Introducing Employee Referral Schemes          

Introducing Employee Referral Schemes

February 28th, 2010


Employee referral programmes are great ways for employers to engage staff while also reducing recruitment costs and increasing staff retention. This article will talk about the steps for introducing an employee referral scheme for your company.

Firstly why would you want to create an employee referral program?

  • Attract new candidates.
  • Involve employees in the growth of the company.
  • Motivate staff.
  • Reduce costs
  • Decreased hiring time
  • Better quality candidates

Employee referral schemes generally function best when they are simple. At a very basic level an employee referral scheme allows employers to set an amount they will pay an existing member of staff who recommends a person for the role who is subsequently offered the job. Employee referral schemes have no real down side from the employers perspective so if you are not currently offering this to your staff, you really should introduce it ASAP.

Since the priority of the referral system is to pay the referrer, the company should decide on and allocate the intended reward before starting the process. Some companies offer up to £1000 but anything from £150 will motivate some employees to talk about the job with their network. For the scheme to function best you should set the reward to the highest amount which you feel comfortable paying. The reward needs to be large enough to tempt the employee to act immediately and also to proactively promote the role.

In order for a successful referral scheme to function correctly, it is vital to create a process by which staff are notified of active vacancies and the referral fee is publicised. For the scheme to be successful publicity is KEY, so if it is not already happening it will be a good idea to start sending round an all staff vacancy email which lists all the active vacancies and also gives details about the rewards available.

Since the whole system is run on the credibility of the referred applicants, companies should encourage the employees to conduct an initial screening before they forward their recommendations. This will save lots of wasted time. One good method for encouraging referrals is to give priority to referred candidates. They should be given attention and ideally the processing of these applicants should be done first. Swift processing and regular feedback on the referred applicant’s status in the process will ensure that your employees stay motivated to send more referrals in the future.

The referral process is completed when the referred applicant is selected to the post. After the candidate accepts the role, the referrer should be recognized and awarded the promised amount. This will reinforce the credibility of the scheme as well as encourage others to actively participate. Should a referred candidate accept the job, the fact that the new starter joined through the referral process should be publicised within the company.

A good referral system should have these characteristics;

  • Public recognition of successful referrals.
  • Prompt bonus rewards.
  • Regular promotional incentives.
  • Converting the program from a passive to a proactive tool.
  • Creative devices to enhance employee participation.
  • Good communications feedback about referrals.

A good referral program will have many benefits, both in cost and the time savings and also since the new employee will have come via an existing social connection it is likely that they will fit in well; hence less time and money spent for orientation and training.

There are some potential downsides to consider. Minority dominance can be a main problem as certain employees will only recommend people from the same group. For example, young employees will in turn recommend someone from their own age. Also most men will only recommend other men….etc.

That said, provided your employee referral scheme is a component of a larger recruitment strategy which also includes job board advertising, social media, etc, it will add a lot of value to most organisations.  For a simple way to manage recruitment from these other online sources you may want to take a look at