Many businesses regardless if they are carrying out their recruitment function internally or by a traditional recruitment agent are struggling to fill vacant positions in a candidates market with sub 4% unemployment.

Today we are going to share one of our strategies  to combat these challenges available as part of our recruitment & retention membership extension.  That is the design & implementation of an employee referral program.

So why should your business consider implementing an employee referral program?  Most business owners know that clients that are referred to them are much easier to convert into clients than cold ones that enquire on their websites.  Why would recruitment be any different?

For sure, an employee referral program is not going to be a silver bullet to resolve all of your recruitment challenge but it is certainly another tool in the toolbox that your business can implement to stack the odds of success in your favor.  

So what are the components of a successful employee  referral program. Realistically there are only two key components being the design and their communication.  We understand that every business and industry is different and as a result every program we design is bespoke but there are a few common denominators that we always take into account.

When it comes to design, of course you are going to need to decide on the type and amount of incentive that you are going to offer your employees to refer their network to apply for you vacant positions.  Sure, a great working environment and the salary on offer are all incentives to refer people to apply, but to drive action to proactively speak and refer to their network, there needs to be some sort of incentive on offer.

Most of the time this will come down to a cash incentive, sure there are other things that you can offer such as experiences of vouchers etc but the best responses has been to cash incentives.  We encourage businesses to look at these cash bonuses as a cost effective way of avoiding excessive placement fees from traditional recruitment agents.

The other aspect of design is to link the incentive to some sort of milestone.  Some businesses pay the entire bonus for example $1,000 at the time that the referred candidate is employed.  Others choose to break up the payment for example $500 on employment and a further $500 if the employee stays for 3 or 6 months.  This really is going to be determined on a case by case basis.

The second main consideration is communication.  How regularly are you going to communicate vacant positions to your employees, how do you promote the employee referral program to them.  Unfortunately this type of strategy is not a “one and done” or “set and forget”.  It is something that needs to be proactively managed over time in order for it to yield positive results for your business and adding to your overall recruitment strategy mix to find top talent in a challenging recruitment market.