Employee Referral Programs: 9 Characteristics of a Highly Successful ERP


A highly successful Employee Referral Program (ERP) is a dream for recruiters and HR executives alike. A well-oiled ERP machine helps take some of the burden of talent acquisition off the shoulders of recruiters, helps you find some of the most qualified candidates, and lowers the overall expense of filling positions.

However, it’s a sad truth that many referral programs become bureaucratic, dysfunctional, and apathetic over time.

There are several reasons ERPs are either set up poorly or become ineffective over time:

  • Lack of Awareness:  It’s easy to be excited and spread the word about your Employee Referral Program when it’s in development or newly established. Once it’s been around awhile however, spreading the word becomes less of a priority.  It’s not unusual for employees to lack awareness of the program, your hiring challenges, or business needs.
  • Problematic Tracking Criteria:  Many times when companies develop an ERP, they only measure success by the cost and the number of hires executed through the program. While those are both important criteria, there are lots of other measurable analytics that should also be considered.
  • Poor Communication:  When employees refer candidates, they want to be kept in the loop. If a candidate is declined, it’s not unusual for both the candidate and the employee that referred them to be kept in the dark.
  • Slow Payouts:  In many Employee Referral Programs, employees are only paid after the newly hired employee that they referred has completed 3 or more months of successful employment. That’s a long time to wait.
  • Becomes Candidate Driven:  Most candidates that enter an ERP are actively seeking a position with your company. They simply request to be referred by an employee of your company to get their foot in the door.
  • Inadequate Process:  The system used to capture referrals, track candidates that are referred, and follow referral payments is often done manually. That makes it not only difficult to manage, but creates the potential for errors.

Why Employee Referral Programs Matter

We all know that finding the right candidate is the biggest challenge recruiters face. It’s a statistic that hasn’t changed for years. Whether it’s because candidates lack skills, demand too much pay, don’t fit your company culture, or don’t live in your geographic area, finding the right fit is difficult.

That’s why your Employee Referral Program is so important.

According to Global Recruiting Trends 2017, employee referrals are the top source of quality hires.

ERPs help organizations hire almost half of their new employees, but Employee Referral Programs also lead to longer tenure and higher on-the-job performance for those new employees because they are more invested in their new job and strive to align with the company culture.

It’s clear that having a thriving ERP can have a huge impact on hiring success.

9 Characteristics of a Highly Successful ERP

Let’s take a look at what makes for a highly successful Employee Referral Program and how you can incorporate these characteristics into your own ERP.

1. ERP Marketing

Marketing your ERP may not be the first thing you think about when it comes to creating a successful program, but it’s probably the most critical delineator between success and failure.

To entice your employees to participate in your program, you need to create excitement through success stories and marketing materials. Driving referrals requires marketing campaigns that build your employment brand and advertise referral benefits for current employees, while sending the message that you want your employee’s help to hire more great people just like them.

Successful ERP marketing requires strong communication within your business through all internal company communications, including your intranet, staff meetings, social media, email, print media, and even texting. Don’t worry if your marketing efforts bleed into external communications as well. A well thought out and executed Employee Referral Program helps build your employment brand.

2. Needs Awareness

If you’ve consistently been marketing your ERP, it’s unlikely that awareness of your program will be a problem. You can go the extra mile, however, by ensuring your employees know your hiring goals and the skills you seek. Raising this type of awareness within your program drives a culture that makes every employee a recruiter for your organization.

3. Demand Driven

When your ERP switches from being candidate driven to being demand driven based on the needs of the company, you can actively solicit direct referrals for your more challenging roles. Existing employees that have similar skills, or at least understand the requirements, can reach out to their own networks.

Leveraging your employees in this way can have a significant impact on your program because it’s a proactive, rather than reactive, approach.

4. Proactive Communication

The importance of providing a positive candidate experience is nothing new, but it’s even more critical for employee referrals. You’ve got to step up your game with employee referrals or you will actually damage your ERP and erode your employee’s trust. Consider putting a process in place that not only keeps candidates informed, but also keeps the employee that referred them in the loop as well.

5. Timely and Appropriate Referral Incentives

It’s standard practice for Employee Referral Programs to pay the referring employee a bonus of some kind, but where this can become an issue is when payments are delayed for months after a hire has been made. Make your ERP payments immediately to ensure the success of your program and keep employees excited about it.

If making payment immediately gives you pause, consider this:

  • Referring employees have a vested interest in the candidate’s success, beyond the incentives they’ll receive. This is especially true if the employee is highly engaged with your company (but that’s another subject all together).
  • They aren’t involved in the hiring process and shouldn’t be held accountable if the candidate doesn’t work out after they’ve been hired.
  • It makes no sense to make referring employees wait 3-6 months to be paid when they’ve already done their job in referring a candidate that was ultimately hired.
  • Employees are unlikely to refer anyone to your organization that will negatively affect their status with the company.
6. Eligibility Requirements

Great Employee Referral Programs don’t exclude certain employees from eligibility, with the exception of your recruiters. A great referral is a great referral, regardless of which employee makes it.

7. Employee Recognition

Recognize the impact that employees make when they refer great candidates to your organization. Publicly sharing the success of your Employee Referral Program and the employees that contribute can have a contagious affect and a big impact on your hiring.

8. Program Analysis

Track every possible metric within your program. The only way to gauge the impact your Employee Referral Program is having is to measure and track the results.

  • Who is referring your best new hires?
  • What’s the level of employee awareness and engagement in the program?
  • How many referrals are you receiving in a given period or for particular positions?
  • Where are your referrals coming from (organizations, industries, geographies)?
  • What’s working and what needs to be tweaked?
9. Easy to Use Process

The most successful ERPs are the ones that make it super simple for employees to refer candidates. If the process is difficult, employees probably won’t bother.

It’s also important to have an applicant tracking system that can capture, track, and report on employee referral activities so you can see who is referring candidates. This is not something you want to tackle manually if you want to have a thriving Employee Referral Program.

What’s in it for You?

At the beginning, we talked about how a well-developed and engaging ERP can take some of the burden of talent acquisition off the shoulders of recruiters, but there are much bigger incentives for companies to build thriving Employee Referral Programs.  Great ERPs have been shown to:

  • Reduce turnover, especially within the first year
  • Produce some of the most qualified candidates
  • Lower your cost per hire
  • Increase engagement
  • Improve cultural alignment with new hires

Clearly, Employee Referral Programs are worth the time and effort. The quality of candidate alone makes it a great return on investment.

So get out there and develop or revitalize your own Employee Referral Program, and don’t forget the 9 characteristics of a highly successful ERP. Your recruiting goals may just depend on it.








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