The employee referral is the greatest praise to the company and one of the greatest opportunities in recruiting. HR managers often have a hard time reaching sought-after specialists and executives with just job advertisements. The employees in the company, on the other hand, have good contacts to specialist colleagues and enjoy a bonus of trust with them, as they know each other from previous projects. This saves time and money in the search for suitable candidates.
What is an employee referral?
How does an employee referral work?
What types of employee referral are there?
How can the employee referral benefit your company?
Risks when using employee referrals
Of course, there are also pitfalls and risks when recommending employees. However, these can be minimized if you are prepared for them. Before you start working in the specialist department, you should be aware of the following risks:
Employees smell the financial reward and spam the job advertisement – this does not leave your company with a positive image
You don’t have an organised process, e.g. through software – the employees have to contact you with every referral by e-mail or via the office grapevine
Your employees do not receive any feedback about the status of the referral for a long time, which means they have no incentive to actively search
Employees are not given precise details about the requirements of the position and recommend candidates who are not suitable
Bonuses for successful placement are not attractive and lead to no referrals being made
In the context of unofficial communication, information about the application process could be passed on to the referrer that they should not have received at all – the topic becomes a data protection incident
A well-designed and well thought-out process solves most of these problems. An employee referral program makes it particularly easy for you. With this, you can see where an application comes from, what its status looks like and when you have to pay out a bonus. The referrer also sees this, but without receiving any information about the application process that they are not allowed to receive.
But success also depends on you. Explain to your referrers exactly which profile you are looking for, who is eligible and who is not. In this way, you avoid everyone being randomly contacted and your company appears as if it couldn’t find suitable applicants in any other way.
This is how they find the right referrer in the company
The right referrer is the one in whose network the suitable candidate is located. The choice of referrer therefore depends on the advertised position. If you want to fill a position in the specialist department with clearly defined skills, the networks of existing colleagues are particularly relevant. Trainee positions, on the other hand, can be interesting across departments, because everyone can have suitable candidates among their circle of friends and in their own family.
You can either use the Employee Referral Program to ensure that your employees decide for themselves whether or not you can recommend a position in a meaningful way. Or you can approach individual employees directly and ask them to share the position within their network. You can also consider the latter as a second recruiting step if the applications received so far have not been satisfactory and you have not yet achieved what you wanted.
This 10-step guide explains how you can successfully use and develop an employee recruitment program.
Bonuses for new employees – how should they be designed?
Financial rewards are the main incentive for employee referrals. Some specialist colleagues distribute job advertisements out of self-interest, as they want a certain individual as a new colleague. But that happens uncontrolled, the motivation behind it is different. In order to motivate those employees who do not seek contacts of their own accord, bonuses must be attractive and fairly distributed.
A management position is of course better rewarded than a position without personnel and management responsibility, as a manager is also more difficult to find. Nevertheless, you should not penny pinch when it comes to this, because the bonus for the successful referral saves you the expensive and lengthy posting of the position on portals on which suitable candidates are not looking anyway. This is how bonuses for a successful referral can be designed:
percentage of the salary of the successful placement
lump sum for the successful placement
staggered bonus: 50% upon recruitment, 50% after having passed the trial period
The type and amount of bonuses are similar to those of a headhunter. With the percentage, you have the advantage that, depending on the requirements of the position, the bonus is automatically higher and there is a greater incentive. However, your employees may be able to imagine more under a fixed sum. Using the euro symbol instead of the percent also has a psychological effect. To protect yourself, you should pay out bonuses in stages. Only when it is clear that the new employee will remain in the long term and are still considered suitable after the probationary period will the full payout be made. This means that your employees are more likely to filter for people they can imagine working for the company in the long term.
However, money is not everything. Non-cash rewards often generate long-lasting appreciation. You can also find inspiration for the right amount or type of bonus for your company in the Firstbird benchmark study.