Ryan O'Donnell By Ryan O'Donnell • April 12, 2016

5 Must-Haves in Your Employee Referral Program

**This is Part Three of "The Five Part Guide to Hiring by the CEO of the "Uber of Recruiting." Check out the introduction here.

You are ready to get started with a new employee referral program. You have spent months planning with your recruiting team, employees, and executives. Everyone is excited about moving forward. You launch the program and within a few months, the hype fades and you are stuck, thinking, “Where did I go wrong?”

Based on the hundreds of employers we've been listening to at EmployUs, we’ve decided to summarize the five most important ingredients to start, grow, or save your company's referral program.

1). Market Your Program After Launch

Getting consistent engagement with your referral program is key to its long term success. If you only make a big announcement during the unveiling of the program, it will get lost in the shuffle. Your employees will start to wonder if their referrals are still needed or what jobs are the most important for the company to fill or, even worse, they won’t wonder at all. As for your recruiters - they will start focusing on other sourcing tools like job boards and LinkedIn over your own referral program. Don’t ignore the goldmine you’re sitting on - market your referral program!

Whether it's a simple monthly email reminder or targeted push notifications with referral recommendations, you need to engage your referral community through a consistent marketing plan. Here are a few things we have seen that tend to work well.

  1. Write a blog post about the referral program
  2. Post flyers around the office
  3. Awesome shout-outs in the office
  4. Social Media Posts to engage external referrals
  5. Email New Hires & Ask for Referrals

Most employers agree they want to hire more referrals, but few are willing to admit that the most important part of a robust referral program is how it’s marketed. Are you getting the most out of your referral program?

2). Have You Set the Right Rewards?

Overheard in HR: "No one is making referrals anymore. Let's get approval to double all of our bonuses to double our referral engagement!" Everyone nods....

Setting the right rewards for the right goals is critical to growing an effective referral program. It's not always cash, but let's face it - money talks. We often get asked if paid bonuses are the only way to run a referral program. Cash payouts might not be obligatory, but most of the best run referral programs offer cash rewards anywhere from $1,000 to $5,000 depending on salary, skill level, and how difficult it has been for the recruiting team to fill a particular position.

When thinking about non-monetary rewards, take notes from RedHat's employee referral program. Jim Whitehurst, RedHat’s CEO, explained in his latest book Open Organizationhow their program rewards employees with greater responsibility for marketing and governing their program. For example, after getting your third employee hired, you earn 25% more cash and a coveted “Mega Ambassador” hoodie. After five hires, employees are invited to steer the direction of the program for the whole company, regardless of their position. This is something that rewards employees and shows them that you value them for more than their rolodex.

3). Quality > Quantity

High participation rates don't automatically translate into quality hires for your company, so how do you assess whether or not your referral program is attracting the right kind of referrals? Rather than focusing on only the total number of referrals made or only employees’ engagement, focus on your applicant to hire ratios month-to-month, testing what produces the highest performing referral program.

Average companies tend to have an applicant to hire ratio of 18:1, when combining all sources of talent like job boards, LinkedIn, career website, and referrals. An average referral program produces 10:1. The average EmployUs customer running their referral program gets one hire for every five applicants by marketing their referral program on our mobile app to people inside and outside of their company. High performing programs can even translate to a 3:1 applicant to hire ratio!

You can improve your overall quality by having your recruiters ask for referrals from employees for any job they are working on. Giving them easy tools to ask for referrals for their employees and broader network is key to not only promoting the program more effectively, but focusing on getting exactly what you need.

Remember, referrals are proven to out-perform any other source of candidates, so even if you already have a short-list of applicants, double-check to make sure you have some referrals in the mix. It will pay off as you’ll save time and money hiring referral candidates

4). Your ATS Isn’t Enough

Even if your Applicant Tracking System is the greatest thing since sliced bread, you cannot solely rely on your ATS to run your referral program. Mainly because letting technology decide whether a person is good enough to consider after someone has already taken the time to put their name on the line and make the referral, is counterproductive. Here are three easy ways to analyze your current provider to see if you need to explore tools outside of your core ATS for referrals.

  1. Focus on Candidate Experience: When someone is vouching for someone else there is an implied level of trust. This is especially true for job seekers who view getting a referral as a fast-track to the top of your stack of resumes. They feel special and they should (remember they are your best employees). Sending them directly to your applicant tracking system to have a similar experience to any job board or career site will easily turn away even the perfect candidate. For more on why they leave, check out Joel McLean's Post on Candidate Bounce Rates.
  2. Make Sending and Getting Referred Simple: When someone knows the ideal person to join your company (or is asking for a referral from someone they know), nothing should stand in their way of making the connection. However, today's ATS-centric referral programs usually treat the person making a referral just as poorly as the applicant! They need to fill out multiple forms, repeating information, and even tracking down their resume. Your best connectors will often get multiple people hired, so facilitating, encouraging, and rewarding multiple referrals from your most active connectors should be top of your list.
  3. Take Your Recruiting Mobile: Your next employees are looking at your job ads on their phone and likely will continue to as the growth of mobile job discovery increases. Are you prepared for this shift? Your ATS is great for recruiters but will likely lack the mobile recruiting functionality needed for meeting top talent where they are, which isn't your career website.

5). Broaden Your Reach

If you're reading this chances are you are having serious conversations about how you can hire more referrals. How many referrals do you want to hire? Many employers say they should hire about 25% through their program. Imagine for a moment that it would be possible to hire 50 or even 75% of your hires through referrals, what an impact that would have on your recruiting team!

Quite honestly, it is a numbers game. The more people you have sending in trusted referrals, the better your chances are of achieving your goals with your referral program. But you might say, "Ryan, we are constantly asking our employees to spread the word about how great it is to work here." My response, "Great! Why would you limit the evangelizing to only your current employees?"

Most referral programs are limited to internal full-time employees, under the assumption that they "know our company culture" or "understand what it takes." Imagine if Apple tried selling the iPhone only through the employees who built it, they would be missing out on a huge market of evangelists.

Take a moment to think through these groups of people. Can they participate in your referral program today?

  • Your Contractors or Part-Time Employees
  • Your Company's Alumni Database
  • Your Customers, Suppliers, and Industry Partners
  • Your Employee's Friends, Classmates, and Former Co-Workers

You have already invested in building your employer brand and marketing your referral program to your own employees, so why stop there? You have a massive opportunity to unlock more talent by inviting these groups, which represent thousands if not millions of people who could start recruiting for your company.

Getting a well-performing referral program started is only the beginning. Ensure your program’s success by integrating these five must-haves throughout your program.

If you need help determining how to improve your referral program, we are always available to help you hire more referrals. You can learn more by visiting the EmployUs Hiring Leaders Blog or contact me directly to set up a free consultation about how you can boost your referral program’s effectiveness.

About the Author:

Ryan O'Donnell is the CEO & Co-Founder of EmployUs, a free mobile hiring app connecting employers and job seekers through trusted referrals. Called the “Uber of Recruiting,” EmployUs built a risk-free way for employers to hire more referrals by rewarding anyone for the network they've built. Interested in our free mobile hiring app to hire more referrals, visit our website to learn more or book a private demo.