Wonder Why Your Employee Referral Program Gets Such Dismal Results?

Published: Aug 22, 2017 By

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Most growth-minded or high-turnover businesses have integrated an employee referral program into their recruiting strategy. It’s a good strategy since employee referrals tend to stick around longer and succeed in the role. 

So, all you need to do is throw up a $500 “bounty” on any new hire and you’ll have more applicants than you know what to do with…right?

Unfortunately, it is not that simple. Not by a long shot.

Successful employee referral programs are few and far between. In fact, it’s rare for employees to really think about them outside of the first few days when they are announced in a team meeting.

 

Why your employee referral program results are underwhelming:

  • It’s too little money to get excited about or induce effort. The best engagement happens when your team’s referral rate is over $1000, and really gets strong at over $2500.  
  • They referred several people right away and they weren’t hired for various reasons.
  • You’ve confused a referral program with a retention program so it only pays out after 90 days of employment. Don’t do this…It’s not their job to find them and keep them. You’re the employer, so you need to be the one worried about keeping them on your team.

 

Reasons you don’t want to think about...but are likely part of the problem:

  • Your work environment isn’t good. They aren’t going to refer friends into a job they’d like to leave.
  • Your compensation is low.
  • Your benefits are basically non-existent
  • The boss sucks.  

     

Ok, I think I’ve made my point, so...

 

Let’s look at how you can improve your employee referral program results.

Assess Your Opportunity + Environment

If employee turnover is a big challenge for your company, your first focus needs to be addressing why people are leaving - versus bringing more people in. Regular staff turnover is expensive - if you don’t feel you have the budget to improve pay, benefits, perks, or the environment, I encourage you to look at how much hiring and replacing is costing you each year. If you cut attrition rate in half - think of how much time and money you would save.

 

Assess + Improve Your Employee Referral Program

Your current program isn’t delivering the results you want, so research successful employee referral programs and implement some best practices. If you’re an HR pro and want details on setting one up, the Society for Human Resource Management offers great resources.

Don’t have time to research and develop a proven employee referral program? Don’t worry - there are many tools to help! A few that I’m familiar with are Jobvite, RolePoint, and Zao.

Don’t give up on this as a recruiting strategy just because your current version is underwhelming. Spend some time (or money) and figure out how to get results that work.   

 

 

Rikka Brandon is the author of the best-selling book Hire Power: Everything Entrepreneurs Need To Know To Hire Awesome People. She’s the creator of the Hire Power Program, an online program designed to help small businesses build a rock-solid recruiting strategy and stop settling when they hire. She’s the Founder of RikkaBrandon.com and  Building Gurus. Rikka is the go-to girl for growth-minded entrepreneurs and forward-thinking business leaders and is considered as the USA’s Top Hiring Expert for Small Businesses.

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