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Employee referrals are a must-have sourcing technique for the current candidate-driven market to find the right job candidates. As per research, 82% of employers were able to yield the best return on investment with an employee referral program.

In today’s fiercely competitive talent market, a powerful Employee Referral Program might bring you great talent for your company. It can bring you candidates in less time, who stays longer while also reducing the turnover rate.

Further in this article, we’ll explore more about employee referrals and how you can create a successful referral program that works.

What is an Employee Referral Program?

Employee Referral Program Definition: It’s a structured process to encourage the company’s people and resources to recommend candidates for open job roles.

It is adopted by companies to take advantage of their internal networks and resources to find talent for open positions.

With employee referrals, employers ask their employees to suggest people from their network or contacts for open positions. Companies offer various incentives to their employees for recommending great talent.

To Know more about Employee Referral Program Read this In depth Detailed Blog-

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How to Build a Solid Employee Referral Program?

Step 1. Get management involved in the process

If you involve the management in the process, it is sure your referral program is going to work better. Involving management and getting their approval before starting any type of referral program is a great idea.

You will require them to understand its value and provide all the details about your program. If you get their approval then you can ask them for their assistance. They can provide you with the needed resources for the program and help you set hiring goals if you request.

Step 2. Simplify the referral process for employees

This is the best way to encourage your employees to refer their connections. Employees would simply lose interest in participating in making referrals if the process is complicated.

Everything regarding the referral program should be easy to understand by employees including the application process, rules, and rewards.

Here are some steps to make the process simpler:

-Opt for an online referral tool that streamlines the process like Recooty.
-Create an online form, you can use Google Forms for that.
-Make a readymade referral email template for your employees to refer their candidates.
-Teach employees how to use company resources to let them speak effectively with potential candidates. For example, a career page or company intro video will help them tell about the company in a better way.

Step 3. Set SMART goals

With no doubt, getting more candidates is the main goal here but setting SMART goals is important. SMART stands for Specific, Measurable, Achievable, Realistic, and Timely. So make sure you figure out the goals that are specific & measurable. And don’t forget to make your process time bound because you will get a timeframe in which you need to reach those goals.

The goals to achieve through the referrals might include the following:

-Improving the quality of candidates hired in your company.
-Reducing the turnover rates and streamlining the recruitment process.
-Decreasing the company’s overall costs on recruitment.
-Increasing the retention rates of new employees.
-Broadening the talent pool with potential candidates.


Step 4. Put forward the appealing incentives

Offering incentives play a crucial role in employee referral programs. Incentives motivate employees to make them try more for giving you the best leads to fill the open position. You can either go for monetary incentives, non-monetary ones, or a mix of both. For example,

-Monetary incentives can be referral bonuses, discounts, gift cards, etc.
-Non-monetary incentives can be loyalty points, early access, swag, extra time off, etc. without direct money involved.

In case you’re going for monetary rewards, try a tiered reward system for referral programs. For example, you can offer rewards of increased value for making good referrals for hard-to-fill positions. Also, you can offer an attractive reward if the referred candidate completes a certain period in your company.

How to choose the best incentives for your employee referral program?
For this, you can take the help of your employees by asking them what would they like to receive as a reward. However, here are some of the ideas you can use:

-Referral contests: You can set up two teams and start a referral contest between them to turn up their excitement. This will allow you to encourage more teamwork, recognize the top referrers and enhance overall employee satisfaction. These contests have great potential to build a referral culture at your workplace.

-Look for location-based options: You can offer something exclusive available in your region only that your employees would like to receive as their reward.

Step 5. Make the announcement and clarify the instructions

Before you start the referral program, announce it in front of everyone in your company. Along with the announcement, issue the instructions and reward structure of your program.

Delivering the instructions clearly is important as they will know how to start referring candidates. You can share the instructions through a video, or pdf file, or make a dedicated web page on your company’s website. Another creative way is to create some attractive posters and post them where employees gather.

Step 6. Give credits for successful hiring

When a referral gets hired, give recognition to the employee who suggested their names. Here’s how you can do it:

-Display their picture in your company’s newsletter.
-Make dedicated posts for them on the company’s social handles.
-Recognizing their contributions on the internal website or communication channels of your organization.

Step 7. Make referrals a part of your company culture

Referral programs should be included within your company culture. Along with making referrals a part of the onboarding process, you can also blend it into other aspects of your organization.

Some useful ways to include employee referrals in your company culture:

Plan a company-wide party/event/meeting to announce the program and create excitement around it. It can give a great headstart to your program.
Organize recruitment happy hours every now & then. Inviting preferred candidates with your employees for a meeting to get familiar with them is a great idea.

Considering your employees as recruiters is necessary. Try to keep informed about the open positions and what kind of candidates you need. Give them access to relevant analytics, tools, and resources to support your referrals.
Run internal promotional campaigns a couple of times throughout the year.

Step 8. Finally, it’s time to track the results

It’s an important step as with this you can discover how successful your campaign was. If you properly track results, you can see if the referral program worked and if it has scope for improvements. Referrals should be evaluated based on quality and quantity.

You can have a look at the following metrics for your evaluation:

-How many referrals company received?
-How many of those referrals were hired?
-In which way you filled more positions? See if positions were filled either with referrals or other hiring methods.
-For what duration did the hired employees stay in the company?
-How did your employees and management feel about the program?

Top Benefits of an Employee Referral Program

Nowadays candidates have an ocean of opportunities in the current job market. Additionally, they also have various advantages like plenty of networking, a choice to work remotely, and the best job search tools at their disposal.

All of these factors make it tough for recruiters to hire candidates through more traditional methods. That’s why going for employee referrals seems to be the best thing as it has some huge advantages. Let’s have a look at the same.

Some of the major benefits of the Employee Referral Program:


  • The resources are readily available for the referral program, and those are your employees. You can start leveraging your best resource right away.
  • You get the best quality of candidates from referrals. It’s because your employees will suggest only those people who are well-equipped with the knowledge & experience needed for the open job role.
  • This process is way more convenient and inexpensive if compared to others. As you know recruiting new talent is a costly affair and opting for this method can save you money. You can cut down the cost of job advertising, the recruiting agency fee, or other expenses to a large extent.
  • Referred candidates are genuinely interested to work in your company. According to the sources, 46% of candidates stayed for a year at the very least after their hiring was made.
  • You get candidates who are already fit for your culture. This is because they get all information about your company including its culture from your employee. So the chances are that the candidates who’re applying already like your company.
  • It’s among the best motivator for your existing employees. It’s because not only they’re getting an attractive reward for referring a great candidate but also the satisfaction of helping out a friend.
  • Referral programs also increase workplace efficiency. How? Well, it’s because good employees are going to attract good candidates to the company. And when you hire them your company will be filled with excellent people, great workplace efficiency becomes obvious. 
  • When you send your employees to bring candidates, they will surely reach them and say only good things about your company. This way you can get great candidates for current and future positions. All in all, employee referral is going to help you improve your employer brand.

Referral Program Examples For Your Reference

You can put all the knowledge you’ve got into action if you have some good examples. Get some inspiration from the examples we listed below to know how to leverage the power of referrals.

Here’s how top companies are leveraging the power of referrals:

1. Salesforce Happy Hours

The way Salesforce does referrals is amazing. The company organizes recruitment happy hours where employees can invite their friends for referring them.

It’s a more informal but more comfortable way to meet potential candidates. Even if these candidates are not immediately ready to apply, they can be reached in future openings.

2. InMobi’s Special Award

InMobi did something special for their employees to encourage them for making good referrals. InMobi gifted a Royal Enfield motorcycle in India & Vespa in the USA to employees whose referred individuals got hired for the engineering manager’s post.

To boost employees’ motivation to participate in the program they parked the vehicles in front of their office gates. They also gave them the option to take the bike or a trip to Bali whichever they like the most.

3. Fiverr’s Gamification System

Fiverr, among the largest marketplaces for freelancers went for gamifying their referrals. They tracked social job sharing and introduced gamification by offering points for sharing jobs and referring friends.

Fiverr gave their employees points and credit for contributions they made to the program and they kept the entire process transparent.

4. & Their Idea of Lunch

The company was unable to find candidates for their customer support position in Brazil. They needed someone who could fluently speak Portuguese & English.

Its hiring team decided to take their team Portuguese for a lunch and told them to recommend someone for the position. And guess what? This idea worked wonders for them! With this, they got a good number of referrals and fill the position in one go.


In conclusion, we would like to say that referral programs are a great way to source some excellent talent for your company. Now you know everything about referrals and how you can use them to your company’s advantage. If this article helped you then share it with your friends and network so they can also take advantage of employee referral programs.

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