HR Glossary / Employee Referral Program

An employee referral program is a method for finding job candidates that encourages existing employees to refer candidates by promising a reward upon the successful hiring of referred candidates.


What Are the Benefits of Employee Referral Programs?

Employee referral programs shorten the hiring process. They also help reduce hiring costs by narrowing the candidate pool and simplifying the recruitment process.

Employee referrals improve the quality of hire as employees tend to refer only highly qualified acquaintances to maintain their reputation. Employees may also know candidates that may not be looking for a new job who are a perfect fit for the position. As current employees are likely to know whether a candidate fits within the culture of the company, referral programs also act as a natural filter to further facilitate recruitment and onboarding.

Employee referral programs also contribute to improving the employer brand, as employees become more likely to speak positively about an organization to attract talents.

How to Create an Employee Referral Program?

  1. Obtain approval from management;
  2. Design the referral program by establishing the rules and the process to submit a referral;
  3. Set goals for the program;
  4. Offer incentives such as bonuses or gift cards;
  5. Notify the employees of the program;
  6. Track the success of the program.

What Are Examples of Incentives for Employee Referral Programs?

Common incentives for employee referral programs include:

  • Bonuses;
  • Gift cards;
  • Extra vacation days;
  • Trips;
  • Public recognition;
  • Charitable contributions.

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