Orbon Alija/Getty Images
Today's competitive labor market requires companies to pursue multiple strategies for finding and hiring the right talent. HR leaders should improve their employee referral program to make their recruiting as effective as possible.
Word-of-mouth can be one of the most effective ways to attract employees, so HR leaders should ensure their employee referral program makes it as easy and rewarding as possible for current employees to refer acquaintances.
Employee referrals can result in a lower cost per hire, as well as higher ROI, said Laurie White, head of talent acquisition at United Services Automobile Association (USAA), a financial services company located in San Antonio.
"[Referred employees] tend to perform well and stay longer," she said.
However, optimizing an employee referral program requires judicious use of technology and some creativity. Here are some tips on how to boost employee referrals for HR leaders to consider.
1. Engage employees in recruiting efforts
HR leaders should ensure employees feel like they're a valued part of bringing in new workers.
Employees must be engaged in an organization's overall recruiting efforts for a referral program to be truly successful, said Adam Fitzer, senior talent acquisition manager at West Monroe, a management and technology consulting firm located in Chicago. Strategies for bringing about this engagement could include the following:
- company recruiters meeting regularly with employees;
- employees participating in recruiting events;
- employees helping conduct job interviews;
- HR staff posting branded messaging about recruiting in the physical office space and on the company intranet;
- a member of the talent acquisition team posting specific hours during which employees can approach them with questions; and
- HR staff reaching out to former employees through the company's social media channels.
HR leaders should partner with their marketing and communications teams to brand the employee referrals program both internally and externally, Fitzer said.
"Think of all of the alums in your network [and] broadcast over social media to let folks know that … [you're] hiring [as well as] the accolades [the company has received]," he said.
2. Advertise incentives
Many organizations incentivize employees to refer candidates by offering a monetary reward if their referral is hired and remains with the company for a specific period of time.
Some programs make multiple payments, White said. For example, one payment may occur at 90 days and then another at 180 days. Regardless, HR leaders should consider the following questions when determining the amount of these rewards:
- Does the amount increase based on role level?
- Does the amount increase if the targeted position is particularly difficult to fill?
- Does the amount increase if the targeted position requires highly specialized skills?
If the company must fill a specific position quickly, the organization could offer an additional bonus to an employee that refers a successful candidate within a certain period of time, White said.
HR leaders should also be very clear about required candidate skills when asking for employee referrals.
When USAA is attempting to fill a role with unusual qualifications, HR leaders ask employees to only refer people who possess those precise skill sets, White said.
Doing so saves everyone time and prevents employees from referring candidates that aren't a good fit and then feeling disappointed when their acquaintance doesn't make it through the process.
3. Automate the process
Features like employee tracking of referred candidates can help improve the referral process for everyone involved.
Applicant tracking systems -- otherwise known as talent acquisition systems -- are the back engine of a company website's career page, said Matt Lafata, CEO of HRchitect Inc., an HR technology consulting firm located in Frisco, Texas. When a candidate applies for a position through the website, they can enter the referring employee's name in a particular field. That employee is then tagged so the hiring manager knows the candidate came to them through a referral.
In some cases, organizations configure these systems so referred candidates are moved to the top of the list, Lafata said. They do so because referrals are so valuable.
Matt LafataCEO, HRchitect Inc.
"The employees of a company know better than anyone else what it's like to work at that company [and] the kind of people they would like to work with," Lafata said.
Employees give the best insight into a candidate and whether they would be a good fit for the organization.
Ideally, the referral component should integrate into the organization's applicant tracking system, White said. Recruiters can then easily identify and prioritize referrals, and employees who referred candidates can monitor their acquaintances' progress as the candidates progress through the recruitment cycle. This transparency is key for keeping employees engaged in the referral program.
"One of the things you hear a lot about with employee referrals, if you're not careful in your process, is … employees refer[ring] people and then feel[ing] that those contacts are never made, and they're just referring into a black hole," White said. "[Having] it integrated with your applicant tracking system is really key."
This tech also helps HR departments manage incentive payouts for employees that refer candidates because they also track when candidates were referred, White said. A referral date could help if two employees refer the same person. HR staff can consult the applicant tracking system to see which employee referred the candidate first and give them the payout.
4. Make it a contest
Making employee referrals into a competition is one way to potentially engage employees and make the referral program more popular.
West Monroe has hosted contests in which one office location competes against another for the most referrals, Fitzer said. The reward is often a lunch, dinner or party. Other incentives could include extra time off, a trip to a spa resort or an experience-based incentive, such as a wine tour accompanied by one of the organization's senior leaders.
5. Make it a party
A fun gathering centered around employee referrals could increase their popularity as well.
West Monroe also hosts talent sourcing "parties" during which the company's recruiters meet a group of employees over a free lunch, Fitzer said. Pre-pandemic, the party took place on-site in a conference room. Now, the company sends employees Grubhub gift cards so they can order their free lunch and participate virtually.
During these events, recruiters work with employees to scan their networks, such as their LinkedIn accounts, for potential candidates, Fitzer said. Recruiters offer employees "double referral rewards" to further incentivize them, with more rewards for employees who refer candidates that move to an interview or other stages.
6. Acknowledge every referral
HR leaders should make sure they're expressing gratitude to employees who make referrals so the employees feel like their contribution was noted.
Not all referred candidates are hired, but acknowledging workers who refer candidates is necessary to motivate employees to continue to do so, Fitzer said. At West Monroe quarterly meetings and companywide town halls, leaders mention employees who referred candidates. The company also sometimes gives prizes to employees who referred candidates that weren't hired in addition to the usual rewards.
7. Make cultural changes if needed
If employee referrals still aren't increasing, HR leaders should examine the company culture and start improvements there.
"If you're not [creating] that culture where somebody is so passionate [about it that] they want others to work for you, you're not going to get good referrals," Lafata said.