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Employee Referral Programs

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One of the greatest ways to ensure that your company hires the best available candidates is through your own Employee Referral program. The Employee Referral program is easy to promote and easy to administer; it not only provides you with pre-qualified candidates it also helps you build goodwill among your existing employees. A well-structured Employee Referral program allows existing employees to refer qualified candidates for your open positions; sounds easy enough but here are some ground rules to set:

  • The employee that refers a candidate must know the candidate personally and should be able to verify the candidate’s past work performance or the employee should have worked with the candidate in the past.
  • Employees are paid a graduated referral bonus based on the level of position in question. Four stages usually suffice; one stage for entry level positions, one stage for experienced candidates, one level for mid-level and management candidates and finally one level for executive level positions if you decide to use the Employee Referral program to fill executive level positions. A referral bonus structure could be based as follows:
    • Stage 1 positions: $500.00
    • Stage 2 positions: $1,000.00
    • Stage 2 positions: $3,000.00
    • Stage 4 positions: $5,000.00

If your company is strapped for cash and monetary referral bonuses don’t make sense then use time off as a reward or perhaps issue the reward in company stock.

  • All employee referred candidates must be officially referred through your company’s ATS (Applicant Tracking System) or through an appointed individual. A properly referred candidate includes a résumé and a completed employment application. Typically referrals should only be made for open current positions.
  • An employee that refers a candidate that is subsequently hired would be paid a referral bonus only after the new hire has worked 90 days or more to ensure that the new hire plans on remaining with the company.

There are several issues to keep in mind when implementing an Employee Referral program including;

  • Ensure that as your employees refer candidates for your open positions you promptly review the candidate’s credentials and inform the candidates as well as the referring employee how the candidate stands as a prospect for your open position. Nothing will kill an Employee Referral program faster than the lack of response to employees and the candidates that they refer.
  • Use milestones to promote the Employee Referral program such as recognizing the employee that has referred the most hired candidates in the past year or perhaps whenever your company completes a successful hiring spree that can be attributed to the Employee Referral program. The key is to build excitement around the program so that employees feel like they want to participate.
  • Dedicate a web page on the company Intranet site to the explanation of the program and the benefits of participating. Remember to talk about the benefits the program brings to the company as well as the employee. List the steps required to refer a candidate and define what makes up the perfect candidate for your company.
  • Ensure that once an employee qualifies for a referral bonus they are paid promptly because they will be keeping track as to when payment should be made!

A well-structured Employee Referral program can be a great resource of candidates for your company’s open positions. It can provide you with qualified candidates, lower your cost-per-hire and help boost overall morale within your company. Contact us at ATAC to learn more…

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