Why You Need an Employee Referral Program
According to research conducted by LinkedIn, employee referral programs save time in the hiring process, lower the cost of hiring new staff members, deliver highly qualified candidates and increase employee retention.
Another benefit of hiring a referred candidate is the knowledge that the new employee will be a good cultural fit in the business. Staff only refer candidates they themselves would be happy working with and know are qualified to fill the position.
Encouraging your workforce to refer good candidates seems like a no-brainer, but it is not as easy as some would think. There are roadblocks to getting staff members involved with the process, and they have nothing to do with incentives — they have everything to do with employee engagement.
Employee Engagement and Challenge Coins
Fortune 500 companies like Coca-Cola, Amazon and Facebook use challenge coins to foster engagement among their employees. Coins are awarded to teams after completing difficult tasks, to commemorate promotions or retirements, and to recognize excellent work.
But why does this matter?
Actively disengaged employees will most likely not be interested in participating in employee referral programs. They do not like working for a company, so they see no point in bringing people they know on board.
Engaged employees, on the other hand, are more enthusiastic about their work. They feel valued within a company and see their influence in reaching team goals. Engaged employees are more likely to refer candidates simply because they want to share their positive working experience with people they trust and want to work with.
It is important to recognize engagement when thinking about employee referrals, and challenge coins are the perfect starting point. They are used to honor excellent service, to create camaraderie among staff members, and to provide a shared vision within the company. Each coin shows an individual that their contributions are valued.
Using them in referral bonus programs is a perfect way to show appreciation for an employee’s efforts to help the company grow.
Bonuses for Employee Referrals
Offering bigger and better incentives is not enough to get people involved. In an effort to get more qualified people into their company, Google doubled the size of their employee referral bonus from $2,000 to $4,000, but nothing changed. The biggest problem was in the complicated nature of the referral process.
The company had to rethink how they approached employee referrals. Google’s hiring chief, Laszlo Bock, found that people were referring candidates because they liked working for Google, not because they were looking for a big bonus. The next step was to make the referral process easier to use, and by employing a strategy known as “aided recall,” the company increased employee referrals by over a third.
Google’s experience shows us that engagement in a company is the driving motivation for referring potential talent, and that making the process simple can increase the number of referrals.
Be that as it may, cash bonuses are the most popular incentives that businesses provide in their referral bonus programs. Other common bonuses are gift cards, extra days of paid time off and all expense paid weekend getaways.
The company DigitalOcean offers a cash incentive on top of a charitable pledge of $1,500. If an employee refers someone who gets hired, they get to choose where the money is donated and receive an additional $3,500 for themselves.
All of these are excellent ideas for incentives, but they do not address the issues of engagement in the company or complexity in referral processes. One simple example of a bonus that addresses both of these issues is in the strategy used by Hewlett Packard Enterprise.
The company publicly thanks their “employee referral champions,” showing value in their efforts to strengthen the team. This method shows appreciation for employee referrals and encourages others to help out as well.
The important takeaway from all of this is not that monetary incentives for employee referrals are a bad option. They are just not the most effective method of getting staff involved with a referral program.
5 Tips For Success
- Foster engagement in your current staff. People who feel their opinions and contributions are valued are happier at work and more likely to want to share that experience with others. An easy way to get started is with challenge coins. Each is a physical symbol of a team’s shared vision, and they are handed out to show appreciation and honor excellent service.
- Use a simple referral process. People can often think of a few people off the top of their head, but they are rarely prepared to comb their entire network of professional contacts. Google’s “aided recall” method borrows from marketing strategies that jog a person’s memory through simple references. In this context, it is the difference between asking a vague question (Who do you think would be a good fit for this company?) and a specific, personalized question (Who is the best programmer you know?).
- Pick a strong incentive. As stated above, incentives are not the most important part of a referral program, however, they do provide motivation and are an excellent way of showing appreciation for helping the company grow.
- Provide updates on referred candidates. When a staff member takes the time to refer a quality candidate, return the favor and keep them informed on the process. This ensures that your employees know that their input is valued even if the candidate is not hired.
- Recognize employees who earn employee bonuses for referrals. This lets the individual and the rest of the team know that contributing to the expansion of the team is appreciated and valued by the company.
It all starts with employee engagement. By keeping your staff motivated and making sure they feel appreciated within the team, you are paving the way for a strong company to grow. Your staff will naturally want to bring people on board that they believe will benefit the team.
Challenge coins are used for any of these steps listed above. When recognizing employees at meetings or team outings for referring a hired candidate, a challenge coin represents gratitude and value within the company.
How does your company’s referral bonus program work? Let us know!
