Employee Referral Programs
We all know: Qualified workers, especially skilled workers, are rare. Companies are therefore increasingly resorting to a form of employee recruitment that is still only occasionally used in social recruiting: the recruiting of new employees by existing employees.
Employee referral programs replace expensive headhunters and are an effective way to find and retain new talent. Not only start-ups, who often acquire new colleagues from their circle of friends, are convinced of this, but also well-known companies such as Siemens, Deloitte and Vodafone. In the following article, you will find out how you can build up a referral network within your workforce by introducing an employee referral program.
What is an employee referral program?
Why are more companies choosing employee referral programs?
What are the advantages of employee referral programs?
What are the challenges of employee referral programs?
What are the differences between digital and manual employee referral programs?
In this 10-step guide, you will find out what else you should consider when introducing an employee referral program.
How can an employee referral bonus serve as an incentive?
You can also find inspiration for the right amount or type of bonus for your company in the Firstbird benchmark study.
Once you’ve decided to pay out rewards for employee referrals, you should ask yourself the following questions:
For which positions are there which incentives? Are they all rewarded equally or individually?
Are the employees paid proportionally (for example with a certain percentage of the monthly salary)? Are there partial or graduated payments?
What is the premium based on? For example, does the “value” of the position or the degree of difficulty of filling play a role?
When does the employee receive the bonus? For example, is it due when the new employee signs the employment contract or after the probationary period has expired?
Every company has to decide on these questions for itself. The questions of whether HR or the individual specialist departments budget the premiums and what needs to be considered when taxing pecuniary benefits must also be clarified individually.
The use of cash rewards as incentives is definitely controversial. On the one hand, monetary rewards create a high short-term incentive to make referrals. On the other hand, they can lead to employees only making referrals in return for payment of a bonus. In addition, the company must counteract the tendency for employees to aimlessly ask around in their circle of friends just to receive the bonus. Here you can find out how you can use bonus payments to motivate your employees to recommend suitable candidates for vacancies.
Of course, there is also the option of giving alternative premiums instead of cash benefits. Quite a few companies base their employee referral programs on non-monetary rewards. Below is a selection of alternative ideas:
Days off or additional vacation pay
Fuel, travel or adventure vouchers
technical devices such as smartphones or tablets
Visibility in the company, for example a mention in the employee magazine
Donate for a good cause
There are practically no limits to your imagination. It is also conceivable, for example, to draw a high-quality prize among all employees participating in the referral program.