Kasey LynchMay 2, 2024
Topics: Employee Experience

Elevate Your Team: A Quick Guide to Launching an Employee Referral Program

Understanding that employees are an organization’s most valuable assets is crucial, but equally important is recognizing the significance of their networks for effective recruiting. 

By utilizing an intelligent employee referral program, enterprises can tap into a new talent pool filled with potential best-fit candidates, which ultimately helps in filling critical roles faster. 

However, once an organization has chosen its referral platform, the question is how to move from the first step of implementation to harnessing the power of their employees’ networks. 

We’ll show you how in this blog as we cover:

  • Critical steps to take before implementation to ensure success

  • Essential best practices designed to empower recruiters and managers to leverage referrals

  • Key referral metrics that serve as benchmarks for evaluating the impact of your program

  • Recommended FAQs to guide new users and spark adoption

Let’s dive into how you can unlock new talent networks and harness the full potential of employee connections. 

What is an Employee Referral? 

An employee referral occurs when an existing employee recommends someone from their professional or personal network for an open position within their organization. To encourage and reward employees for successful referrals, many companies have implemented employee referral programs. 

These programs typically offer incentives such as monetary bonuses, recognition, or other rewards for employees who refer candidates who are subsequently hired. 

By fostering a culture of employee engagement and participation in recruitment efforts, organizations not only enhance their chances of securing top talent but also strengthen the bonds within their workforce. 

Employee referrals serve as a symbiotic relationship, benefiting both the organization by acquiring valuable talent and the employees who contribute to the growth and success of their workplace.

Related: How ChenMed is Building the Best Candidate Database in Value-based Healthcare

Launching Your Employee Referral Program

Employee referral programs can be the unsung, untapped heroes of your talent acquisition strategy. This streamlined approach to securing top-tier candidates not only expedites the hiring process, it also empowers your employees to become an active part of the recruiting process — strengthening their relationships with their teams and the organization as a whole. 

However, there are multiple steps to take to ensure your program reaches its full potential:

Step 1: Determine Your Program Objectives

Before you launch your new program, it’s important to craft clear objectives that will guide program requirements and implementation. Answer these questions to kickstart this process:

  • Are you looking to fill specific roles?

  • Do you want to enhance diversity?

  • Are you searching for new ways to bolster recruiting processes?

  • Is this program designed to foster engagement among employees? 

  • How will you incentivize or motivate employees to submit referrals?

Step 2: Choose the Right Platform to Support Your Goals

Depending on your answers to the above questions, look for specific employee referral tools that will make achieving your goals simple. Choosing a streamlined platform will give you the functionality you need as well as the commitment to continued evolution, meaning the platform will evolve alongside your business. 

Implementing an intelligent, AI-driven platform is one of the best ways to ensure that your solution is scalable and open to continuous improvement based on user feedback. 

Additionally, pairing a streamlined and intelligent referral program with monetary rewards, recognition, and exclusive perks can further inspire active participation from your teams. We recommend choosing a referral program that’s easy to access through your company’s internal communication platform or a dedicated portal. 

Regardless of the platform you choose, keep in mind that the smoother the process, the more likely your team will enthusiastically recommend qualified individuals.

Related: How Kuehne+Nagel Empowers Employees To Own and Grow Their Careers

Step 3: Communicate, Communicate, Communicate 

It’s not enough to invest in an employee referral program, implement it, and then let it run its course. Your teams need to communicate with your employees to set expectations, answer questions, and promote feedback loops to ensure the program's success. 

You should establish a framework for communication that includes pre-implementation and post-implementation messages to cover your bases. We recommend promoting your program in the following ways:

  • Include it in your regular newsletters

  • Empower managers to talk about it during team meetings

  • Send dedicated company-wide emails to raise awareness 

Depending on your current stage of implementation, the content you share will change from general education to highlighting success stories of referrals getting hired to emphasize the benefits of employee referral programs. 

Step 4: Highlight Success Stories and Be Open to Feedback

While you may kick off feeling assured that your program is primed for success, setbacks can occur. But don’t get discouraged! 

Employee referral programs are just like any other business initiative — they are fluid and subject to change based on external factors. If you go into this process knowing that it should be iterative based on feedback and performance, it will help you maintain a growth mindset. 

Continually seek feedback from employees to refine and enhance the program, ensuring it remains a dynamic and effective tool for talent acquisition within your organization.

As your program gains momentum, monitor its progress through analytics and celebrate successful referrals. Recognition, both public and private, reinforces positive behavior and encourages sustained engagement. 

After all, who doesn’t want to celebrate someone they know getting hired successfully at a company they already love? 

Related: The Sky’s the Limit: Inside Southwest’s Employee Referral Program

Best Practices for Supporting Your Referral Program

There are multiple ways to leverage referral programs. Employees get rewarded for connecting their organization with potential best-fit talent while recruiters and managers can access a pool of talent that’s full of warm leads and quality candidates. 

Let’s take a closer look at best practices for recruiters and managers who will be leveraging the referral program to fill open roles faster. 

Best Practices for Recruiters

Recruiters should be over the moon about having access to a new talent pool. But successfully streamlining referrals to employees isn’t a process that happens overnight. Here are some best practices to keep in mind to foster the continued success of your internal recruiting efforts: 

  • Build a base of engaged employees to accelerate your efforts to fill open positions

  • Work with hiring managers to identify hard-to-fill roles opening for the year

  • Set up internal campaigns for referrals to keep them top-of-mind

  • Collect testimonials from referred candidates and share those in internal campaigns 

  • Create a referral spotlight for your jobs to quickly find and connect with qualified talent

Best Practices for Managers

An effective referral program is supported by multiple teams and departments throughout your business. Managers play a key role in connecting with employees regularly to promote open roles in their networks. Here are some best practices to help keep individuals engaged: 

  • Identify jobs with low referral rates and collaborate with your teams to develop new strategies for increasing referrals

  • Locate referral hot spots by location or job category 

  • Celebrate successful efforts and conduct knowledge-sharing meetings to create internal best practices

  • Work internally to promote referral bonuses and incentive programs 

How to Drive Adoption Through Communication

Over-communicating before, during, and after the implementation process is not only a best practice but is highly effective. 

There are two great ways to ensure your workforce has the information they need to seamlessly adopt and engage with your new referral program: through dedicated emails and FAQs. 

Crafting Informative Emails

Through dedicated communications, you can keep everyone in the loop by sharing high-level details about the referral program, while letting employees know what’s coming soon. 

Specifically, focus on sharing emails that highlight your reasons for investing in a referrals program and your vision for the future. 

Here are some key elements that should be included in your emails:

  1. Make your hero bold and eye-catching to ensure employees continue reading.

  2. Share the timeline and launch date, and provide insight into resources or trainings to follow.

  3. Share clear calls to action connected to the features you plan to roll out.

Here’s a high-level overview of the emails you should be sending in anticipation of your referrals program launching: 

  • Insight into company culture and reasons behind implementation 

  • Save the date launch email so employees can add the date to their calendar

  • Launch date email with updates on implementation and what to expect 

  • Host an informational meeting about the program and promote it over email

  • Send targeted internal emails to foster engagement 

If you’re a current Phenom customer and are rolling out your Phenom Employee Referrals program, here’s a collection of resources to help streamline your efforts

Related: How Kuehne+Nagel Is Making Faster Quality Hires With Phenom Referrals

Anticipating FAQs

Implementing a new program always brings on new challenges. But with the right initiatives, clear communication, and intelligent tools, implementation can be smooth and simple. 

One major component of setting yourself up for success is anticipating potential new user needs or questions. For example, by creating an FAQ document that answers your employee’s most pressing questions before they even have a chance to ask, you’ll be able to get everyone on the same page right away. 

We recommend spending some time to generate company-specific answers to the following questions:

  • What’s in it for me to refer someone? 

  • Can I refer a former employee?

  • What constitutes a “good” referral?

  • What if my friend wants me to refer them but I don’t think they’re a good fit?

  • What requirements do I need to meet to apply for internal positions? 

  • What do I do if someone else refers a former colleague and I have reservations?

  • What can I do to help improve my friend’s chances when I refer them?

  • Is there a limit to how many people I can refer?

  • How long after my friend is hired does it take to get my referral bonus?

  • Can I refer my relatives (e.g., partner, spouse, children, immediate or extended family)?

  • If I refer someone I have an immediate relationship with, do I need to disclose that?

  • How do I know what the salary is for the role I’m referring someone to?

  • How should I tell my friend they didn’t get the job?

  • My friend has been out of the workforce for ten years — how do I make sure their referral gets noticed? 

There are also some additional questions to consider when creating your FAQ document that depends on the Referral platform you choose. 

Already a Phenom Customer? 

Just copy and paste the following questions with the corresponding answers into your company-specific document to add additional context that new users will be grateful to have at their fingertips:

  • How do I refer someone? You can refer friends from the “Referrals” page on the internal site, which can be found in the main header navigation menu. You can also refer friends for specific jobs by clicking the “Refer a Friend” button on the job description page. 

  • Do I have to refer someone for a specific job? No. You can submit a general company referral from the “Referrals” page and indicate any possible areas of interest for your friend.
    What if I don’t have a resume for my referral? That’s okay! All we need is their basic information, including their email address and phone number, to reach out and collect their resume or supporting documents. 

  • How will I know where my friend is within the referral process? You can track the status of all referrals you make from the “My Referrals” page on the internal site. Click on your name in the top right corner and choose “My Referrals.”

  • My friend is amazing, but I don’t know which role they’d be a good fit for. What should I do? You can submit a general company referral form from the “Referrals” page to get started. Just let us know some basic information and we’ll take it from there. 

Referral Metrics to Measure Success

Driving the right outcomes is a cyclical process that involves ongoing analysis of your referral efforts. To figure out what data you should keep track of, here are our top five referral goals and metrics to consider as you launch your referral program:

1. Increase Employee Engagement

Employee engagement is one of the most important metrics that will determine the success of your referral program. The main metric to consider is Referrals per Employee. Here are some questions to help gauge how well your referral process is working through an employee’s experience: 

  • How many referrals do employees make per month? Are you trending up or down since last month?

  • Do employees find the current referral incentives appealing and aligned with their preferences?

  • How well are the program's purpose and benefits communicated to employees, and are there any common misconceptions?

  • Is the referral process perceived as user-friendly, and have employees encountered any challenges in making referrals?

  • How frequently do employees provide feedback on the referral program, and what mechanisms are in place to gather their insights?

2. Reduce Time-to-Hire

Another main objective of an effective referral process is aimed at reducing time-to-hire for roles across the organization. The key metric to assess for this goal is Referrals per Job. Here are some questions to help assess the impact of your initiatives on your overall time-to-hire timelines:

  • How many people were referred for specific open positions? Are jobs with high referral rates closed sooner?

  • Can you track the average time it takes to fill a position when a referral is involved compared to positions filled through other channels?

  • What percentage of referred candidates successfully progress to the interview stage, and how does this compare to non-referred candidates?

  • Are referrals contributing to a diverse pool of candidates, and how does this diversity compare to candidates from other sources?

  • How often do referrals result in the successful placement of candidates who meet or exceed the desired qualifications for a position?

3. Improve Referral Quality

The metric for this category is Interviews per Referral. This metric will help you determine how effective your program is by highlighting a key conversion factor: the quality of referrals. After all, having overwhelming numbers of referrals is great only if they’re quality submissions. Here are four questions to ask when assessing how to improve the quality of referrals:

  • How many referrals do employees make per month? Are you trending up or down since last month?

  • Are employees provided with sufficient training or resources to make high-quality referrals, and what feedback have you received regarding the effectiveness of this training?

  • Have you observed any correlations between employees hired through referrals and their long-term retention within the company?

  • Can you assess the overall quality of candidates referred by employees, and how often do these candidates align with the desired skills and qualifications for open positions?

4. Improve the Quality of Hire

Balance quality and quantity of hires is difficult for every company in every industry. For referral programs specifically, you want to assess your hires per referral (net conversion rate) metric to determine how successfully you’re capturing quality referrals that convert into onboarded employees. If your results aren’t where you’d like them to be, leverage the following questions to determine areas of improvement: 

  • How many referrals invited to interview were hired? How does this compare to non-referred candidates?

  • Can you track the average time it takes to hire a candidate who was referred, and how does this timeframe compare to non-referred candidates?

  • Have you gathered feedback from candidates referred by employees regarding their experience throughout the hiring process, and how does it contribute to the overall success of their placements?

  • How smoothly do candidates referred by employees transition into their roles, and what impact does the referral source have on their onboarding experience compared to non-referred hires?

5. Reduce the Cost to Hire

This metric is self-explanatory but for your initiatives, focus on the Referrals per Job Category specifically. This metric will guide you to areas of your business that might be more difficult to hire for than others. In the departments that experience effective recruitment through internal referrals, it’s important to assess the monetary impact that makes. Here are some questions to kickstart your assessments: 

  • How many people were referred for specific job categories? Do categories with high referrals have reduced sourcing and campaign costs?

  • How do the return on investment (ROI) metrics for the referral program compare to other recruitment methods, considering both the direct costs and the long-term value of hires made through referrals?

  • For job categories with high referral rates, can you evaluate the effectiveness of recruitment campaigns, and have these categories demonstrated a reduction in overall campaign costs?

Unlock Untapped Talent with an Employee Referral Program

Your employees are full of untapped potential, whether it’s in their everyday roles or their networks. With a seamless, intelligent, and dedicated employee referral program, your teams can tap into new talent pools to achieve your hiring goals faster while supporting employee engagement. Using the best practices in this article, plus your commitment to continuous feedback and improvement, you can create a fantastic program that meets your needs. 

For existing Phenom customers, there are numerous other resources to support you on your journey to implementing an effective referral program. You can access those here

If you’re currently searching for an employee referral platform, request a personalized Workforce Intelligence demo with our team to see how Phneom can help you get started. 

Kasey Lynch

Kasey is a content marketing writer, focused on highlighting the importance of positive experiences. She's passionate about SEO strategy, collaboration, and data analytics. In her free time, she enjoys camping, cooking, exercising, and spending time with her loved ones — including her dog, Rocky. 

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