Employee Referral Programs Generate Best Candidates

Step back from your recruitment role and ask why are you doing this? Consider this: when it comes to finding technicians, who knows more about where technicians “hang out” than other technicians?  Same for engineers, customer service reps and yes, even company presidents.  Take engineers.  They belong to the same associations, go to the same meetings, read the same professional journals, and probably frequent the same taverns.  So why aren’t you asking your engineer to help recruit engineers for you—engineers that he already knows.

 Your existing people can be your best recruiters In fact, studies show that employee referrals generate the best candidates at a fraction of the cost of traditional recruitment methods.  Your employees will do much of the screening, providing the candidate with the scoop on your organization—both the good and the bad.  Either way, when the candidate becomes an employee, he’ll come in with his eyes wide open, already knowing your people, history and culture, without any surprises.  So, it only makes sense to start an Employee Referral Program today. In a Society For Human Resource Management national study, employee referrals were cited as generating the highest quality candidates with the best return on investment for the organization.

 But many of you may be thinking “we can’t do this.  Our organization has never done this and this will never be allowed.”  Wrong.  More and more recognize that there is a need to do things differently.  They understand that referral programs are an important and effective recruitment toolThey save money; payouts are only made with a guaranteed hire; and they promote good will among your employees and foster employee retention.  You may have to “sell” the concept but when they see the benefits, they are quick to approve.

 Here are four tips to make your referral program a hit:

  1. Promote the program big time: educate your workforce about what you’re looking for.  Build a campaign around your needs.  Make your referral program highly visible and fun.  Use posters, payroll stuffers, fliers, t-shirts, etc. 
  2. Pay out the big bucks: A referral bonus of a couple hundred dollars is not going to turn heads.  When it comes to referrals, money talks.  Consider this: a 2-inch display ad in a major metropolitan newspaper will cost $2,000, and there is no guarantee anyone will see it, never mind send a resume to you. So why not give the same money to your employee when his referral is hired? Remember, you only pay with a guaranteed hire.
  3. Pay all at once: Avoid payouts that are staggered over time. You’ll get more referrals when you pay out all at once—on the day the new referrals comes to work. 
  4. Make it a big deal: never include the payout as part of a regular pay. Cut a separate check and then personally deliver the check to the employee when other people are around to see the payout. You get to be the “good guy” who delivers the big bucks; the employee is recognized and rewarded, while your other employees view this and wonder how they can reap similar rewards. Talk about a win-win-win. And watch the increase in referrals after your first payout. I had a client who got four solid referrals after paying out her first referral check. Everyone wanted a piece of the action.

 Make all your employees recruiters with an Employee Referral Program.  You will get better candidates and more candidates.  Your employees know you best and as such they should be your best ambassadors and therefore your best recruiters. They should be scouring the community for the best people and bringing these candidates to your attention.  The program will also save you money.  And you can finally focus on running your business.  It doesn’t get any better than that.

This blog was excerpted from my book Uncomplicating Management: Focus On Your Stars & Your Company Will Soar

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3 Comments

Filed under careers, Leadership, Management

3 responses to “Employee Referral Programs Generate Best Candidates

  1. Great article that highlights the importance of referral programs for the future of HR management! I just recently stumbled over a nation-wide study that confirms the success of referral programs in recruiting key positions and the most important product features. It confirms all recommendations given above in the article! http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=mona+berberich
    Easy to read and great guide!

  2. Pingback: 7 Recruitment Trends in 2015 | Uncomplicating Management

  3. Pingback: 7 Ways to Measure Your Recruitment Brand | Uncomplicating Management

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