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September 22, 2022

The Employer’s DIY Guide to an Effective Employee Referral Program

two large hands passing a person to each other

Not getting the quality candidates you need? To bring the va-va-voom back into your hiring, you need to find top talent — fast. The easiest way to do it? 

A five-star employee referral program! ⭐

As the person responsible for hiring (among many other things), you’ve got a lot on your plate. So what if the employees you already know and love could recommend like-minded and super-skilled candidates for those pesky open positions?

If you want top quality hires without hefty recruitment costs, you need an employee referral program that will incentivize employees to refer the best talent to come work for your org.

Today, we’re offering up more than just tips. This is a total walkthrough, explaining how to design your program from top to bottom (or bottom to top, or side to side…you get the picture). 

We’ll break down what an employee referral program is and how to create one that works for your company and employer brand. Consider this your go-to guide for building your own employee referral program from the ground up. 

Ready? Let’s get cracking!

How to build an employee referral program:

  • Step 1. Determine your hiring needs
  • Step 2. Build your framework
  • Step 3. Outline basic rules
  • Step 4. Choose the right incentives
  • Step 5. Get employees excited

Well, hello there! Did you know Breezy gives you a place where current employees can refer candidates for open positions, or even apply to internal positions themselves? Yep! Simply enable your Employee Portal and get your whole company in on the recruiting process.

What is an employee referral program?

Simply put, an employee referral program is a recruiting tactic employers use to boost the number of qualified job candidates coming into the hiring pipeline. 

An effective employee referral program uses rewards and incentives to encourage existing employees to refer top-notch candidates for open positions in their organizations.

In essence, employee referral programs take a help-me-help-you approach, incentivizing employees to recommend other high-achievers for open roles. This not only results in higher-quality hires, it also makes for a more cohesive workplace. 

Can someone say synergy? ✨

Breezy examples of the different referral options within the platform
With a fit-for-purpose employee referral program — complete with centralized job postings and employee referral links — Breezy makes it easy to build a referral process that brings you more top talent. 😉

How can an employee referral program help you

With 10.6 million job openings in the US and 6.3 million unemployed people, businesses are competing hard for talent acquisition. To get a leg up on the competition, make use of the connections you already have — starting with your employees (and their networks). 🌐

Let’s take a closer look at the business case for a high-impact employee referral program.

High-performers will bring in other high-performers

Time and time again, research confirms that employee-referred hires tend to stay longer and perform better

In fact, 45% of referred employees stay with the organization for upwards of four years. Clearly, employee referral programs are far more cost-effective (considering cost per hire) than many recruiting strategies. 

Easier onboarding

When you hire an employee’s friend-of-a-friend or a superstar former coworker, you’re making the most of your workers’ existing network.

In many cases, this also cuts down on time spent onboarding

Existing employees can speak from personal experience about life as an employee at your company. This means any new hires they recruit will not only be more informed, they’ll also be better prepared for the ups and downs of #worklife. 

Unlike unconnected hires, referred employees already know a bit about the role from their pal, making job-to-job transitions that much easier.

Referred candidates can be a natural fit 

Hiring isn’t a one-person job — it’s a team sport. And everyone should be able to get involved. 

More likely than not, your top employees are already networking with professional peers and past coworkers outside the workweek. They have special access to qualified pros with the skills and in many cases the values your organization has been looking for. 

For built-in values fit, take it to the streets and ask your employees for recommendations. Even if their professional pals aren’t actively looking for a new gig, they’re more likely to consider alternative options if the time (and connection) is right. 

Referrals are super cost-effective

Make the most of your employees’ networks by enlisting them as off-the-clock recruiters

When you think about it, you’re getting free job advertising when your employees gush to friends and former colleagues about how awesome their job is. 

Not only that, employees often make the best recruiters because they already know the business inside and out. They’re able to make better (and more authentic) “sells” through their personal relationships. And if they sing your praises enough, you can cut back on traditional job ads too.

By using the existing human resources at hand, you’re lowering overall recruiting costs and improving your recruitment ROI. That’s what we call two-birds-with-one-stone hiring!

Referred employees are in it for the long run 🏃‍♂️

No two ways about it. Well-managed and thoughtfully designed employee referral programs have also been consistently linked to higher employee satisfaction rates and better employee retention rates. 

Giving current employees the chance to get involved with the organization’s growth makes them feel trusted. And when their referral gets the job, the recommending employee feels accomplished and valued.

Plus, referred employees often make better employees. Because they have trusted friends within the company, they’ll feel engaged and ready to roll from day one. This makes it way easier for them to fit into the company culture with a built-in mentor. 

No matter which way you slice it, employee referral programs create an engaged workforce willing to stay the duration. 

Your step-by-step guide to an all-star employee referral program 

Now that you know why an employee referral program is the best HR secret weapon for employee engagement out there, you’re probably wondering how to actually design one. 

Let’s take a step-by-step look at how to create an employee referral program that gets the whole team on board.

Step 1. Determine your hiring needs

To design an employee referral program that works for your organization, start by getting crystal clear on your hiring needs.

That usually means triaging three core areas: workforce, time, and budget. 

  • Which open positions need to be filled? 
  • How long do you have to fill them? 
  • How much money are you able to spend on recruiting?

Start here to nail down the scope and make sure you have the right resources to launch an effective employee referral program. 

Employee portal job openings

Step 2. Build your framework

While your employee referral program is still in the development stages, make sure to keep it simple and accessible. If your program rules are too complicated or confusing, employees simply won’t bother. 

One foolproof tip is to bake referrals into your company culture. 

Set the stage during onboarding by explaining how referrals are key to company success. When new employees understand that employee referrals are not only appreciated, but expected, they’ll make it a priority early on.

Another easy way to outline expectations at the outset is to actively distribute your job postings whenever a position opens. This way, employees have all the necessary job parameters at their fingertips, making it easier to decide who (or who not) to recommend for the gig.

In Breezy, employees can submit referrals in two super simple ways:

  1. Add Referral: Just click Add Referral to submit a candidate’s name, contact info, and resume — plus any notes you’d like to include.
  2. Referral Link: Employees get a simple link that they can easily send to potential candidates. When the candidate clicks the link, they instantly can view and apply for the position.

The best part? Employees will automatically be credited with the referral right on the candidate’s profile in Breezy. 🙌🏼

How to access the employee portal

Step 3. Outline basic rules

Once you have a loose framework for your employee referral program, start outlining some basic rules to be followed. 

Not sure which guidelines to set in stone? 

Start with a few simple questions:

  • Who can make a referral? Senior employees only?
  • Do you also want input from company newbies with fresh insight (and connections)? 
  • Will you decide on a case-by-case basis, or set a hard-and-fast timeline? 
  • Is there a cap on how many referrals an employee can make per year? 

With clear and fair rules, employees will have no problem knowing who, what, and how to refer candidates for your open roles. Over time, this clear structure will help make employee referrals a natural part of your company ecosystem.

Step 4. Choose the right incentives

Once you’ve outlined the dos and don'ts of your referral program, it’s time to sweeten the deal. 

Determine what rewards you’ll offer to employees who refer stellar candidates. Choose wisely, and you’ll have your employees lining up to recommend their top-performing friends! 

Here are a few quick employee referral incentive options:

  • Extra time off
  • Gift cards
  • Prizes
  • Special shout-outs (such as recognition in the company newsletter)
  • Cold hard cash

While 96% of employees in 2015 preferred a cash bonus, many employers have found success by offering additional vacation days. 

Talk to your employees and see what they prefer.

Candidate Volume by Referrer section of the Referred Candidate report
With Breezy’s simple, visual Referred Candidates Reports, you can easily see which employees are bringing in the most referrals and get the team fired up to deliver even more!

Step 5. Get employees excited

Once you’ve ironed out the kinks in your employee referral program, it’s time to get PUMPED! 

To drum up some excitement around your shiny new referral program, why not start by building a little suspense? 

Send out announcements and generate intra-office buzz about the program by posting about it on physical (or virtual) bulletin boards, in your email reminders, or a feature in the company newsletter. 

When people are aware of and excited about the program, you’re more likely to get an avalanche of qualified (and highly-recommended) applicants.

Here a few done-for-you resources to help you spread the employee referral love: 🧡

Or to really class things up, why not take a page out of Salesforce’s book and organize an employee volunteer happy hour?

The cloud computing company organizes regular get-togethers where current employees are encouraged to invite the people they want to refer. Not only is this a fun way to enjoy a few beverages with friends and colleagues, it also helps hiring managers get to know potential candidates — keeping it fun and functional!  

Tips to make the most of your employee referral program

Creating an employee referral program can feel like a big undertaking, but it’s all worth it once you start seeing that hard work come back to you tenfold. 

So how can you get the most bang for your employee referral program buck?

Don’t hesitate ⌛

If an employee comes to you with a top-notch hiring recommendation, do not sleep on it! 

Fire up the hiring machine and get to work before someone else snaps them up.

If you stay on top of things, it’s hard to not save money. While traditional hiring methods like job boards and career site postings can take up to 55 days from beginning to end, employee referral programs cut the hiring time nearly in half (only 29 days!). 

When you’re quick on the draw with incoming referrals, maximizing your ROI really is that easy.

Stop the endless resume-scrolling ✋🏾

Not only can a robust referral program bring you the best hires, it can also help you cut back on time spent screening resumes.

For a direct (and highly effective approach), follow in the footsteps of Google’s famous 2015 pivot and ask the hard-hitting questions. 

When recruiters at Google need a lead, they ask employees: “Who’s the best software developer you know in Boston?” 

By cutting to the chase, they’re able to push employees to think critically about who they recommend.

Cut back on money-pit tactics 💰

Once you’ve established a robust employee referral program, it’s time to start really saving money by cutting back on costly traditional recruitment methods. 

That could include saving your recruitment budget for hires higher up the org chart or swapping your pricey enterprise software for an easy-to-use applicant tracking system.

We’re not saying you need to ditch everything — it’s definitely smart to have a safety net of top job boards and recruiters in your back pocket — but by leveraging employee referrals, you can focus your hiring budget on the areas that matter most.

Build the best employee referral program with Breezy!

With a well-defined employee referral strategy, you can create a hiring process that gives everyone the warm fuzzies. Employees feel valued and referred candidates feel comfortable and 100% ready for the role.

And the best part is, you don’t need to burn yourself out to build a great employee referral program. 

With these simple steps, you’ll have everything you need to save time and money on an employee referral program that delivers a steady stream of star candidates. 

And when you’re ready to keep it as simple and streamlined as possible, Breezy’s got your back. With a central Employee Portal, employees can refer candidates directly to your open positions, while you automatically track referrals and corresponding bonuses. It’s as easy as saying, “You’re hired!” 😉