Finding the right talent in today’s landscape is a significant challenge. Many industries are highly competitive, requiring businesses to go head-to-head with aggressive compensation packages, unique company perks, and the increasing demand for remote work flexibility.
While recruitment is difficult, your current workforce is one of your most valuable assets for finding new talent. Employee referral programs reward staff for participating in the hiring process, significantly reducing the administrative burden on HR teams.
How Incentives Drive Successful Referrals
A referral program is only as strong as its participation rate. To ensure your team is actively engaged, you must implement effective employee incentives.
- Boost Engagement: Thoughtful employee incentive ideas give teams a reason to look within their professional networks for quality candidates.
- Reduce Recruitment Costs: Successful referrals lower the cost-per-hire and typically result in candidates who are a better cultural fit.
- Strengthen Company Culture: Recognizing employees for their contributions to team growth fosters a sense of ownership and belonging.
Adds More Importance to Effective Recruitment Processes
Providing a gift card or other cash incentive can be a quick and easy way to demonstrate the importance of making good hiring decisions. This helps to show teams that their opinions really do matter and make a difference when finding the right team members.
When an employee sees that their time is valued by the business and they’re compensated accordingly, it helps to validate their credibility. This helps increase confidence levels, which will be reflected in various other business areas as well.
Gives Employees Motivation to Get Involved
Not all employees are great at networking. Still, even the ones who may need more reason to dip into their contacts than a simple “please.” To generate more employee referrals, they often need something to give them the initial push to get involved.
Offering incentives is a straightforward and cost-effective way to achieve this. It helps to get teams excited about pulling up their Rolodex and reaching out to older colleagues to see if they’re looking for a new opportunity. At the same time, employees know that they’ll be compensated to some degree for the effort they put in.
Helps Increase Program Awareness
Employee referral programs only work if your teams know they exist and how to use them. Teams are often flooded with company policy information or new procedures. Referral program details can easily get lost in this noise, and it’s important to look for ways to keep these initiatives top-of-mind.
Creating incentives for employee referrals and regularly discussing the arrangement in company meetings or memos ensures employees never forget about them.
Keeps Company and Employee Goals in Alignment
When you attach an incentive to an employee referral, it naturally helps your employees set and achieve goals. This is another way to motivate employees through the program, creating a win-win for everyone. The business gains access to a better talent pool, and the employee can accomplish their goals and be rewarded for it.
This kind of alignment can help employees feel more connected to the company’s long-term success by making them active, hands-on participants in building the team. When you create a sense of sharing a larger mission together, it can have a profoundly positive effect on team morale in the office and foster a more satisfied, committed workforce.
Improves the Quality of New Job Candidates
If you just ask your team for names they’d recommend, you might get a few. But when a bonus is offered, people tend to think much harder about who they recommend, rather than just firing off a list of random friends. They’re also more likely to pre-screen their own contacts and identify the people who would actually be a great fit for the role and adapt well to the company culture.
This effect gets even stronger if you offer tiered rewards. For example, you might decide to offer a bonus that increases after the new hire passes their 90-day probation. This structure encourages employees to only refer people they believe will succeed long-term. It becomes a natural quality-control filter for HR teams, reducing the likelihood of having to restart their hiring processes soon after making hiring decisions.
Identifies More Talent Through Passive Searches
Often, the best people for a job aren’t actively searching for employment. These “passive candidates” are skilled, successful, and happy where they are. Your current team members might be the only bridge to these individuals, but without a compelling reason, your team is unlikely to consider reaching out to them.
In most cases, an employee wouldn’t really bother pushing someone into a role they might not even want. It’s an awkward conversation. However, a significant reward can provide the necessary push. It gives your team a reason to make that call, have that conversation, and sell their contacts on why your company is a great place to work and worth getting an interview.
Gamifies Company Hiring Processes
Most people enjoy a bit of friendly competition, and you can tap into that spirit with your referral system. The rewards you choose can be a great way to get more people involved, especially if you gamify their involvement. This turns what might seem like a “waste of time” to some into something that they look forward to taking part in.
You could create things like leaderboards, offer special bonuses for the “most referrals in a quarter,” or other game-like elements. This can help to make the recruitment process much more engaging and something that everyone on the team can get involved in.
Get More Employee Referrals
Setting up a referral reward structure takes careful budgeting, time, and effort. However, the investments you make in this area can lead to significantly better hiring outcomes.
By looking for effective ways to reward your team for their involvement in your employee referral programs, you’ll experience a lot of benefits. Your HR department will spend less time and money hunting for qualified candidates and more time ensuring their successful integration into your company culture.
Cindy Mielke is passionate about the incentive industry. In addition to her role as Vice President of Strategic Partners here at Tango, she is a Certified Professional of Incentive Management who proudly serves on two industry boards. When she’s not working, Cindy enjoys spending time with her family—including three cats, two dogs, and a horse—and sharing her love of nature as a Nebraska Master Naturalist.
