What are they?
By definition employee referral is a structured programme employers put in place to encourage and incentivise their employees to recommend candidates from their own network.
In theory it’s a fairly obvious initiative to put into place and the benefits may seem obvious, however the success of these schemes can vary wildly. Done right, they are a great way to reduce costs and employ like minded people who are likely to succeed within your business. We’ll give you some idea of what a good scheme can look like and also outline some of the pitfalls of putting in place the wrong system.
What you should consider
Before you implement an employee referral scheme there are a number of aspects you ought to consider. We’re always amazed at how many businesses don’t consult their workforce before forging ahead. After all, why put so much time and expense into creating a scheme that only a few will benefit from and buy into the concept of?
Think about the following as you plan out a programme:
- What should the incentive be? – cash or non-cash
- Ease of use – make sure it’s easy for employees to engage in the scheme
- Accessibility – ensure everyone can benefit
- Feedback – keep your referrers updated on progress
- Recognition – publicly praise those who refer
- Pace – waste no time in asking new starters who they recommend
All of these may seem obvious but they are often not considered. Let’s take a look in greater detail.
It’s easy to put in place a cash referral scheme for employees which can vary in amount. We’ve seen some big numbers because ultimately you’re still saving in recruiter fees, time and advertising. Anything from £500 to £5,000 plus depending on the level of the role and the organisation.
However, it’s not necessarily cash that offers the greatest incentive.
One of the world’s best known tech companies found that offering employees $1 million dollar incentive schemes for their most senior hires was not as successful as inviting successful referrers the opportunity to take a holiday in Hawaii.
A top 3 Management Consultancy firm’s research told them that the main reason their people referred others was that it made them feel good. They decided to offer people the chance to donate a portion or all of their reward to a charity of their choice and they would match the amount.
So it’s not all about cash – consider the alternatives.
Ease of use
This goes without saying but make sure the dynamics of the scheme are simple and easy to work with. Don’t expect an employee to jump through too many hoops – they literally want to suggest a name and leave the rest to you. That said you need more than that so put a system in place that makes it simple for them to input.
Make sure everyone gets the opportunity to refer. Just because the accounts team sit in that space, it doesn’t mean they don’t know the greatest software developer in London.
You’re not likely to encourage people to refer more than once if you don’t keep them updated with the progress of their referral. It’s embarrassing for employees when they refer a friend who constantly asks them if they’re likely to be interviewed. Keep them informed.
We all like recognition don’t we? It should be no different if an employee refers a great person who end up joining the business. Shout them out publicly and make them feel good.
The best time to ask for referrals is shortly after someone has joined when they have no preconceptions of the business and who may or may not fit. And make sure you get the question right.
No – “is there anyone you know you could refer to us who you think might be right for this media planning role?”
Yes – “Who is the best media planner you’ve worked with in London”
The second question will get them to really think. That person may not be looking for a role
now but you can be sure they’re good and you can add them to your pipeline of brilliant
Employee referral schemes are not a nice-to-have they’re an essential as long as you get them right at the outset. Consult with your staff and gat their opinions, give them some options and ultimately get their buy-in. Think about incentives other than cash – think about the culture of your business and what might work best for your employees. Be innovative – an ERP could be part of a reason people want to join you – at the very least you’ll be talked about in a positive way.