When searching for a new job, a referral from someone already working at the company can help get your resume a closer look, and might even assist you in landing an interview. For employers, referral programs can be a way to obtain candidates who are recommended by a current employee. It’s a win-win situation for all parties involved.
What are Employee Referral Programs?
Employee referral programs are formal programs established by employers to encourage employees to refer candidates for jobs within the company. Referral programs benefit employers and current employees, as well as the potential new employee. In some cases, the employee can receive a bonus if the referred candidate is hired.
Benefits for Employers
A referral program is a way to help ensure the best talent is hired for the available positions within the company. Current employees are assumed to be uniquely qualified to identify the best candidates since they understand the organization’s mission and corporate culture. Employees may have friends or colleagues who they know are talented and would fit perfectly into that culture.
According to a survey by ERIN, over 80% of employers rated employee referrals as the best source for generating return on investment. Referred candidates are hired at four times the rate of candidates sourced from job boards, and 45% of them stay with the employer for more than four years.
Benefits for Employees
Employees who refer successful applicants can receive cash bonuses, rewards, or points that can be used for prizes, additional time off, gift vouchers, or other bonuses. For cash rewards, ERIN reports that the average bonus is $2,500.
Benefits for Job Applicants
For job seekers, a referral is a way to give your application priority consideration. When companies receive numerous applications for each open position, a referral can help distinguish your application among the crowd of candidates.
Note: It’s always a good idea to check LinkedIn to see who can refer you for a job. If you are a college graduate, also check with the alumni office or career services for a list of alumni who might be able to help.
How do Employee Referral Programs Work?
Companies with effective programs promote employee referrals regularly and provide an easy mechanism, such as an online referral system, for employees to refer candidates. Equipping employees with a summary of selling points for working with the organization and educating employees on effective ways to communicate with candidates are important elements for viable programs.
Note: Employee referral programs that have mechanisms for employees at all levels to refer candidates tend to be the most effective. Some organizations specifically target employees they believe have connections with former employers who compete or have a reputation for developing high-impact talent.
Company Referral Incentives
Company referral programs often include financial incentives for employees who provide viable referrals, such as awards, vacations, free travel, and cash bonuses. Sometimes small rewards are offered for any candidate who is referred and gets an interview. In other cases, bonuses depend on the hired candidates staying within the organization for a certain period of time.
Non-financial incentives, such as formal recognition for employees who provide referrals through corporate communications, can also be effective. Recognition of contributing employees by supervisors can also serve as an incentive.
What
What are company friend referral programs?
Some employers have expanded their employee referral programs to include mechanisms for company friends who are not employees to recommend candidates for open positions.
Who qualifies as a company friend?
Companies set criteria for who qualifies as a friend. Common categories include former employees who left in good standing, vendors, clients, consultants, college interns, employee family members, high-quality candidates who declined offers, and members of advisory boards or boards of directors.
Referral policies
Most organizations establish guidelines for referrals. For example, most companies specify that recommendations should be supported by tangible evidence of the person’s past performance. Companies state that they are looking for top performers. They may provide materials to educate employees on the best ways to approach and screen potential candidates.
Referral incentives
Some companies may offer incentives such as cash or prizes if referred individuals are hired and remain with the organization for a specified period of time.
Potential benefits for employers
As with employee referral programs, the main potential benefit of a company friend program is the opportunity for employers to attract high-performing individuals who are not actively searching job postings or looking for new jobs. Additionally, by relying on company friends rather than solely on employees, employers open themselves up to a much broader pool of potential candidates. An additional benefit is that company friends are not on payroll, so the time spent searching for potential employees is free to the company (aside from any cash incentives or rewards).
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Source: https://www.thebalancemoney.com/what-are-employee-referral-programs-2062990
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