Employee Referral Programs

Employee Referral Programs: Do’s & Dont’s

Recruiters frequently cite referral hires as the best way to find qualified candidates for difficult-to-fill positions. Anecdotal evidence supports research showing that reference hiring is more cost-effective, has the highest candidate-to-hire conversion rate, and has the highest retention rate of all sources.

This article will tell you everything you need to know to create the best employee referral programs. 

What is an Employee Referral Program?

An employee referral program is an organized and planned procedure for current employees to propose candidates for available positions. One of the most challenging aspects of hiring is locating qualified candidates. To recruit high-quality employees, many companies rely on Employee Referral Policy.

Employee Referral Program: Pros and Cons

Benefits of Employee Referral Programs

  • Candidate screening would be done by your staff, as they would have a good understanding of the job requirements. As a result, the candidate applications you receive due to employee referrals are higher-quality leads.
  • Referrals from current employees often lead to the next step in the hiring process: an interview. So, do employee referral programs work? In a Glassdoor interview data report, employee referrals increase the likelihood of a job match by 2.6%–6.6%.
  • Recruiting is a costly endeavor. It costs companies a lot of money to hire new employees. There is both a direct and a non-direct cost associated with this decision. Recruiting agency commissions are direct costs. Indirect costs include things like time, transportation, and other resources. An effective employee referral program can save the vast majority of these costs.
  • Referred employees are more likely than new hires to remain longer. Employees are more likely to stay with a company if this is the case.
  • It’s practically expected that your employees will act as matchmakers when referring to friends and acquaintances. Employees would better understand the tasks at hand, the abilities required, and the types of individuals needed to complete them. So, these employees will be a better fit for the organization. 

Disadvantages of Employee Referral Programs

  • Cliques can arise when you hire people based on their relationships, disrupting the rest of the team. In addition, it might lead to hatred in the workplace if you feel like you’re being overshadowed.
  • Even if the referrer is a close friend, it’s important to keep in mind that a referral’s hiring could impact them.
  • They may be more afraid of looking foolish in front of someone they know outside of work, and therefore, they may not be as forthcoming with their thoughts.
  • In addition, they may be more biased and inclined to favor the individual they’ve referred.
  • Your team may lack variety due to recommendations. However, to be successful in business, you must access a wide range of viewpoints and ideas.

Referral Program for Employees: Do’s and Dont’s

Dos for Recruitment Referral Programs

  1. Here’s an employee referral program idea, enlarge the employee referral program guidelines to include former employees, coworkers, and even vendors as they understand the company’s ideals and a genuine interest in seeing it succeed. Creating a network of advocates who can organically spread the word through referral links.
  1. People are more inclined to join an incentive program if it’s easy to refer others.
  1. With the help of an employee referral site, you’ll be able to structure the program, attract potential referrers, and streamline the entire process. As a result, a referral portal will help to guarantee that referrers are providing high-quality referrals and inform them of the process.
  1. To create employee referral programs that work, you need to take the help of your team leaders. Ask them to encourage people to refer people. 
  1. Incorporate an easy-to-use internal referral system for staff.
  1. Make it easy for referred applicants to apply by responding immediately.
  1. Employees should be able to trace the path of a referral through the hiring process using tools provided by the company.
  1. Establish an employee referral program policy that compensates both those who participate in the program and those who successfully hire those they’ve referred.
  1. So, how many referrals can an employee give for the referral program to be successful? Typically, you might want to restrict the referrals a person can provide to increase diversity in the workplace. 
  1. Employees who refer applicants and whose referrals lead to successful employment should be recognized.

Don’ts for Employee Referral Programs

  1. Relying on negative feedback is a recipe for disaster. Instead, employees must be informed if a referral they’ve made is inappropriate. As a result, the employee will be able to make better decisions in the future, and the organization will be able to recruit better employees.
  1. Both the referred applicant and the employee should be kept updated on the progress of the search at all times. Referrals aren’t worth the effort if employees feel like they’re wasting their time.
  1. Don’t leave anyone out. In some cases, referral schemes exclude HR staff and others. That was a terrible oversight on my part. Participation should be open to everyone. Yes, there will be constraints, but participation should not be limited to only a few departments or individuals. Morale will take a hit from that.
  1. Don’t overpay or underpay for anything. Bonuses may likely differ by position, but if they don’t meet employees’ expectations, the program won’t succeed. Your cost per hiring and bonus levels have to be aligned by HR and the C-suite to achieve the best results.
  1. Don’t delay the payout of rewards. This is a huge oversight on the part of businesses. But that’s not the worst of it; employees will begin to lose faith in their employer as a result.


With an employee referral program, if you want to get the most out of the process, you must also recognize the process’ shortcomings and work accordingly. We hope that this article helps you create your perfect referral program.

Springworks Team

Building products and tools to simplify the life of an org's HR function in terms of recruiting, onboarding & retention!

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