How To Make Your Employee Referral Program Effective


Employee Referral Programs (ERP) are gaining importance in the companies owing to the benefits obtained such as quality hire, reduced cost of hiring, high retention level and high level of performance by the referred employee. Most of the companies have started to use ERP and are trying to fill almost 50 percent of their available vacancies through this channel. Currently, hiring by referrals constitute more than 30 percent of the total hiring done in any company. But, having an Employee Referral Program is not enough. It needs to be made effective which should be periodically measured based on different parameters. An ineffective ERP is a waste of company’s investment. The ERP can be made effective by focusing on its backbone and they are the company’s employees who refer good prospects.

Related Link: Employee Referral program - harnessing the buddy network 

The companies need to market their ERP among its employees effectively. One can start with creating a story to connect the employee with the program. The employee needs to connect emotionally with the program else they will not contribute seriously. The emotional connect can also be created using a strong slogan for the program. The reason behind most of the employees not taking part in their referral programs is because they do not know to look out for prospects and how to go ahead if they find one. They are also scared about the impact on their image if their referred candidate does not get selected. They do not want to tarnish their image in the company nor their relationship with their friends. Hence, employee must be trained on the approach to be taken while convincing the prospect. They also need to be taught that their friends and relatives are not the only source of getting candidates. They must be made aware of the different available sources that can be tapped. Use of the software tool to be used is another deterrent to the process. The process employed for referring should be simple and tracking of the employee status with ease is very important. 


The employee should be motivated by various means to bring in quality referrals for the company. The HR should go beyond the regular incentive plans. They must conduct regular meeting with the employees and inculcate the feeling that by bringing in good candidates they are working for the betterment of the company resulting in the benefits to the employees in return. Awarding with cash incentive plan where a portion of the cash will be donated for charity will have many takers among the employees. Many times, non cash awards are more motivating than the cash awards. They lead to emotional bonding with the program and the company. The employee will be greatly motivated if they get recognition from the top level. Various kinds of events can be held for employees to reward them for making significant contribution in hiring. Dinner with the CEO and top management can be a great source of motivation. Award should be given to first time referral and also for bringing in good prospects that could not be hired due to prevailing circumstances but can be a prospect for future. It will encourage employee participation. The bonus amount should be regularly modified to keep the interest alive. Surprise bonuses and awards like vacation trip, plane tickets and movie tickets for families on regular basis will create buzz among the employees. Higher bonus should be attached to difficult openings. Events should be conducted to award the successful employees and their achievement should be celebrated.

The ERP can be made more effective by having clear job description for the position to be filled. The job openings should be made easily available to the employees and job requirement should be discussed with them. This will prevent unwanted referrals lacking in desired skill set. The top contributors of the program should be regularly contacted for references and weed out the employees with very poor and unsuccessful referrals. Ex employee of the company and non employees such as spouse, vendors and strategic partners can be exploited for references. Maintaining a record of suitable non hires for future openings can be of great help.

A timely communication is also very essential for a successful ERP. The employees should be contacted on immediate basis for upcoming vacancies. The references should be screened on priority and interviews should be scheduled as soon as possible to not keep any potential candidate waiting. Joining formalities should not be delayed once the offer has been made. The employee and its referral must be informed of their status at every stage. This will keep both of them interested. The employee must be provided feedback on successful as well as unsuccessful hire so that they can learn from the process and contribute to the program by referring suitable candidates.

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The effectiveness of the ERP must be regularly measured. Factors such as referral analysis, candidate assessment, new hire performance, retention level, quality and cost incurred in hiring can be used to measure the effectiveness of the ERP by the

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