The Guide to Building an Employee Referral Program For More Quality Hires

An employee referral program is a great way to attract quality candidates and increase employee retention. In this guest post, Richard Conn of 8×8 breaks down what makes a good employee referral and how to get started with a referral program — including tips on choosing the right software, employee education, and what incentives are effective.

The natural human urge after enjoying good services is to tell a friend about them. For example, say you listen to a new song that’s absolutely beautiful. It’s likely that the first thing you want to do is tell a friend or loved one to listen to that same track. A great employee referral program relies on the innate human desire to share good experiences with others. It’s a simple principle, but it’s hugely effective.

An employee referral program is a platform for employees to refer candidates in their immediate network for job roles within their organization. Employee referrals work out more often than not. Hence, they’re hugely valuable and often require incentivization to influence employees to refer more qualified candidates. It can be a huge benefit for hiring remote employees, as the person who refers them can give an insight into your working culture before they start and help them get a feel for whether you’re a good fit for them.

The best employee referral programs leave your staff excited about introducing company vacancies to friends and family. But, simultaneously, the referral program delivers a better hiring experience and simplifies the team recruiting process. Here’s a complete guide to creating one that delivers quality hires for your remote teams.  

Elements of a Good Employee Referral

Your efforts to build an employee referral program have higher chances of success when you know what makes a good referral. Below are the key indicators a referral candidate is a good fit for a team position. 

Any referred candidate must have the requisite experience and qualifications to fill the role.

How to Build an Effective Employee Referral Program for Great Hires

The following talking points are essential building blocks for designing your company’s unique employee referral program. When you satisfy the checklist below, you can test your employee referral program through an exploratory method.

Encourage a Company-Wide Referral Culture

Any successful employee referral program must give its core participants, your employees, all they need to make a referral. A company culture that encourages staff referrals, suggestions, and input is top of the list. 

For example, a remote call center staff hiring process may be improved by involving the existing managers, customer service agents, team leaders and treating each member as a company ambassador from the start. This treatment includes providing employees with orientation and sensitization about a prospective employee referral program. 

And even before the time ever comes that you need a referral, be sure to accept your employees’ suggestions about team operations, a new free consulting proposing template, workplace safety, and other miscellaneous topics. This attitude indicates the company’s willingness to accept feedback, encouraging the thought process that the hiring team will take their referral candidate seriously. 

For example, you can encourage the referral culture by asking every new hire to submit a list of qualified persons in their personal network, thereby creating a talent pool. You can then search this list for suitable potential matches when your company has a vacancy in the future. Then, you can ask the referring team member to introduce the potential applicant to the company.

Set Guidelines for the Referral Program 

The major guidelines for any effective referral program revolve around eligibility for participation in the program. For example, you have to decide whether all employees can make a referral or if they need to have worked with the organization for a specific number of years. 

Another point of consideration is the incentive for making referrals. Even in the push-or-pull marketing world, referral programs thrive on rewards. Therefore, any plan for creating a company referral program should account for rewards, who can get them, and under what conditions these rewards become accessible. 

Your guidelines should answer questions like: 

Employee Education

Your employee referral program may not deliver quality hires because your staff doesn’t know about it. Many times, your employees are unsure about how to utilize the referral program. In addition, they’re unclear about what the program represents, thanks to poor marketing and education from the management. 

Your employee referral program should have a plan for teaching employees how to use the program effectively. Start by teaching your employees how to submit a referral. Your education should also explore how to recognize high-value applicants for different roles. This sensitization is important to increase the quality of referral applicants. 

For example, say you’re looking to expand your remote teams. You can start by integrating referral training sessions into the onboarding stage for all new hires. This initial training can excite hires about sharing the company with qualified friends and family when the time is right.

Select the Right Software

Your choice of software can impact many aspects of your business, including your referral program’s efficiency being impacted by your choice of HR management software. This is because the HR management software you use affects your ability to track and categorize referrals. 

Allowing referrals to pass through the hiring grapevine unnoticed can kill employee morale regarding referrals. Hence, you must choose an HR management software that helps you avoid that pitfall.

The ideal referral program software can sort through applications. For instance, it should effectively categorize prospective developers for AI meeting assistants from web developer applicants. 

Your referral program software should also automate the referral information submission process. It needs to be easy for employees to navigate themselves so they can complete the process remotely. It should track applicants through the hiring process and have a framework for informing employees of their referral’s hiring status. 

While many companies have a platform for submitting referrals, there might not be a system for keeping employees updated. This situation is a huge problem as it can signal to employees that their referrals aren’t being taken seriously. Remotely-based workers will find this particularly important as they rely on online communication to keep them in the loop. 

Other factors that should inform your choice of software for employee referral programs include:

Shift Focus Away From Incentives

It’s nearly impossible to find an employee referral program that delivers quality hires without any incentive. At least, employees should get a small reward for submitting referrals — whether or not they become new hires. This reward can range from a small cash bonus to additional paid time off or company souvenirs. Adding incentives to your employee referral program isn’t the wrong approach. In fact, bonuses can significantly boost the number of referrals employees submit to the hiring team. 

The problem arises when the program overly focuses on the reward for introducing applicants to vacancies within the company. This situation fosters a perverse and unconstructive referral culture where employees simply submit referrals to earn the available rewards. 

This perverse culture neglects a key cornerstone of any successful employee referral program — ensuring every referral is an applicant who ticks the requisite qualification boxes. You’ll only end up with an increase in referrals at the expense of quality applicants. 

While adding an incentive to your employee referral program is recommended, you should only add them in the context of a thank-you rather than as a motivator. One way to do that is by disbursing rewards only after the referral has satisfactorily worked with the company for a specified timeframe. 

Another strategy is to minimize the rewards for a successful referral, but not to the point of insignificance. By doing so, your employees are motivated to make referrals because they want to help their friends or further the company’s productive efforts. When employees focus on helping their friends and the company, you’ll still get many referrals, but with the added bonus of quality applicants all-round. 

Evaluate and Tweak the Employee Referral Program

You are unlikely to create the best employee referral program on your first attempt. And even if you do, your company’s needs will likely change with time, and your employee referral program should also change to fit these needs. 

The first step is to tweak any element of your employee referral program when it isn’t delivering results. But you should also make necessary periodic adjustments whenever there is a change in the following areas:

Build an Employee Referral Program That Works

A successful referral program can be a steady stream of high-quality hires for your company. Start creating one by setting guidelines and educating your employee on the merits of the referral program. Finally, don’t underestimate the important part your preferred HR software plays in creating an effective employee referral program.

Author Bio

Richard Conn is the Senior Director for Demand Generation at 8×8, a leading communication platform with integrated ccaas solutions, voice, video, and chat functionality. Richard is an analytical & results-driven digital marketing leader with a track record of achieving major ROI improvements in fast-paced, competitive B2B environments.