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Tips for Employee Referral Programs

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Most companies have employee referral programs, and it’s highly likely that you currently have one place. The question is, are you getting the most out of it? Here are a few tips to consider.

Avoiding Referral Repercussions
Even the best ideas need fine tuning, which is why despite its many benefits, employee referral programs are often revisited and re-tooled. Below are some of the most common concerns that arise from the implementing an employee referral programs. Since some of these take a few months or even years to surface, the sooner they are prevented the better.

  • Decreased Diversity – Most employees refer people who are very similar to themselves. While this helps companies access quality candidates, it can undermine efforts to promote diversity. Encourage everyone to participate in the program, and prioritize first-time referrals over those from program ‘regulars’.
  • Favoritism or Nepotism – This can be a double-edged sword. Some say having a family member or a friend in a company increases one’s chance of getting hired while others believe it’s an automatic point against applicants. Either way, it can be hard to not hire someone's child, sibling, cousin, or even childhood friend – no matter how unqualified they are. Maximize objective hiring by clearly outlining job requirements.

  • Refereeing Referrals – Some candidates are so great, it takes several employees to reel them in! All kidding aside, there have been stories of one candidate being referred by several employees – all of whom refuse to share the credit or the cash incentive. To avoid conflict, document when employees send a candidate your way.

  • Cliques, Camps and Factions – The same problem that can diminish diversity could easily create divisive sub-groups in your company. People are naturally competitive and the stresses or frictions in the workplace often cause people to band together. While there is nothing wrong with making friends at work, make it clear that hostility and controversy will not be tolerated in the workplace.

Making Employee Referrals Work
An employee referral program has many benefits. From a company’s perspective, it helps them access a candidate pool that is otherwise not visible to the job market. It also allows employers to demonstrate their trust and desire for their employees to participate in building the company. From an employee’s point of view, referring family, friends and acquaintances let them help these people as well as their employer in one effort. The fact their efforts can be rewarded and recognized makes for a very enticing motivator. Here’s what you can do to make a good program great:

  • Make it Simple: The more straightforward the referral program, the better. Employees are there to focus on their work, and don’t need the burden of a complex employee referral program. You simply want to reward or recognize employees who successfully help fill open positions with qualified candidates.

  • Make it Collaborative: Since employees often personally know their referrals, they are bound to care about the applicant’s progress. Rather than have them constantly asking you about the status of the application, be proactive by keeping them in the loop. A brief e-mail informing them that their referral is scheduled for an interview is sure to be appreciated.

  • Make it Visible: One reason why employee referral programs peter out is because no one really knows what positions are open in the company – or that there are any open positions at all! Whether you decide to send out a general e-mail, post the position on your Intranet or make flyers to post in the lunchroom or distribute during staff meetings, the more cognizant employees are of the open positions and their requirements, the better the results will be.

  • Make it Matter: Show employees that their effort and vote of confidence are appreciated. Review the referrals’ resumes ASAP and don’t shelve their applications. Remember that your employees probably endorsed your company one way or another. Acknowledge and contact these ‘pre-qualified’ candidates immediately.

  • Make it Realistic: Recognizing that even the strongest referrals still mean new employees who may or may not thrive in their positions, some companies pay out incentives in two installments. The first half is paid out immediately while the remaining half is given after the referral completes one year on the job. This encourages employees to refer ‘keepers’. As an added bonus, this strategy helps retention because it adds another reason for the employee to stay for at least another year.

  • Make it Rewarding: Set an incentive amount – whether it’s a fixed sum or commensurate to the positions. Either way, always pay it on time, and if you truly wish on capitalizing on your employee referral system, reward the referring employee as promptly and visibly as possible. The more positively you reinforce referrals, the more engaged the employees will be with the program.
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