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Building an Employee Referral Program

An employee referral program is a strategy in which current company employees set out to recruit new employees for their organization. Among the many benefits of this approach, the strategy of employee referral programs have long been popular due to the cost-effectiveness and quality of hires they attract. Additionally, employee referral programs are proven to hire better cultural fits for a company since they already have something in common with your current employees.

Want better hires, happier employees, and less open positions? Let’s look into how you can build your employee referral program today!


First, Let’s take a look at how successful referral programs are:

  • New hires sourced via referral programs produce 25% more profit for their companies than new hires sourced via other means.
  • Referred candidates stay longer. After two years, 45% of referrals remain compared to 20% from job boards.
  • 88% of employers said that referrals are the #1 best source for above-average applicants.
  • Referred candidates are 55% faster to hire than those from other sources.
  • Employees are happier working with people they want to work with.

How to Start Your Employee Referral Program

To get your employee referral program started, check out these tips:

1. Detail Necessary Qualifications

Being a good friend isn’t the only qualification that matters. While it might reflect positively upon someone’s character, there are other factors to take into account. Common qualifications needed are the ability to work the shift being hired for, relative experience, and a good match for the pace of work.

2.Prepare Your People

Give your staff the tools they need to share openings with others. This includes business cards with instructions on applying and entering their name as a referral, or crafting social media posts that are easy for them to share.

3.Outline Payout Guidelines

Determining when a payout will take place is important. While it would be nice for the employee to receive their bonus or reward as soon as their friend gets hired, that’s not the best idea. By outlining when a bonus will be paid out, it incentivizes them to only refer people they are serious about. Most bonuses take place after either 30, 60, or 90 days of employment. This is an indicator that the employee will stick around and has truly been a good hire.

4.List Reward Options

Reward options may range from cash incentives to free food to special days off. Involving your current staff members in choosing which incentive they want to be chosen is a good way for them to get excited about the new program. Once it is initiated, it is important to stick to the set reward as not to show favoritism.
Cash incentives are the most common reward. The amount is often relative to the job being filled. A General Manager position may warrant a higher reward than a cashier position.
At Iron Hill Brewery, they offer $50 after their referral has stayed three months, $100 after six months, and $200 after one year. For management positions, they offer $500 after six months and $1,500 after one year.

Sprockets’ Applicant Matching System takes the shared traits of your top performers to build a Success Profile. From there, all applicants are matched against it. You can easily see who is a good match for your franchise based on their Match Score. Get started with a free account to boost your franchise hiring.

Plus, check out this article on the importance of employee engagement.


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