How to Run an Employee Referral Program

Many companies are having difficulty attracting the talent they need. One way to find good people is through an employee referral program. This is a program where employees refer people they know for positions at the company.

This type of program has several advantages for a business. First of all, the job candidate is already screened to a certain extent. The employee is referring someone whom they are familiar with. The employee would know something about the person’s work history, their skill set and whether they would be a good fit for the company.

How It Works

The program works by offering incentives to employees for referring people. The incentive is usually some kind of a bonus. To further encourage participation, businesses should also give some type of companywide recognition to those who make referrals.

Companies generally award the bonus only if the referral is hired. But to make the program more effective, employees should receive a bonus whether the referral is hired or not. Also, companies run the program only when there are job openings to fill, but employees should be able to make referrals at any time.

How to Make It More Effective

Another common bottleneck in these types of programs is the process involved. Employees have to follow a procedure that is set up to make the referral. To make the program more effective, companies should streamline this procedure to make it as simple and quick as possible – a name and brief recommendation, for example.

Another issue arises when several employees refer the same person for a job. Most companies handle this situation by giving a bonus to the first person to make the referral. But here again, to make the program more effective, and encourage people to make referrals, everyone who made the referral should receive a bonus.

When more than one employee refers the same person, this is in fact especially helpful to the company because management then has a more comprehensive picture of the job candidate and may be better able to assess the person’s skills.

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