, data-driven decisions.
  2. Funding levels should be inline with the benefit that your organization receives from a referral.  Set your budget for a successful referral at 30% to 60% of what it would have cost you, if you had to hire an individual through normal posting or recruiting channels.
  3. Make sure people really know about the program.  Communicate success stories of people who referred someone, who has been a great addition to the team.  Pull potential participants into the program by making sure they know how this helps both them and the company. Communicate on a regular basis with strong What’s In It For Me messaging that links to participant value to the company benefit.
  4. Recognize and reward people who refer!  Having reward and recognition throughout the process is an important element of engagement.  Send thank you notes to people who make qualified referrals.  Keep them informed throughout the process. Consider taking your budget for a successful referral and “parsing” it out along the way, so people earn throughout the referral lifecycle.
  5. Make sure you have an Employee Recognition strategy,  don’t just post positions.  We often hear that all positions are posted for the same dollar amount.  Why?  Not every role is as difficult or costly to fill, and you budget should reflect that fact.  You may not want to post all position.  Setting clear objectives for the program, determining how your employee recognition program will help increase your employee’s engagement and monitoring to the plan will help you achieve greater success.

Any one of these challenges has the potential of derailing your employee referral program.  When these occur, participation rates will decrease and your ability to achieve the desired engagement levels and ROI will diminish. 

For more information about how you can have employee referral programs that work, access our ebook, The Ultimate Employee Referral Handbook.

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