Setting Up a Referral System: What to Consider

• Setting up an employee referral system can lead to faster hiring times, higher retention rates, and finding more qualified candidates.

• 84% of employees feel more committed to their employers after referring someone who was hired.

• Referred applicants are almost three times more likely to be hired than those who apply online.

• Creative incentives such as monetary rewards, non-monetary rewards, public recognition, and professional development opportunities can help motivate employees to refer candidates.

• Track referral program results to measure the program’s success over time.

Creating an employee referral system can significantly increase the quality and diversity of your company’s talent pool. Having existing employees refer friends and colleagues for open positions can lead to faster hiring times, higher retention rates, and the ability to find more qualified candidates.

A referral system also provides benefits for those already employed at the company. According to research from Deloitte, 84% of employees said they felt more committed to their employers after referring someone who was ultimately hired. Additionally, 71% of those asked said that being able to refer people made them feel more connected to their organization and its purpose.

In terms of hiring performance, referred applicants are almost three times more likely to be hired than those who apply online, according to Glassdoor’s report on recruiting trends. Referred applicants also have a 45% greater chance of being hired than applicants sent in from a staffing agency or job board. Companies also receive 100% more applications via referrals than through other sources such as job boards, making it easier for them to find top talent quickly.

As a result, you might want to consider setting up an employee referral system for your company. Here are a few factors you should take into account when doing so:

Creative Incentives

Incentivizing an employee referral system is a great way to encourage employees to refer candidates for open positions. Not only can it help you find qualified candidates quickly, but it also helps build loyalty among current employees. Here are four incentives you should consider pursuing when setting up your referral system:

Monetary Rewards

One of the companies’ most widespread incentives is monetary rewards for successful referrals. These can range from bonuses for hired referrals to performance-based bonuses for referred applicants who remain employed with the company for a certain number of years. Studies have shown that monetary rewards are particularly effective in encouraging referrals from senior-level employees or those with large networks.

Non-Monetary Rewards

Non-monetary rewards such as gift cards, merchandise, experiences, or special recognition events are another great way to incentivize referrals. The idea here is to offer something that has value but doesn’t involve cash. These rewards can be especially effective in motivating employees who may not be motivated by money alone.

Public Recognition

Publicly recognizing and honoring those who make successful referrals can be a powerful motivator. Celebrating successful referrers on social media or during company meetings signals that your organization values and appreciates referring great talent. This type of recognition encourages current employees to keep referring more people. It helps create a positive reputation among potential future hires who see their connections being recognized by your company’s culture.

Professional Development Opportunities

Providing professional development opportunities such as access to training programs or workshops to those who make successful referrals can be an attractive incentive for many employees. These options allow employees to learn new skills and grow professionally while helping out their company simultaneously — making it a win-win situation all around!

Set Up the Referral Process

Creating an employee referral system is a great way to streamline the hiring process, increase retention rates, and find more qualified candidates. Utilizing a referral tracking platform is essential for businesses wanting to tap into existing social and professional networks. The software can lead to better quality hires, but it also helps make the process faster than manual tracking.

When setting up your referral system, here are a few steps to consider:

• Identify Desirable Candidates: Determine the type of candidate your company is looking for and create a list of desirable traits or skills.

• Outline Your Guidelines: Establish the referral criteria, such as who can refer candidates and what incentives they may receive.

• Set Up an Application Process: Set up a standardized process that clarifies how referred applicants should apply and be considered.

• Publicize Your Program: Promote your referral program internally so existing employees know about it and are more likely to refer qualified people. Provide clear and concise information regarding the benefits of referring a successful applicant.

Track Referral Program Results

Tracking performance results is an essential part of any employee referral system. Gathering this data allows you to measure the success of your program over time and make adjustments as needed. By tracking results, you can identify which incentives are working, determine which sources produce better hires, and uncover any areas for improvement.

For example, tracking performance results can provide insight into how many referrals successfully obtain a job and how quickly they are hired after being referred. This information can help you identify recruitment bottlenecks and determine which processes need streamlining or optimization. You may also discover patterns that indicate hiring preferences or other trends that could influence who is being referred. Additionally, tracking performance results lets you see if specific incentives are more effective than others at encouraging employees to refer candidates.

Analyzing referral program performance data can also help you evaluate the overall effectiveness of your program and determine whether it’s offering a good return on investment (ROI). By seeing which sources lead to more hires and which don’t, you can make better decisions about allocating resources to ensure maximum efficiency and success with your employee referral system.

Final Thoughts

An employee referral system can help your company quickly identify and secure talented individuals who are an excellent fit for your organization. Not only does it boost the quality of new hires, but it also increases loyalty among current employees. Setting up and maintaining a well-thought-out system is essential for companies wanting to tap into existing social and professional networks. When done right, an employee referral program can offer significant benefits such as faster hiring times, higher retention rates, and finding more qualified candidates — all while providing incentives that build loyalty among current employees.