Is it a Good Idea to Offer Employee Referral Bonuses?
  • Is it a Good Idea to Offer Employee Referral Bonuses?

A good hiring manager knows that referred employees have higher employee engagement and better retention because it is easier for them to integrate into the company culture. But, it can be a difficult task to create the right type of employee referral program, in order to ensure that employees are referring friends who are the right fit for the job opening.

How do you properly motivate employees to refer high quality candidates to your company? Employee referral bonuses are a good option to consider, especially since many people are strongly motivated by money. But, there are a few other steps that need to be followed to ensure that your employee referral bonus program is a success:

Motivating the Right People to Make the Referrals

Employee referral bonuses aren’t about filling the open slots with anyone who walks through the door. Instead, the goal is to motivate your best employees to refer their friends and contacts, which increases the likelihood that you will be able to hire other high quality employees. Let employees use their connections to help you find the right candidate, and set clear expectations about the skills and experience that are required for each job opening. Any level of employee should be eligible to participate in the referral program, including both high-level managers and entry-level employees.

Preferential Treatment

It is important to avoid discrimination during the hiring process, but there are a few ways that you can provide preferential treatment to people who have been referred to the company. Give precedence to those referrals by evaluating their resume quickly and inviting them to be interviewed. Give these referrals the opportunity to be the first to pick their interview date and time, in order to entice them to learn more about your company. It can be disappointing if an employee makes a referral but the referral’s resume isn’t evaluated for a few weeks, so make sure to take prompt action when the referral applications come through the door.

Be Clear About the Rewards

From the beginning, make sure the referral bonuses are clear and concise. Setting the expectations from the beginning ensures that everyone has the same understanding about the referral process, and it decreases the likelihood of miscommunication later on. Consider various types of rewards that are available, including cash, gift cards, a VIP lunch, company swag, or anything else that is motivating to the employees.

Maintain Good Communication

Communication is the backbone of a successful employee referral program, because it provides immediate positive reinforcement when an employee has referred someone to the company. Make sure that the referral program is prompt and provides timely messages, so that employees get fast information about the people they have referred. For example, it is best to provide an update within 72 hours, so there is no doubt that they received credit for the referral.

Are you interested in learning more about effective ways to increase employee satisfaction, which will in turn increase employee referrals? Contact us to learn how to utilize the Agile HR system to improve your hiring and employee retention techniques.