Recruiting 101: What Is Employee Referral?

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What is employee referral?

Employee referral happens when an organization’s employees recruit job candidates from the people they know. Hires sourced by referral are prized because they recruit faster, last longer as employees, and perform better in their work.

How do you encourage employee referrals?

Employers typically use incentives or rewards to encourage referrals. For example:

  • Bonuses or other monetary rewards
  • Perks such as preferred parking spots or shift times
  • Prizes or entries into draws for prizes
  • Performance review points

In larger organizations, these incentives are often part of a formal employee referral program. These programs which might also encourage referrals by:

  • Setting referral goals and establishing targets
  • Outlining and communicating the referral submission process
  • Sharing job openings internally
  • Encouraging employees to promote their workplace on social media
  • Offering preferential treatment to referred candidates, for example, guaranteeing an interview
  • Tracking referrals and ensuring program fairness
  • Recognizing and celebrating successful referrals
  • Measuring program success and the success of referral-sourced hires

Regardless of an organization’s size, some planning and structure is required to successfully encourage employee referrals:

“There should be a formal employee referral program in any enterprise-level organization. In smaller businesses, you might not have a formal program, but you need a mechanism in place for managing referred candidates: a way to track referrals, and a way to make sure people get proper credit.”

Craig Fisher, Head of Employer Brand and Talent Marketing, CA Technologies

Read more Recruiting 101

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