Recruiting top talent into your ranks isn’t always easy. But often employers have an unused recruitment resource right under their noses – their existing employees!

Asking your employees to refer people in their networks for open positions in your organisation is known as an employee referral program. It can result in great quality hires and therefore is a great asset for any company.

Find out how to design and manage an employee referral program below.

What is an employee referral program?

An employee referral program is a recruitment strategy whereby employees are encouraged by their employer, through incentives such as monetary and non-monetary rewards, to refer highly skilled candidates for open roles. Employee referral programs are cost-effective and a great way to tap into external talent pools.

What are the benefits of an employee referral program?

An employee referral program has many benefits:

  • It gives employers access to highly qualified talent – Through an employee-referral program, employers are granted access into the networks of their employees, and can tap into large candidate pools of highly skilled passive job seekers who may jump on the right job opportunity should it arise. According to SHRM, employee-referred new hires are better performers than new hires who are not employee-referred. They are also a better cultural fit.
  • It’s a cost-effective recruitment strategy– Employee referrals fast-track the recruitment process as employee-referred candidates require less vetting – and are usually higher performers. Therefore, recruiters get “bums in seats” quicker, hence it is a highly cost-effective strategy.
  • Increases employee engagement: While certain employees may find comfort in sticking to the same responsibilities day in, day out, others may occasionally seek a change. Rather than lose a potentially valued employee who’s grown disinterested in their role, employers with a skills gap to fill can offer that employee a change in role. Not only will this make the cross-boarded employee feel recognised; the opportunity to learn new skills will boost engagement levels. 
  • It boosts employee engagement – By incentivising employees to refer the best talent in their network, employees become recruiters and brand advocates. This increases workforce engagement and satisfaction – and retention rates.

What influence does an employee referral program play on onboarding?

As mentioned before, new hires that have been referred by an existing employee typically perform better and are a good cultural fit. This is because people avoid referring candidates who will make them “look bad”. Instead, they will only refer someone who they think is qualified for the role and has a good shot at landing it.

This means the employee-referred new hires may require less onboarding and reach full productivity quicker than their nonemployee-referred peers. Indeed, the referee could also play a part in the onboarding process by showing the new hire the ropes, introducing them to team members and generally settling them into the organisation.


4 easy steps to creating an employee referral program

Employee referral programs don’t run themselves – they require constant management from HR in order to receive and maintain executive buy-in.
Below are 4 tips on how to design and manage an effective employee referral program.

1. Raise awareness of your program

In order to promote a buzz around your program, you must make employees aware of the initiative – primarily, what’s in it for them. Only then will widespread adoption occur. So, communicate the rewards you are offering – e.g. cash bonuses or gift vouchers – but be sure to clearly lay out the terms.

2. Make the rules and stick to them

Nothing damages the integrity of a new initiative like inconsistency. Create conditions and rules around the referral program – such as the referee must know they are being referred before the employee submits a referral form – to ensure everyone is treated fairly. After all, if there are monetary rewards involved, it’s crucial that the program is still cost-effective.

3. Recognise successful referrers

To create excitement around the program, recognise employees who have referred successful candidates via social media or on your organisation’s intranet. This promotes a good recognition culture and a bit of healthy competition!

4. Keep things moving and provide feedback

A program is only successful if it is well-managed. Therefore, HR and hiring managers must act fast on referrals and provide timely feedback to both parties. Your company may have a rule where they interview every candidate that is put forward by the program – whether a phone screening or an in-person interview. This sends a positive message to both parties.

Designing and managing an effective employee referral program is not a walk in the park. But done right, it can bring a wealth of benefits to the employee, referral and the organisation.

HROnboard, an ELMO company, offers a best-in-class software solution that reduces the amount of time HR teams and leaders spend securing the best candidates and undertaking the critical onboarding process for new hires. Our solution also helps manage internal employee role changes and can create a smooth and seamless process for exiting employees. To find out more, reach us here.

ELMO Cloud HR & Payroll offers end-to-end solutions for the entire employee lifecycle, from ‘hire to retire’. This includes recruitment, learning, performance management, payroll, rostering / time & attendance, and more. For further information, contact us.

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