Employee referral programs are a popular way for businesses to recruit talent without investing too much in advertising open positions. With the prospect of new benefits or compensation, workers are much more likely to refer friends or former coworkers, offering a win-win situation for both employer and employee.
However, not all referral programs work according to plan, as the trick to a successful program involves striking a balance between the benefit for employees and the expense to the company.
When implementing a referral strategy, human resource teams need to clearly define the rules and the compensation structures for employees. Cash is the most common incentive, but managers should make sure to incorporate these expenses into their recruiting budget.
Over time, weigh how much the referral bonuses cost against the relative expense of a traditional recruitment program. However, it’s important to remember the role a referral program plays in boosting employee morale.
It also pays to keep the program fresh and up-to-date. Managers should adopt new themes that reflect company culture and use company events to present prizes, awards or small giveaways to publicize the program. It is also important to distribute payment of bonuses to employees in a prompt manner.
The process for referring a candidate should also be fairly simple and not discourage employees from participating. HR managers can add a section on the company intranet or distribute flyers throughout the office.
When in dire need of new hires, managers can launch an interdepartmental competition to see who can refer the most candidates. In the event that a referral is hired, be sure to track his or her progress, acknowledge the referring employee and make sure they receive their payment.
Sometimes, hiring demands may be too high to rely entirely on a referral program, so managers may want to augment the strategy with a traditional recruitment process. In such a situation, it’s even more important to track expenses and ensure the collusion of both programs does not end up costing more than each would have if run independently.
When a referral is brought on board, be sure to inform him or her of the process as well. However, one of the few criticisms of referral programs is a lack of diversity, as a workforce that is highly networked may curtail critical outside perspectives and unique experiences.
For that reason, it’s important to keep a constant eye on the referral program and how it is impacting company culture.