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Employee bonuses in referral recruiting
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Verfasst von Jelena

Employee Bonuses in Recruiting: What Is the Difference Between Monetary and Non-Monetary Rewards?

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Why are Employee Bonuses Essential in Referral Recruiting?

Employee bonuses are an essential part of employee referral programs. Due to the shortage of skilled workers, experienced professionals are worth their weight in gold in some industries. That is why many companies rely on employee referral programs.

Employees refer friends and acquaintances that they consider suitable for vacancies in their company. If the referral is successful, companies pay bonuses in monetary or non-monetary forms. What sounds expensive at first glance has only advantages for companies. 

For example, some studies have proven that referred candidates stay with the company longer when they are hired via referral. This is because they identify more strongly with the company’s values ​​and goals. As a result, the gap between the application and hiring process is shorter than when hiring via traditional channels. This saves companies time and money. That is also why Germany’s companies already fill on average 30% of open positions with referred hires.

How Are the Rewards Beneficial to Referral Recruiting?

Rewards motivate employees of a company to provide referrals from their networks for open positions. Thus, in recruiting, rewards are meant to engage employees within the referral process. The rule of thumb is that good talent knows good talent. When skilled, motivated employees refer their acquaintances for vacancies, candidates are usually a good fit. This saves companies high costs in comparison to relying on recruiting agencies or headhunters for hiring.

Employee bonuses in referral recruiting

Benefits of Non-Monetary and Monetary Rewards

Naturally, employees highly appreciate cash bonuses.They are free to spend it as they wish, on whatever they like. Nevertheless, cash bonuses also have some disadvantages. Since the amount is taxed, Talent Scouts receive a lower amount than what was promised. Additionally, employees often use a cash bonus to satisfy their primary needs meaning that the reward can lose the touch of being an extra special.

On the other hand, the non-monetary bonuses could be objects employees could  not normally afford or gadgets they wouldn’t otherwise purchase. As a result, this type of reward is often more satisfying and desirable. Additionally, a non-monetary reward also retains its value as it has already been taxed or is tax-exempt. 

Scott Jeffrey at the University of Chicago carried out an interesting study on rewards. Jeffrey examined the effects of monetary and non-monetary rewards on employee performance/ employee engagement within referral programs. There were three study groups. The control group received only a “thank you” for the successful referral. In contrast, the remaining groups respectfully received a cash bonus and a non-monetary reward. The monetary reward fared much better than the “thank you” group, and employees increased their performance by 14.6%  after receiving this reward. 

Nevertheless, the non-monetary reward was the real winner: its performance was 38.6%  better compared to the control group and more than twice as high as the cash bonus group.

Rewards as Appreciation for Employee Referrals

Appreciation plays a significant role in how satisfied employees are with their job. A study by ManpowerGroup showed that over 90% of employees want to receive regular and honest feedback on their performance. Employees also consider it important when bosses show genuine interest in them as people. Appreciation from superiors and managers for well-performed tasks is also an important factor for job satisfaction, affirmed by more than 90% of surveyed employees.

Appreciation matters more than praise. Praise is usually expressed spontaneously in relation to a specific professional achievement. Instead, expressing appreciation is a permanent attitude that superiors should incorporate into their relationships with employees.

Employee referrals are of utmost importance to the company. Companies should clearly demonstrate this to their employees. This is why rewards (monetary and/or non-monetary) are essential for a successful employee referral program. They highlight the appreciation towards employees actively engaging with it. Furthermore, referrals are beneficial to companies also because they help establish trust between employers and employees. Employees feel involved in the company’s growth and that their opinions are heard. 

Employee bonuses in referral recruiting

Examples of Rewards

Rewards for successful referrals differ from company to company. The industry in which companies operate also plays a major role. What matters is being creative and experimenting with rewards to find the suitable ones for your company. 

For example, when InMobi’s bikes first launched their employee referral program, they came up with a cultural-oriented approach to non-monetary rewards in their offices in India and US. For successful referral in India, they offered a Royal Enfield bike, while in the US, a Vespa. 

Cash Rewards

Cash reward amounts can be different according to the roll required to fill. For a senior position with three to five years of professional experience, employees receive between €250 and €6,000.. This is the result of a study carried out by the University of Furtwangen. Big companies like Ernst & Young also trust in referral programs and pay out a high cash-sum for a reward. Employees receive up to €10,000 for referrals resulting in hires. 

Compared to the rewards costs, a recruiting agency costs significantly more. On average, professional recruiters charge approximately a third of a candidate’s annual salary. Adidas, for example, pays out around €1,000 per referral, in addition to non-monetary rewards. 

Non-Monetary Rewards

The company Adidas occasionally rewards employees for successful referrals with a scooter. In addition to monetary rewards, Randstad pays out luxury trips of approximately €4,500.

Firstbird, the global industry leader in employee referral programs, helps companies set up a reward shop for their referrals. In addition to the cash bonus, Firstbird relies on a point system for non-monetary rewards. Talent Scouts earn coins for activities related to the referrals and can redeem them with the items in the reward shop.

Find out more about Firstbird’s reward shop in a free product demo. Book an appointment here. 

A study by Tom Gravalos at Goodyear endorses the efficiency of a point system. Gravalos divided surveyed salespeople into two groups: one group received cash bonuses for successful sales, while the other earned points for a reward shop of the same amount. The ultimate result was that the group who gained points achieved 46% more sales targets than the group with the cash award.

Non-Monetary Rewards Increase Employees’ Engagement

Active Talent Scouts are an essential element for a successful employee referral program. Embedding an efficient reward system helps to increase employee motivation in providing referrals again and again. We already mentioned the positive effects of referrals on a company’s culture and workplace. An employee referral program contributes to creating a pleasant working atmosphere based on trust and shared values.

Consider embedding a reward shop within your employee referral program. Because of its gamification feature, a reward shop can increase Talent Scouts’ motivation to continue providing referrals more than cash bonuses do.

Firstbird can help you set your reward shop according to your company requirements and provide you with the best performing digital platform to manage your referrals.


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