5 keys to a successful employee referral program

Employee referral programs are proven to work. According to industry insider Georgene Huang, these programs are highly popular. Roughly 63 percent of businesses have a documented referral program. Additionally, the Society for Human Resource Management reported that almost a quarter of all hires come through referrals.

Why the high usage numbers? Because companies that rely on referral programs see good results. According to JobVite, it takes an average 29 days to hire referred candidates compared to 55 days for candidates who arrive via a generic career website.

As marketing professional Paul Petrone noted, referral programs can cut company costs and may even improve employee retention rates. Beacon Hill has even seen the potency of a great referral program!

"Several months ago, a graduating college senior named Jake reached out to one of our team members, Rebecca, in our Charlotte office, asking about potential recruiting and sales opportunities," says Steph Ackerman, Senior Corporate Recruiter for Beacon Hill's Corporate Recruiting Team. "He contacted her because he realized she had graduated from the same college a few years prior. Rebecca conducted a phone interview with Jake and was so impressed that she referred him to me because she thought he would be a great fit for Beacon Hill. After several rounds of interviews with multiple divisions, Jake joined our Tech Division this past June and has had nothing but success, already making eight placements! Therein lies the power of referrals – thank you, Rebecca!"

Here are a few ways to make sure your referral program is a success:

1. Focus on your company culture

Before your program can be a success, you need to foster a working environment that your employees would like to share with their friends and acquaintances. Improving employee satisfaction will help your referral program - and that means your company culture needs to be warm and inviting.

"We do the typical things - incentivize financially and ask for recommendations - but the biggest difference we've found is having the kind of workplace that team members are excited to bring their friends into. Our culture is incredibly important, and when team members feel what it's like to work in a place that cares about them, they want to bring their friends along," said Zach Obront, co-founder of Book in a Box, in an interview with the Young Entrepreneur Council.

Ask yourself if you'd invite your own friends to work. If you wouldn't, chances are your employees won't, either.

2. Make the program fun

Many of today's workers spend their days at computer workstations, using email, proprietary software and other web-based applications. If your referral program's user interface (UI) looks like just another one of these programs, it may be difficult to get your employees to use it.

Your employee referral program should be fun. Recruiting expert Sagar Raina suggested gamifying your program by offering incremental incentives to employees that log on and make referrals - much like points earned in a game. Just because a candidate isn't hired doesn't mean the referrer shouldn't be rewarded. Incentives such as contests, points and badges will keep your employees engaged and active within the program.

3. Consider unique incentives

Money is always a great reward, but unique offerings may encourage more employees to join the program. Employee referral specialist at Oracle Georgiana State recommended offering incentives such as cooking classes, luxury car rentals, catered meals, gift cards, paid time off, movie tickets and spa vouchers.

Ask your employees what kind of rewards they'd like to see. Their input can help you develop an effective referral program.

4. Use internal marketing to spread awareness

Once your referral program is up and running, don't let it sit on autopilot for long. Use your internal marketing resources to remind your employees about the program and its potential rewards.

Any time you hire a referred candidate, tell your employees about it, Business News Daily suggested. This serves as a reminder and an incentive. Some employees will inevitably rise above the rest in terms of number of referrals and hires. These top performers should be rewarded for their efforts.

5. Be mindful of structure

The most successful referral programs are not built in a vacuum. They are instead constructed with the machinations of the rest of the organization in mind. How do you ensure that your recruitment efforts are attracting a strong, diverse applicant pool if you are leaning on a referral program where everyone hires those who think and act like them?

"Employee referral programs – those which purposefully take unconscious bias into consideration in their design – have the potential to actually encourage diversity in the workplace," remarks Paige Charbonneau, Benefits & Compliance Manager for Beacon Hill. "Through their valued employees – all of whom bring unique experiences and a diverse array of backgrounds and interests – employers can gain access to pools of untapped resources from which to recruit new talent who they may not have been able to find on job boards or through the standard application process."

In order to ensure consistency and make sure hiring decisions are made with the best interests of the company in mind, it is also recommended to integrate a referral program into an already-existent hiring protocol.

"Many of our clients utilize certain personality or skills assessments as part of their interviewing process because they feel this is a good indicator of who can be successful in their organization," says Lorri Zelman, Division Director of Beacon Hill's HR Division in New York. "In these types of organizations, implementing an effective employee referral program can result in attracting similar caliber employees who are likely to score similarly on these assessments. In addition to attracting those who have the likelihood of being successful in the culture, there is no doubt that most people want to enjoy working with those they like and respect. This results in shorter ramp-up times for the new hires by eliminating the 'get-to-know-you' phase."

Employee referral programs can be incredibly successful, but they can't be your only recruitment channel. As part of a holistic recruitment campaign, which may include job boards as well as professional recruiting services, referral programs can serve a valuable purpose within your company.