An employee referral program can be a great way to tap into highly qualified candidates through your existing employees. Hires you make through referral programs can often be better cultural fits, stay with your company longer, and cost less to acquire. This guide walks you through the steps you need to take to create an effective employee referral program that bears results.
Specifically, we’ll walk through how to create an employee referral program with an applicant tracking system (ATS) tool like Jobvite. We also have a complete list of the best recruiting software tools here, and go through a few alternatives to Jobvite at the end of this guide.
Step-By-Step Guide to Creating An Employee Referral Program
To help with the referral program creation process, we’ve broken down a step-by-step guide on how you can get a referral program started quickly.
Step 1: Decide Your Referral Incentives
To create a referral program that bears results, one of the first things to determine is the appropriate set of incentives for your employees. This can depend on a number of factors, including your budget and the industry you operate in.
Employee referral incentives come in many forms:
- Paid time off
- A recognition ceremony
- A cash bonus
- An extra holiday
- Company swag
- A thank you note from the CEO
There are no hard and fast rules as to how creative you can be with your incentives, though you want to make sure your referral incentive won’t incentivize employees to hurriedly refer someone solely for the sake of a prize.
Learning what incentives motivate your employees might be a trial and error quest in the beginning. Sometimes, what you think will be enough to encourage your employees to take action does little to increase your referral rates. This is okay! Keep experimenting until you find incentives that work–and don’t be afraid to ask your employees what they would want.
Step 2: Automate Your Referral Submission And Collection Process
If you’re already working with an applicant tracking system, creating an automated referral system your employees can easily access is easy. However, if you don’t work with a comprehensive talent management system, a tool like Jobvite can help you create powerful referral systems that get you real results.
Once you’re onboarded, Jobvite’s referral management dashboard tracks all of your referral incentives, promotional campaigns, and referral ownership. Its referral portal makes it easy for employees to refer their best candidates through their social networks through an easy submission process.
Once employees submit their referrals, they’re automatically stored in your ATS system. From there, your employees get automated updates on the state of their referrals as they move through the hiring and vetting process.
One of the best parts about Jobvite is it doesn’t leave you in the dark once you’ve collected a pool of referral candidates. Through its detailed analytics, you’re able to see exactly where you’re getting your best referrals from, your engagement rates, and even your percent of hires coming from referrals.
To bring it all together, Jobvite also helps you gamify the referral process by publicly highlighting top referrers and awarding them accordingly.
Step 3: Lead With Information
If you don’t set expectations, they’re rarely met. Let your employees know what an acceptable candidate is from the beginning and what the current job openings are. It helps to clearly fill everyone in on how and where exactly to submit their referrals to ensure they get considered properly.
A referral program isn’t of much use if employees only know it exists without knowing how to take full advantage of it. You should make sure to accompany submission information with clear rules and guidelines on what they can expect as a reward. Are they going to receive a small bonus once their referral is onboarded and has cleared the probation period? Are they going to receive the incentive upon the hiring of their referral? Will they need to be present or be a part of their referral’s onboarding process?
The clearer your referral program guidelines and incentives are, the better rate of success you’ll have with submission rates as well as the quality of your hires. For better referral results, consider:
- Being specific about the job requirements of the positions you’re wanting to fill
- Keep your employees informed about what positions open and which have been filled
- Let them know about any upcoming deadlines or important dates
To manage your referral program guidelines, it can be as easy as creating an internal page with all the necessary information that can be updated as job openings change and positions are filled. Or, with an ATS like Jobvite, you can automate the notice process and keep all your employees in the know through email.
Step 4: Remind Employees About Referral Options
It can be easy to “set and forget” a referral program and hope it magically fills with stellar hiring suggestions. However, that couldn’t be further from the truth.
A healthy referral program is one that’s kept alive by constantly reminding your employees that it’s there as an option in case they know or learn of a candidate down the road that would be a great fit for the job.
Set a periodic calendar reminder to bring it up in work meetings or add an announcement to your company bulletin board so your referral program stays relatively top of mind.
Step 5: Revise Your Referral Program As Needed
Say your referral program guidelines have been set. Your incentives are great but not overbearing to where your employees are referring anyone and everyone in hopes of getting a shiny prize. Yet, you might not be getting the results you’re hoping for. What gives?
Sometimes it’s necessary to revisit the drawing table to review where things aren’t adding up. Do you need to reassess your incentives if they aren’t enticing enough? Are the referrals you’re getting not quite matching up with your expectations?
Any area where there is a chance for miscommunication is worth revising. One of the best things you can do is gather employee feedback. Anonymize the process if necessary. That way, you can be sure to create a referral program that’s more aligned with the desired incentives of both your company and your employees.
However, revisions aren’t only necessary if the referral program isn’t working. As your company goals change, budgets are revised, or roles are filled, you’ll want to modify your referral methods as necessary.
3 Top Benefits of Employee Referral Programs
There’s a reason why companies today keep using referral programs to recruit talent. They help reduce recruiting costs, shorten the hiring process, and help increase company retention.
Reduce Recruiting Costs
It can cost thousands of dollars at a time to hire a new employee. This becomes much more costly if your company experiences a high turnover rate. With a successful employee referral program, you’re able to build a talent pool of pre-qualified candidates to choose from as job opportunities arise with ease.
Your referral talent pool can consist of both active job seekers and outstanding talent that might not be actively looking for a new position but that might take the right offer at the right time. Once your company implements a referral program that employees are responsive to, you’re looking at potentially saving thousands in recruiting costs that you can then allocate elsewhere as part of your hiring budget.
Hire In Less Time
The hiring process isn’t just costly, but depending on the positions you’re looking to fill, it can be a highly time-consuming process. With a referral program, you can cut the time it takes you to recruit a new candidate in half once your employees submit a set of more eligible candidates you can vet and choose from.
Better Retention Rates
Employees that are referred by someone they know within the company tend to stay at companies longer. Additionally, since referrals tend to fit better culturally, they also tend to produce more in the long run.
When you compare these rates to the outcomes of recruiting completely detached talent you start to understand the true value of running a well-balanced referral program that employees will actually participate in.
3 Biggest Challenges With Employee Referral Programs & How To Troubleshoot Them
While there are plenty of upsides once you’ve implemented a successful referral program, there will be challenges you’ll inevitably come up against as you refine your referral strategy.
Low Employee Engagement
Your employees might not get excited about the referral plan you’ve put together. That’s a normal situation to be in. Yet, if employees simply aren’t engaging and submitting referrals they think are a good fit, it’s probably time to revisit your incentives.
Some specific actions you can take to make the incentives more appealing are:
- Offer a mix of incentives that don’t only involve recognition or only involve monetary compensation
- Build in valuable “surprise” incentives for successful referrers and widely promote them
- Don’t only reward results, but opt to reward engagement with the referral program to motivate other employees to do the same
- Inform your new hires about your established referral program during the onboarding process so they’re aware of the important part it plays in your business from the start
- Get leadership involved so it creates a strong top-down referral influence
A well-structured referral program is likely not something you can throw together in one evening. It can take trial and error as well as ongoing adjustments as you find new and novel ways to incentivize employees within your company’s constraints.
Diversity Pitfalls
With a referral program, you can potentially run into diversity issues. In today’s world, a diverse workforce is a must. Not only because it’s reflective of the real world, but because a more diverse workforce tends to do better overall.
It isn’t surprising that candidates will tend to refer other candidates that are much like themselves. Fixing this issue, or making sure it doesn’t become a problem from the start, can be as simple as encouraging employees to consider diversity when submitting candidates as part of your guidelines.
Encouraging employees to be aware of their unconscious biases can help you stay away from a serious diversity issue that may arise down the road.
Bad Referral Quality
It’s important to not overhype referral incentives to your employees. Unfortunately, this can lead to receiving hurried referrals that aren’t the best fit for the sake of a prize. This in turn only wastes company resources and can end up costing more or just as much as it would to recruit a completely unknown job candidate.
To fix bad referral quality, go back to the drawing board to revise your referral guidelines. Ask yourself:
- Are we being clear on the job requirements we’re looking for?
- Is the incentive actually incentivizing employees to refer quantity over quality?
- Is our vetting process not stringent enough?
Methodically running through every part of your referral process and asking some of these questions can help lead you to the core of the problem.
Lack of Promotion
It’s easy to fall into a rut in which the hiring team only publicizes the program once or twice a year. A successful referral program that brings in candidates works best by staying top of mind for employees.
Failing to continually promote your referral program can and will inevitably lead to less than ideal outcomes. To continue to promote your referral program, schedule promotion dates either weekly, monthly, or quarterly.
Scheduling a date where the hiring team can bring up the referral program in meetings or company-wide announcements can be an easy fix to a stagnant referral program that doesn’t see any promotion. This way, employees both old and new are aware that they can refer candidates and be rewarded for their effort.
Other Options For Employee Referral Programs
This guide showed you how to create and manage an employee referral system with Jobvite. However, here are some alternatives worth considering:
If you’re a large business that manages a talent pool instead of starting from scratch when there’s a job opening, you might find the ClearCompany tools ease the process of maintaining and managing a large talent pool with referrals included.
However, if your company leans on a robust applicant tracking system to get the job done, BambooHR can be the multifaceted tool you use to attract new candidates and manage your referral process. It’s designed to support you through both the hiring and the onboarding process.
Sometimes you need a more straightforward recruiting process that doesn’t cost you anything to use. Recooty can be such a tool. It comes with plenty of ATS tools and job posting options that’ll ensure you’re getting access to the best candidates possible from one centralized dashboard.
Here are all of our top picks for recruiting software that can help with referral programs.
- ClearCompany – Best for talent management
- JazzHR – Best for high-quality candidate sourcing
- BambooHR – Best applicant tracking system
- Recruiterbox – Best for collaborative hiring
- Recooty – Best free recruiting software