When it comes to hiring methods, we’re big fans of a good employee referral program. They get great results, have an excellent return on investment, decrease cost per hire and bring many benefits for everyone involved in the hiring process.
You might be thinking of starting an employee referral program of your own, but might be unsure where to start. To help you out, we’ve gathered our favorite employee referral program ideas for some inspiration.
How does a regular employee referral program work?
Traditionally, most employee referral programs follow a pattern that goes like this:
- A new position opens up
- Employees refer someone they know who would be a great fit for the position
- A company hires the referred candidate
- The employee who made the referral gets a reward
The good news is, you don’t have to go by this pattern, and you can structure your employee referral program in any way you want.
Employee referral program ideas
If you’ve been thinking about creating your own employee referral program but simply don’t know how to get started, we’ve prepared a few ideas to get you going in the right way.
1. Spread the program beyond your employees
Your employees aren’t the only ones who want to recommend great candidates for a position. If you see an ad for a position where your friend would be a great fit, you’re going to recommend them – so why not get a reward for it? In fact, research shows that 41% of referred candidates come from trusted external sources, and not the companies that hire them.
In many cases, people who don’t work for a certain company can refer great candidates. Given the larger number of referrers, you’ll also get more high-quality candidates, which is a major benefit to opening your employee referral program to anyone.
As for the downside – the larger number of candidates means more time spent on screening. To quickly narrow down a large applicant list, you can use a pre-employment assessment tool to separate the wheat from the chaff.
For successful hires, you can award referrers who don’t work with your company with cash or a product/service you are selling.
2. Get a good tagline
If you work in marketing, you probably know the value of great copy. Just a few different words can make a world of difference in motivating someone to do something – such as your employees to refer someone new to your team.
For an example of some great employee referral program taglines, take a look at this great blog. However, it’s best to come up with your own.
Once you’ve chosen one that works, you can use it to motivate your employees to participate. This can be done through posters, email newsletters and reminders, printed cards, Slack channel updates and any other occasion to motivate your employees to participate. You can take a cue from one of the many initiatives of InMobi, a company with an inventive employee referral program.
3. Create a few tiers
Just having an employee referral program is great, but why not take it a step further and make it fun for everyone involved? Create a few tiers for your employees so that they can be rewarded for the number of new hires they referred. For example:
1 referred hire – Newbie
3 referred hires – Beginner
6 referred hires – Senior
10 referred hires – Mastermind
Depending on the number of hires, you can come up with rewards such as financial incentives, days off, badges, T-shirts, mugs and other company swag, hand-written thank-you notes – anything goes.
4. Experience trumps money
While cash incentives for successful hires are the most common rewards in employee referral programs, they’re not the only type of reward you can use. Employees think of cash as just another bump on their paycheck and a cash reward won’t make that much of a difference in their lives.
In the famous study from Wichita State University, participants were asked which they would rather prefer, a cash prize or a tangible gift (TV or a cruise), with most participants choosing cash as the most rational choice. However, when asked which would make them happy or satisfied, emotion came into play, and most participants chose a TV or a cruise instead of a cash prize. The reasoning is that the prize is seen as an unexpected gift they usually wouldn’t go and buy themselves.
In the end, once the cash lands in their account, it’s just another lump sum to pay for an expense such as a utility bill. On the other hand, by offering experiences instead of monetary rewards, you’ll help employees associate the act of referring someone to a great memory instead of having money to spend on something they can buy themselves.
You can give your employees experiential gifts as a reward they’ll never forget. Examples of these gifts include wine tasting, cooking lessons, skydiving, kayaking, picnics – the sky is the limit (quite literally).
In fact, trips may be the best non-monetary reward. In a study from Clemson University, participants rated trips as their most preferred incentive (with a score of 6.4 out 7), followed by cash (6.0) and merchandise (5.41).
5. If you do give money, don’t give it all at once
We won’t give you the money is the root of all evil talk – money pays for stuff, and it’s a great incentive. However, the problem with cash is that most employee referral programs reward the referrer only after the new employee is hired.
A better alternative is to give smaller sums (or portions of a non-monetary reward) along the hiring process for new hires. There are two benefits: first, it facilitates a continuous referral process for the employees, so they don’t stop referring new candidates. Second, if the person they referred doesn’t get hired but makes it to the interview stage, for example, they still get some kind of reward.
Even something small like rewarding referrers with a lunch voucher or a 20 EUR gift card immediately after the referral could give people a reason to continue scouting for talent!
6. Fund a cause of the employees’ choice
You don’t have to directly reward the employees who refer someone in order to make an impact. For example, for every successful referred hire, you can donate money to a certain cause that the employee chooses. This can be a charity, or a project of their choice, such as Indiegogo or Kickstarter.
A great example of a reward such as this comes from Toggl Plan. They were recently hiring for a Growth Hacker in their company and used Toggl Hire to test applicants for the position. For each applicant that passed the test, Toggl Plan pledged to plant a tree, turning a standard hiring campaign into an environmentally friendly one.
7. Tailor the reward according to the employees’ needs
Not everyone will want a kayaking trip (who wouldn’t want one, really?), so the best way to encourage your employees to refer a great hire is by giving them exactly what they want. Do you know someone who would really want a Fender Telecaster, but they just can’t justify buying it? There’s an easy idea for an employee referral program gift.
While this is the most attractive option for the employees, it’s the hardest one to get right. The most difficult part is communicating the reward before the referral happens.
8. Sponsor a lunch for the new hire and the referrer
What better welcome for the new hire into your company than a meal with the person who referred them? You can sponsor the meal and use it as a unique opportunity for the referrer to introduce the new hire to the company culture and atmosphere.
9. Give a small gift even if the referred person doesn’t get hired
To encourage employee participation, you can give them small gifts even if the person they referred doesn’t the job. This can be anything from a T-shirt, mug, tickets for an event, or anything that comes to mind that doesn’t hurt your budget too much – as there can be a large number of referrals.
10. Give days off as a reward
If there’s one thing that your employees will appreciate besides money and gifts, it’s time off. According to research, 93% of people feel that days off increase their productivity. Moreover, 64% of people say that they are refreshed and excited to get back to their jobs after a vacation. As you can see, vacations benefit both the company and its employees, so this makes for a great reward for an employee referral program. However, research has shown that only 15% of companies use days off as a reward for new hires.
As an alternative, you can give the referrer a day or more to work remotely instead of being at the office. As multiple studies have shown, remote workers are actually more productive than those who work in-house, and your employees will appreciate not having to drive to work… Or put on a pair of pants before clocking in. It’s a win-win situation for everyone involved.
Employee referral programs may sound like a lot of work, but you can adapt them to a model that works for your company. There is no one way that works best for all companies, but the important thing is to give it a try and see for yourself why these programs are one of the most efficient and fun ways to hire great people.