Most will agree that employee referrals are the best source of hire, but for an employee referral program to be effective, you have to have four crucial elements—one of which is a motivating incentive to participate in the program.
Do you know the average employee referral bonus in your industry? What are the best companies offering these days? We asked our partners these questions and got a pretty clear idea of the going rate for an employee referral bonus amount in construction, landscaping, manufacturing, home services and other deskless industries. (Spoiler alert: it's a lot more than just $50 or $100.)
What Is the Right Employee Referral Bonus Amount?
It varies significantly from company to company. What does seem to work, though, is that referral bonus payments are contingent on the new employee being retained for a reasonable period of time.
Greg Hayne, Hayne Coaching Group
A referral bonus should be calculated as a portion of the cost in time and money that takes to recruit & hire a new individual. It should also factor in gross profit they can generate in a 30-90 day period. The bonus should be paid once the employee reaches a specific skill or time employed so the referrer has buy-in for encouraging them during onboarding.
Cullen Talley, Exit Momentum
$200 - $300 for entry level.
Ben Gandy, Envisor Consulting
According to FMI's 2022 Benefits & Pay Practices survey, employers in the built environment with a referral bonus program pay employees $250 to $7,500 (median $3,000) for qualified employee referrals. The payment is most frequently provided in the form of a bonus once the new hire has achieved 90 days of service.
Amber Duncan, FMI
I really can't speak on other businesses, but at Gensco, depending on the type of position, it could be as low as $1,000 to as high as $3,000.
James Albert, Einstein Business Resources
I've seen many companies offer $500, but the best-in-class companies are offering $1,000 or more in some cases.
Alex Chausovsky, Miller Resource Group
I have seen referral bonuses in our industry range from gift cards up to a couple of hundred dollars to a more sophisticated plan that combines monetary rewards and a combination of extra vacation time. The best programs I have seen include a reward for the person referring, an initial reward for the person being hired, and a substantial payout at the end of one year of employment to both the referrer and referred.
John Kenney, Cotney Consulting Group
I've seen some offer up to $5k for a referral if a new employee sticks for at least 90 days. This can be increased if we are calculating the cost of a vacancy for your organization. The best range I've seen is between $3k - $5k. However, I've also seen non-cash referral programs and referral bonuses such as paid trips, donations, or gift cards, which can be easier to absorb for company budgets that are tighter.
Tito Caseres, Bloom Partners Talent Solutions
As you can see from this small set of anecdotes, there is no one-size fits all answer to the question. A typical employee referral bonus starts on the low end at around $250 for entry-level positions but can often exceed thousands of dollars.
It’s important to benchmark in your industry and local market to understand what your competitors are offering, but it’s also necessary to run the numbers to truly understand what you can afford to offer, as well as calculate the direct and indirect costs associated with hiring a new staff member. If you need help getting started, browse our partner marketplace to find the right coach for your business.