Why you need an employee referral program (and how to create one)

In the search for new talent, your current employees could be your secret weapon.

Our networks vaster and stronger than ever before. Tapping into the connections of your own people can open up fresh opportunities to secure talent you may not have access to through traditional recruitment methods.

Nina Mapson Bone is managing director of recruitment agency Beaumont People, and the president of the Recruitment, Consulting and Staffing Association Australia and New Zealand (RCSA). She says there are many good reasons to incorporate an employee referral program (ERP) into your recruitment strategy, but good planning is the key to its success.

“A lot of companies do it, but they do it badly, so it’s not taken up anywhere near as much as it should be,” she says.

Candidates come pre-screened. Your employees know your vision and your culture – they’re not likely to recommend someone who doesn’t align with your brand.

Government service delivery provider Serco Australia was met with an unprecedented demand to increase staff as a result of significant contract wins.

This led Serco to create an innovative, multi-pronged approach to their talent resourcing plan, including a referral incentive scheme not just for people who work for the company, but also for those who don’t. It won them the Recruitment Campaign award at this year’s Australian HR Awards.

Serco Australia’s Chief Human Resources Officer Julie Carroll says rewarding people not currently employed by Serco helped find candidates for hard-to-fill clinical roles.

It resulted in increased diversity of its workforce and improved efficiency of the recruitment and on-boarding for new hires.

“We also know that people referred to Serco by members of our existing team make for some of our best employees,” says Carroll.

Quality candidates may not be active job seekers but referrals can cast your net wider and present you with candidates you may not have otherwise had. For a candidate, a happy company employee they know and trust can be the drawcard that entices them to at least find out more.

Serco received referrals for 35% of ERP-eligible roles and for 30% of its newly-implemented external ERP.

“The people who come through your referral program may not look or sound exactly what you want, but sometimes that’s where your gems are,” Mapson Bone says.

The most common reward is financial – anything from $100-$500 is fairly standard but some places will pay in the thousands for particular roles.

Serco offers its employees a $1500 cash incentive, and up to $3000 for specialist roles. Non-employees are rewarded with a $500 gift card of their choice via Prezzee.

Beaumont People gives both its staff and non-employees the option of having the value of their ERP instead donated to a charity of their choosing.

Other incentives could be increased company benefits, added value onto their sales revenue targets to boost commission rates or public recognition.

People make referrals for many reasons – to help their friends, to help their company or to enhance their value as an employee. Financial kickbacks are often not the main attraction.

“Pick a reward based on what you what you can afford and how you want it to align to your brand,” says Mapson Bone.

“In all the ones I’ve been involved in we’ve never had a higher take up rate because the reward has been higher. It’s the fact they are getting something out of it that creates the momentum to refer.”

An ERP can be cumbersome. Mapson Bone says you need to consider at what point people will become eligible for a reward. Is it once they’ve made it to interview, after they pass their probation or after they’ve stayed with the company for a set amount of time?

If they referred someone two years before they start working for the company are you still obliged to pay up?

Work out how are you going to track and monitor when a referral reward is to be honoured.

Plan well and be clear about the process or you could end up with disgruntled employees and reputational damage, she warns.

It’s no good having a fantastic ERP if no one knows about it.

Serco promotes its ERP through payslip notices, weekly job vacancy emails, posters in high-traffic staff areas and on the intranet.

Mapson Bone advises her clients to keep it fresh in people’s minds.

“Send emails out occasionally or maybe do a promotional month where it’s double the money for one month, or for particular positions,” she suggests.

“What’s important is to keep the story alive because if you are not communicating it to your staff, it doesn’t matter how good it is, it won’t happen.”