Running Your Business

Employee Referral Program Ideas: How to Create a Program That Works


  • Employee referral programs can lead to high-quality hires who stay on the job longer

  • Keep these program simple, easy to use and mobile friendly

  • Offer incentives employees will appreciate and find ways to incentivize referrals that don't lead to hires, too

Posted by June 26, 2019

Your current employees are a great resource for finding new hires, but they’re often underutilized. However, when they’re are incentivized for bringing in top talent and for their stellar employee referral program ideas, your company can tap these valuable resources while ensuring new hires will be happy and comfortable once they come aboard.

The best program is the one where everyone wins. From effective communication to appealing incentives, here’s how to structure a winning employee referral program.

The Benefits of an Employee Referral Program

Employee referral programs are beneficial in many ways. About 82% of employers say that referral programs generate the best return on their investment. And about 88% of employers say that referrals are their best source for finding above-average applicants.

These programs also have a higher retention rate than traditional hiring, with 45% of referred employees staying longer than two years versus 20% found on job boards. Referred employees may also be more engaged because they’re more likely to fit in well with their colleagues since their personality already complements another staffer’s.

But companies won’t experience all these benefits if they run a program that’s confusing or poorly marketed. So how do you avoid that? Here are a few employee referral program ideas that can help.

1. Simplicity Is Key

Using the referral program shouldn’t require an expert’s constant help or an in-depth three-hour webinar. Keep it simple: The best process is to have an online page where job openings are listed. Employees can simply click the listing and fill out an online form to refer a candidate.

You should also welcome and reward employee referrals all the time—not just when a specific job opens up. This can be as simple as having a designated Google doc form or empowering employees to send these referrals via email. In addition, some companies use programs that connect with social networks, allowing employees to refer followers on LinkedIn, Facebook or Twitter. The program will have higher engagement if it’s mobile friendly, so employees can easily refer contacts while they’re on the go.

2. Offer the Right Incentives

Referral programs can be a great investment, saving $3,000 or more per hire. Traditional hiring often requires a percentage that goes toward an agency or recruiter, or spending money on advertisements or other fees that referral programs avoid. So the money put into offering incentives will pay off over time.

But what are the best ways to entice employees to refer a qualified friend? A cash incentive for a referral is always appealing: These can range from $250 to thousands of dollars, depending on the job and the company’s budget. Some companies pay more for executive-level referrals, but others provide the same incentives no matter what type of job is being referred.

Small businesses can offer other incentives if they can’t afford large bonuses, such as stock options, gift cards or even extra vacation days.

Some companies pay an initial bonus for a referral and then a secondary bonus after a certain number of days or months of employment. Others like Intel, in order to encourage diversity in hiring, may pay more for referrals that lead to the hiring of underrepresented candidates.

3. Market the Program

Another key to a successful employee referral program is communication. Talk about the program and the motivation to build a great workplace culture. Businesses might have an initial meeting explaining the new program, but they shouldn’t stop there. Sending regular emails about new positions and incentives can help, along with talking about referred hires and how well they’re doing.

Even if a referral doesn’t get hired, thank employees anyways. Some businesses like to incentivize every referral somehow, such as hosting a raffle where employees get one ticket per referral for a nice prize.

Keeping these three employee referral program ideas in mind can help your business create a successful and vibrant program that attracts top talent and shows current employees they’re valued, too.

For more tips on how to improve your workplace, explore United Concordia’s Benefits Bridge.

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