Why Are Big Enterprises Moving Toward an Employee Referral Program for Recruitment?
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Hiring the right people for the right jobs has always been the key to the success of any business. With myriad job opportunities across borders and nations, it has become difficult for companies to get hold of dedicated and qualified candidates on board. At the forefront of development, we live in a fast-paced tech-driven world, as a result, it’s not only new hires that need to adapt new-age techniques companies need to upgrade their recruitment process as well. 

Unlike previous times when HR professionals spent days, weeks, or even months promoting open positions and sifting through applications, employee referral programs act as an internal program to recruit the best talents from existing networks of current employees. Statistically speaking, a referral candidate is reported to be 55% faster to hire than other hiring sources. 

To know more about what an employee referral program is, how it can be beneficial, how to build a successful employee referral program, and more,  read this quick guide. 

What Defines an Employee Referral Program?

An employee referral program is an internal recruitment channel for finding the ideal candidates for vacant jobs in the company. Instead of leveraging traditional methods of inviting job applicants, like classified advertisements or job boards, successful companies ask their employees to recommend new hires. 

The employee referrals involve current employees referring their family, friend, relative, or other associates for open positions within the company they are working in. 

3 Key Features of Employee Referral Program

#1 Valuing Suggestions Provided by Current Employees

As a token of acknowledgment concerning a successful employee referral program, an upside to this is making your current employees feel valued. In this program, current employees introduce the company’s job openings to friends, family, and relatives. 

#2 Guaranteed High-quality Candidates 

The central premise of this particular program is that the current staff is well aware of the company culture and also the vacant job roles. This implies that already working employees will be better able to judge if the applicant suggested by them is a good fit for the company.

#3 Budget-saving Tactic

With an employee referral program, companies need not invest in professional recruiters to research and attract the right talent. It is believed that hiring candidates on reference from existing employees will perform better than hiring candidates from other sources. 

Read – What is Data-Driven Recruitment? Strategies to utilize

6 Benefits of the Employee Referral Program

With an employee referral program, employers are undeviatingly connected to the professional and personal network of their existing employees. And within less time and lower cost, employers can access a multi-layered talented applicant pool. All this is due to the primary advantages of the employee referral program. 

Here listed are some key benefits of this program.

#1 Efficient Hiring Process

Existing employees of the company would conduct indirect screening as they already know the attributes that the potential applicants should have for the job roles. Hence, the job applications that a company gets through employee referrals are more qualified leads than other recruitment sources.

Additionally, it takes much less time to close a job position with employee referrals than other hiring methods. 

#2 Higher Conversion Rates

Existing employees recommending vacant job positions to friends or family usually leads to higher conversion rates. Such job applicants tend to move forward faster in the company’s interview process than in traditional sourcing methods. 

#3 Improves Employee Retention

The employees that fit into organizational culture, norms, and values will undeniably be staying longer with the company. Now that candidates referred by existing employees are already well-aware of the company’s needs and work approach, they are less likely to leave the company in near future. 

Trusting the referrals that your current employees provide acts as a sort of incentive for them and, thus, are motivated to work in the company for the foreseeable future. 

Read Top Benefits of Creating an Employer Brand

#4 Improves Employee Engagement

An employee referral program has come across as one of the best ways to engage employees in more meaningful ways. When the employer asks his employees to find the next hires, they feel more empowered and responsible. 

An Employee referral program isn’t only based on sentimental value; it presents itself as a bonus incentive provider. Every employee longs for incentives and recognition. Under this particular program, existing staff is provided with either a monetary employee referral bonus or incentivized with some exciting perks like bonus vacation days, social recognition, or even concert/movie tickets. 

#5 Improves Employer Branding

Another valuable benefit that the employee referral program provides is it helps in improving employer branding. When existing employees spread the word about job openings to their circle of friends or family, it brings a lot of traffic to the company. 

This further improves the organization’s brand visibility and also creates a positive impression of the brand.

#6 Highest ROI

Recruitment is one of the most expensive processes to be undertaken by companies. There are several ways to recruit processes; while some are direct, others are indirect. Overall, the costs per hire involved in the recruitment process add up to a significant amount.

Direct fees involve paying commissions or fees to recruitment agencies, job sites, career sites, or marketing job descriptions. On the other hand, indirect cost includes resources like logistics, time, and efforts spent on the recruitment process. 

However, a successful employee referral program can help in saving on these recruiting costs as employee referrals lead to a successful hire without spending on other recruiting strategies

Read 6 Effective Strategies for Mass Hiring

4 Key Elements of an Employee Referral Program

Here listed are the elements that are usually consistent through most successful employee referral programs:

#1 Prepare and Plan

An employee referral program can’t be set up in a day or two. It requires careful consideration concerning employee prospects and may take up weeks and sometimes, even months. The company needs to understand its internal hires’ needs, so, consider asking these questions:

  • How many candidates are to be hired and for which positions?
  • Are there any open jobs that a company has often struggled to fill?
  • What minimum practical and theoretical requirements are there for potential hires?
  • What is the company’s culture and which type of candidates can be the best fit?

The answers to these questions and more can help a company sketch out the shape of the employee referral program. Additionally, an organization can figure out how much time, money, and effort the current employees will be spending on getting it up and running. 

Read What is Ecommerce Recruitment and Strategies you can implement

#2 Define Rules and Processes Clearly

For the success of an employee referral program, it is essential for employers to clearly define all rules and processes. With technology finding relevance in every corporate process, there are several technological solutions such as scheduling software to make this straightforward. For instance, scheduling software can be used to automate calendars and applicant tracking tools can streamline referrals. 

Such tools usually are equipped with features and a handful of employee referral form templates to send out to the current employee. The employee referral policy should define:

  • How existing employees can recommend potential candidates?
  • When existing employees can expect their rewards?
  • How to resolve complications, if any during the employee referral process?

#3 Promote the Employee Referral Program 

Now that the employee referral program has been designed with well-defined policies, it is time to get it rolling. This starts by promoting the program to the company’s staff.

A company can use different types of employee referral-promoting channels such as promotion campaigns, referral parties, social referral events, and more. 

#4 Maintain the Program Through Recognition

Once the program has been promoted, the final step is to recognize the participation of employees in the program. One of the great ways that ensure the success of this program is to reward and recognize the employees’ participation. Doing so will motivate employees to continue introducing referral candidates.

Additionally, it is essential to evaluate the results through applicant tracking systems and improve tactics time and again to get the best out of this program. 

Read 10 Productive Tools for Recruiters

5 Examples of Successful Employee Referral Programs


PURE is an American property insurance company that has a high referral rate. According to the company, around 40% to 60% of its quality candidates have been sourced through referrals. 

The company believes in not wasting time and cutting right to the chase. Employers ask a new hire within his/her first week at the company, if they know anyone else who could be the best fit for the organization. This strategy leads the company to more referrals within less period of time and emphasizes the significance of referring.

#2 Google’s Razor-sharp Questions

This example beautifully demonstrates the power of simplicity when it comes to employee referral programs. At Google, one of the things that the recruiters do is ask the employees direct questions such as “Who is the best software developer they know locally?” These pointed questions further push employees to think harder about the applicants they refer.

#3 Intel’s Double Bonus

Intel has come across a straightforward way to hit the two proverbial birds with a single stone. To stay on top of its diversity hiring, this American giant tech enterprise doubles the monetary incentive when current employees successfully refer applicants from women and other minority groups for vacant job positions. 

#4 Accenture’s Emotional Reward

Accenture uses an emotional reward strategy to recruit qualified hires while saving time. The company’s employee referral program is based on the fact that employees feel good by referring people either because they helped their close ones or they helped the company. 

Additionally, the company provides their employees an opportunity to donate a part of their financial incentives received as referral bonuses to the charity.

#5 Hewlett Packard

Hewlett-Packard has kept its employee referral program simple and effective. The company just gives its employees public recognition for their efforts in referring skilled candidates to the company for job openings. 

Wrapping Up

Many businesses find it difficult to recruit qualified individuals for open positions. There are numerous facets to the recruitment procedure, and the stakes are as usual always high. A hiring error can affect team morale and be detrimental to the organization as a whole. In such situations, an optimized employee referral program can be a great relief for the recruitment team.  

Although this particular strategy may sound like a lot of work, employers can adapt them to a model that works efficiently for the company. A model such as this, which cuts down the time and effort required to headhunt potential employees will of course ultimately result in saved costs on other recruitment channels. 

Also, rewarding existing employees for referring high-quality applicants will boost the engagement level of the employees across the company. As a result, employees will stay loyal to the company leading to higher employee retention rates.

FAQs on Referral Programs

What makes an optimized employee referral program?

The more transparent an employee referral program is, the more likely employees will feel comfortable in sharing their contacts and also make referrals in the future. So, a company needs to create a program where submitting and tracking referrals is easier for the employees. 

What can be the goals to achieve through the employee referral program?

1. To hire qualified and talented employees for filling open job positions
2. To reduce the time required to recruit new hires
3. To decrease the employee turnover rate by a certain percentage
4. Hire 30%-35% more competent candidates for vacant job positions

How can existing employees be motivated to participate in the employee referral program?

One of the easiest ways to motivate your employees to participate in the employee referral program is by providing them with financial and non-financial incentives (referral bonuses) dependent on the success rate or percentage of referrals of new hires.  

How innovative software can contribute to the success of an employee referral program?

Different types of software such as employee referral tracking software help companies know what proportion of candidates are referred by employees, scheduling software can be used to automate calendars, and referral template software to create attractive job descriptions.

What are social media referrals?

Recruiting marketing technology has made it possible for employers to post job requirements on their organization’s social channels. Additionally, companies can use their current employees’ social media networks to attract a talented pool- if employees are willing to post on their behalf.

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