Referral programs 101

Thinking about setting up an employee referral program? Amazing!

Never thought about it? You’re about to learn why you should have one. Keep reading.

A referral program is a handy system that turns the connections your team already has into candidates for your pipelines. It’s a three-way win: employees get recognition, candidates find their fit, and the company strengthens its team with every referral. 🤝

But how does it work?

At its core, a referral program is just a structured way for your team to recommend people they know for open roles. Instead of random “hey, do you know anyone?” messages, it gives your employees a clear process to follow, including:

• Who can refer
• How to refer
• What rewards exist for referrals
• When rewards are paid

Why bother with a referral program?

In today’s competitive market, referral programs aren’t just a nice to have, and they can offer multiple benefits:

• Faster hires: Your team already knows candidates that could crush the role, so you spend less time sourcing.
• Better fit: Employees refer people they can vouch for, increasing the chance that the candidate will align well with your culture.
• Stronger retention: Referred employees tend to stay longer (up to 70% in some studies!), which obviously saves your company time and money in the long run.
• Engaged employees: Your team will feel like they have an impact in growing the company, and they usually receive a pretty penny for it too!

Rewards & recognition

Before you get too excited, you do need to clarify a few things internally before you start informing your team about the shiny new program. Let’s talk rewards and recognition.

First, you need to define:

Who the program is for

In most companies, referral programs are open to all employees, with some exceptions. While referrals are welcome from everyone, you’ll often see that recruiters and hiring managers won’t receive a bonus for the roles they hire for. That’s because their job is to hire, and they’re already being paid to do that.

Hiring managers can often get referral rewards when they refer candidates to other roles, though. Sorry, recruiters. 🫣

What can rewards look like

Referral rewards often come in the form of a monetary bonus. The exact amount and method of receiving this bonus can vary from company to company, but you’ll often see things like:

• €500 – €4,000 per successfully hired referral, sometimes the amount depends on seniority.
• Gift cards, team experiences or dinners.
• Monetary rewards paid in full once the referred candidate is hired and passes probation, or split into parts and paid out at different milestones.

What else do you need to consider?

Setting up a referral program is just the start. A few other things will actually make it work:

• Decide where it will live: ATS, dedicated portal or another system. Keep all referrals in one place, and follow GDPR rules.
• Monitor performance: You’ve put so much effort into getting this thing off the ground, make sure it’s actually improving your hiring. Measure team participation, referral to hire conversion, probation pass-through rate and retention.
• It doesn’t replace all recruitment: Referrals can absolutely bring in good talent, but candidates should all go through the same process, to keep things fair for everyone.
• Spread the word: Openly promote the program through Slack, newsletters and meetings. Celebrate successful referrals. The more visible it is, the more the team will use it.

A great referral system can save you hours of cold sourcing, bring in strong hires, and keep your team engaged. The above is just scratching the surface.

If you’d like guidance on bringing your referral program to life, get in touch!