Lessonly’s guide to creating
an employee referral program

Lessonly's powerfully simple training software helps teams learn, practice, and do Better Work.

laptop screen
topic card
sales card

Employee Referral Program

Human capital is one of the most valuable assets that any company has. This is why most companies put in place strategies to ensure that they improve the quality of hire during the recruitment process. One of the best ways to attract talent is through an employee referral program. Simply put, this is a structured and organized recruitment method in which current employees are encouraged and rewarded, through employee referral bonus, for recommending candidates for open positions. Unlike sourcing, this internal method taps into the existing networks of employees to find and hire the best talent.

As much as companies can use an employee referral program flyer to receive recommendations, it remains important to recruit and keep top talent. Qualified employees are likely to have better and quick learning ability, bring in new energy, show a different level of expertise, ensure increased time management and show better management skills within colleagues. By choosing candidates who are a good fit for open positions, you will make it easier to run and grow the company. There are several companies that managers can turn to when looking for the perfect employee referral example. Pure Insurance, software application company Buffer, online marketplace for freelance services Fiverr and the cloud-based software company Salesforce have used this program to help build better teams and grow their respective brands.

Employee referral stats you should know

Research shows that employee referral programs have a high return on investment. Managers and executives should explore employee referral program ideas that will help them find and hire top talent. However, there should be clear employee referral program guidelines to ensure transparency and help the HR department find the best fit.

  • New hires sourced via referral programs produce 25% more profit for their companies than new employees sourced through other means.
  • Referrals have been found to be the number one most productive source for diversity hires.
  • 70% of employers said that referred hires fit the company culture and values faster and better than those hired from other sources.
  • Hiring a referred candidate is faster, helping to cut time to hire by about 40%.
  • Employee referral programs help to increase your employee retention. In fact, 46% of referred hires retained for a minimum of one year after they were hired.
  • Applicants hired from referrals have been found to start their new positions an average 10 days faster than their counterparts from other sources of hire.

Based on these statistics, the benefits of employee referral programs are clear. Such programs make the hiring process faster and cheaper, help boost productivity, increase employee loyalty and retention and promote seamless processes in the workplace. Borrowing from some of the best employee referral programs examples will help companies enjoy the associated benefits.


Advantages and disadvantages of referral marketing

Today, a good number of companies rely on referral marketing when seeking to recruit new employees. Here are some of the reasons why this recruitment method has become popular.

Saves money for recruiting – compared to other sources of hire, referral marketing ensures a shorter hiring time. This, in turn, helps to save money for recruiting. However, you should rely on an employee referral program flyer template to announce the recruitment process to existing employees.

Increase employee productivity– employee referral statistics 2018 show that referral hires fit in the company culture faster, have a higher retention rate and are likely to be more productive than their counterparts.

Drives employee engagement – referral employees have a better chance of feeling more comfortable with their colleagues. In addition, by fitting into the company culture, this is likely to drive employee engagement.

For all the advantages associated with the referral market, the process is not without some disadvantages. Here are some of its demerits.

Can lead to the formation of cliques: Referral hires will definitely have a relationship with the existing employees who recommended them. Once they assume their respective roles in the company, there is a chance that they will form cliques. This could leave other employees feeling left out, a factor that could have serious implications on teamwork and collaboration.

Can contribute to a lack of diversity and ideas: By recruiting people from your employees’ networks, you will realize that they have many things in common. This means that the workplace may lack diversity as well as new, innovative ideas that could bring about growth.

Risk of favoritism: While employee referral bonus amounts are meant to encourage employees to recommend qualified candidates for open positions, they are also associated with the risk of favoritism. An employee could influence the process so as to receive this bonus.

One of the ways to ensure maximum benefits is to make all employees aware of the employee referral program announcement. Once the recruitment exercise has been completed, employee referral program names should be made public to encourage transparency.

product screens

Better Work starts here

Take a Look

5 tips for effective employee referral programs

An employee referral program can be a powerful and superior recruiting tool. However, in order to ensure that the process helps you find the best talents, it is important to create an effective program that will be invaluable in the current talent acquisition environment. Here are some tips to help you.

Give current employees what they need to refer to others – one of the best ways to use employees to promote your brand is to have a referral-worthy culture. Through this, employees will become great brand ambassadors. You should also provide the necessary tools such as an employee referral portal. Lastly, provide an example of a company that has a great employee referral program and highlight the benefits of the program in line with employee referral statistics 2018.

Set clear expectations – It is critical that all your employees understand the guidelines and expectations relating to the program. An employee referral policy document will help to communicate clearly how the process should be conducted. Make sure that the expectations are in line with the company culture and that all employees are familiar with the set expectations.

Offer incentives that motivate good referrals – You should always encourage and reward employees for recommending qualified candidates for open positions. While some base their rewards on how long the referred hire will stay at the company, others offer a full reward immediately upon hire. However, in order to ensure that one position does not appear to be more important than another, you should aim for parity in these rewards.

Market and promote the program from within – In order to make sure that your employees take part, you should treat this program in the same way as a marketing campaign. This means investing in the program and coming up with communication plans that will increase the chances of success. The good news is that you can borrow from some of the best employee referral campaign ideas to help you achieve the desired outcomes.

Provide feedback on referrals – Be sure to measure and track the process to determine whether it is working or not and to make the required adjustments. Consider the number of employees hired through referrals, the number of qualified candidates obtained through the process as well as the performance, retention and rate of participation of referred hires. You can get an employee referral program policy template to guide you during the process.

Hold leaders and HR accountable: Make sure that leaders are part of the program by helping them understand the competition, giving them data and feedback on the outcomes. HR should also be encouraged to communicate with the both the referring employee and the candidate on the job status to avoid frustrations.

Provide employee referral program training with Lessonly

Before embarking on the employee referral program, you should place measures to ensure that the recruitment process will be a success. This is why it is essential to involve your current employees so that you can tap into their networks. One of the best ways to make the most of your employee referral program campaign is to make sure that your employees understand it. A clear understanding of the process will give employees the motivation they need to participate in the process. Teams can take advantage of Lessonly to highlight and market their employee program and achieve the desired outcomes.

By using Lessonly’s training software, it will be easier for executives to share information with employees regarding the stipulations and guidelines for the referral program. Through the software, you will also learn how to ask employees for referrals, a factor that will contribute to your chances of finding and hiring the best talents in the industry. In addition to using the software for training, you should also make sure that this becomes part of the culture of your company. The end result is that all the staff members in the company will be guided by the culture and will abide by the guidelines set out for the program. Learn more about Lessonly and get a demo today!

Like what you see? Learn more below.