The 4 Elements of an Effective Employee Referral Program

When it comes to an employee referral system, just because you build it, does not necessarily mean they will come.

Danielle Riha
November 5, 2021

When it comes to an employee referral system, just because you build it, does not necessarily mean they will come.

We see a lot of companies who technically have a program in place, but the process (and reward) for submitting is unclear to employees. To make matters worse, we also see many companies struggling to keep track of referrals and the timing of payouts to the referring employee—which can be very demotivating for referring employees.

That’s why we recently asked Desiree Grosman to shed some light on the challenges of designing an effective employee referral program. As a growth coach for female contractors and home service business owners, she works with her clients to help them get more customers, understand their financial numbers, build their dream team, and protect their time. Recruiting and training is one component of her coaching program, so she has a wealth of knowledge and experience in using employee referrals to find and hire high quality talent. Here’s what she had to say.

The 4 Elements of an Effective Employee Referral Program

Whether you’re manually building your own program from scratch or using employee referral software to facilitate the program, the following components must be included and clearly defined:

  • Who you need to hire
  • The process for submitting referrals
  • The incentive for submitting referrals
  • When the incentive will be delivered

But what if your referral program has these components, and you’re still not getting any referrals? To make your program effective, it also needs to meet the following criteria:

  • Have a formalized system for requesting and receiving referrals
  • Sets clear expectations about how the system works and the type of people you’re looking to hire
  • Motivates your team to refer
  • Brings you a pipeline of candidates throughout the year

Keep reading for Desiree’s advice on how to create an effective employee referral system that checks all these boxes.

Element 1: Who You Need to Hire

Desiree’s first pro tip was to be specific about what you want to see from your employees’ referrals—both in terms of the role that needs filling and the type of person you want to fill it.

If you say something vague like, “Hey, if you hear of anyone looking for work, send them our way,” you’re not going to get anything in return. You haven’t helped your employees connect the dots between people they know and the jobs you’re hiring for.

Instead, you need to paint a picture to help your employees visualize the type of person you’re looking for. Think about things like personality traits, hobbies, lifestyle choices and career aspirations. More often than not, you’re looking for culture fit before specific experience, so answering these questions about your ideal candidate (even if just for yourself) will help you articulate the type of person you want to hire and the type of work you’re hiring them to perform.

Element 2: A Defined Process for Submitting Referrals

Desiree’s advice here was to keep it as simple as possible, leveraging the maxim that “Simplicity scales and complexity fails.”

If it’s too hard or confusing to refer someone, your employees won’t be motivated to bother with it. If it’s too hard or confusing to track, you won’t be able to give out the rewards to the right people in a timely manner, which will also demotivate them.

This is where Team Engine can be a huge benefit. Our automated employee referral software makes it fast and easy to:

  • solicit referrals from employees
  • collect the referred candidate’s contact information
  • initiate contact with the referred candidate
  • keep track of who referred whom, and when payouts are due

Element 3: Clear Incentives/Rewards for Referring

Don’t assume you know what your employees will be motivated by. Instead, go straight to the source and ask them!

Contrary to popular belief, cash isn’t always the best incentive. Desiree suggested taking a “treat yourself” approach to rewarding referring employees with the following ideas:

  • Meal Deliveries
  • House Cleaning
  • Mini-Vacation (e.g. a stay in a hotel downtown)
  • Upgraded Fleet Vehicles (which doubles as an investment in your assets)
  • Training/Development

The key, again, is to ask employees directly. Get their feedback and buy-in before moving forward with any ideas. And while in-person, face-to-face meetings are always better, we realize that might not be possible for all organizations—especially those with a large, distributed workforce. This is another way that Team Engine can relieve you of undue burden with our texting-based employee surveys.

Onboarding sent via text message in Team Engine

Discussing incentives with your employees can also be an opportune time to get valuable feedback about what makes your company a great place to work. Ask them how they applied, why they applied, why they chose you, and why they stay. Not only can these conversations identify areas for improvement and keep people from leaving, they can also help you understand what aspects of working at your company might be most attractive and appealing to prospective employees. Then you can use that language to update job descriptions and enhance job advertisements.

Element 4: Ongoing Promotion of the Program

Perhaps the most important point of our interview with Desiree was to not let your referral program stagnate.

Announcing the program at a single meeting and never again is a recipe for failure. Only reminding employees about the program during their onboarding guarantees they’ll forget about it. A poster hung in the breakroom will quickly fade into the background as part of the scenery and go unnoticed for months on end.

Here, again, Team Engine makes a daunting task fast and easy to complete with our employee referral feature. No scheduling meetings or printing and distributing memos. Just type out a message in the software and hit “Send” to distribute a quick reminder to everyone’s text message inbox that you’re hiring for X, Y, and Z positions.

Desiree also advised that you make it a big deal every time someone refers, even if you don’t hire them. This is a form of employee recognition and that recognition not only motivates them to keep referring people, it also makes them feel appreciated and thus more likely to stay at your company.

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