August 16, 2020 0 Comment

A Total Guide to Set up an Employee Referral Program

Most organizations leverage a number of channels for talent acquisition for their staffing needs. One channel of talent acquisition that is becoming increasingly popular with many organizations is implementing an employee referral program. Organizations need to follow a few guidelines to set up an employee referral program that can deliver the desired results.

What is an Employee Referral Program?

According to a report submitted by the talent management software organization SilkRoad, employee referrals resulted in more than 30% of all recruitment and 45% of internal hires in 2016. This report was based on an analysis of the data collected from 14 million applications and 329,000 hires.

An employee referral program makes it possible for the existing employees of an organization to refer candidates from their personal or professional networks for a job opening in their organization.

When employees are happy and satisfied in their workplace, they feel naturally inclined to share their experience with people in their professional networks as well as the members of their family and friend circles.

Given the option to recommend them for a current or prospective job opening in their organization is an effective way of sharing great workplace experience. This talent acquisition strategy proves beneficial for both participating employees and the hiring organization in the following ways:

How does an Employee Referral Program benefit Employees?

1. It gives employees a sense of empowerment and ownership by being able to contribute to the organizational needs beyond their job-related responsibilities.

2. Most organizations offer rewards or incentives to employees providing referrals for various job positions, which further enhances their motivation.

3. It increases their sense of pride and stature in their professional network or friends circle by being able to provide job opportunities to them in their own organization.  

How does an Employee Referral Program benefit Employers?

1. Employee referral programs help organizations cut down on the cost and time of hiring even after taking into account the rewards and incentives provided to the employees.

2. The candidates hired through employee referral strategy tend to have a higher chance of matching the job needs to the extent of 2.6 to 6.6%, which enhances the productivity levels of the organization.

3. Employees hired through employee referrals are more likely to stay for a long time in the organization and contribute more to its growth and profitability.

How to Design an Employee Referral Program?

Given the advantages of an employee referral program,  the next big step for organizations is to set up an employee referral program, complete with its set of policies and processes.

There are a number of factors that organizations need to consider in order to create a successful employee referral program as follows:

1. Identify hiring priorities clearly

It is important for organizations to clearly establish their hiring priorities –  the open positions for which the referrals would be required and the rewards or incentives for each position. Establishing clear hiring priorities makes it easier for organizations to create the right framework for the referral program.

2. Establish key policy parameters

An employee referral program should provide employees with precise information about how it would work and why employees should participate in it. The employees should have a clear understanding of the guidelines for submitting referrals and criteria for getting the incentives or rewards for the referrals.

3. Set goals and allocate resources

Setting measurable, specific, and timed objectives are the most essential aspects of establishing a successful employee referral program. It is also essential to allocate the right budget and resources to ensure the fulfilment of these goals.

Moreover, organizations need to make sure that the employees are made aware of these objectives before the program is actually launched. This will give them ample time to gain a better understanding of how their referrals will impact the fulfilment of the objectives in an effective manner.

4. Choose the right technology platform

The success of an employee referral program also depends on the technology platform used by the organization. The platform should be easy to use and should provide comprehensive details such as the available positions,  job descriptions, the skills and experience required, and referral incentive.

The platform should also allow easy integration with various social media channels making it easier for the participating employees to spread the word across their professional and social networks. Most importantly the system should enable the employees to submit their referral and track their status.

5. Identify common challenges

Every business process including implementing an employee referral program is fraught with challenges. Identifying these challenges at the design phase itself makes the organizations better prepared to handle them better as and when they actually arise.

The most common of these challenges include maximizing employee participation, assuring them of fairness in the hiring of referral candidates,  preventing discord among the workforce, and even maintain the novelty and excitement in the program.  

How to Implement an Employee Referral Program?

The manner in which an employee referral program is launched can set the stage for its success or failure. It is important for organizations to invest time and effort in creating a buzz around the launch and making the occasion truly special and memorable.

Additionally, organizations need to consider the following to ensure a successful launch of the program:

1. Communicate all necessary details to the workforce

Organizations need to make sure that the members of the workforce are provided with complete details of the referral program. It is advisable to create a detailed presentation covering all these details, which is shared digitally or otherwise with the employees during the program launch.

The presentation should use a combination of text, audio and visuals to help employees understand the working and benefits of the program easily.

2. Organize a question-answer session with employees

Organizing a question-answer session is another important aspect of launching an employee referral program. The session enables the employees to understand the nuances of the program including the objectives, the policy and the process.  

It also enables the organization to address basic queries and concerns that employees may have about the program.

3. Explain how the incentive or rewards system works

Employees are generally incentivized for candidates hired through their referrals. Sharing the details of how the referral rewards system works in terms of the process, the policies and the timing is a critical aspect of the communication during the launch of the program.

To encourage more participation from the employees, organizations can consider giving a small bonus or reward to every employee submitting a referral. The policy can subsequently be modified to reward only those employees, whose referrals result in the successful hiring of the candidates.

4. Training on the technology platform

Another important aspect is that of providing proper training to the employees for using the technology platform. This could be done through live training sessions in person or through digital means. These training sessions should cover the various steps involved in the submitting and processing of the referrals.

5. Post-go-live support

The organization should provide support to the employees post the launch of the employee referral program through a helpdesk either on email or on call, a readily assessable database of frequently asked question and detailed process and process documentation.

Any updates in the policy or the process should be shared immediately to ensure complete transparency of the program.

6. Monitoring the performance of the program

Monitoring the performance and impact of the program is also critical of its success. This includes assessing the improvement in the quality of hires, the reduction in the overall recruitment costs and time, and most importantly the impact on the workforce and workplace culture through the referral program.

This would help in improving the program and ensure better quality and quantity of candidates being recruited through this channel.


A well-developed, successfully launched, and efficiently managed employee referral program can help organizations gain easy access to a vast and untapped talent pool of potential candidates and hire them faster and a lower cost.

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HiFives ( is an employee rewards, recognition and engagement SaaS platform that enables organizations to digitize, automate and transform their employee experience. The platform enables supervisors and co-workers to nominate, recognize and reward employees using a points-based system. Budget management, jury-based evaluation and multi-level approval workflows are built into the platform. HiFives has social features such as a wall of fame and gamification features such as leaderboards, e-certificates and digital badges. It also has a global redemption system with country-specific e-gift card options. HiFives integrates with all leading HRMS systems, Office 365, Google Workspace, MS Teams, Slack and other popular tools used at the workplace. HiFives is used by many large enterprises, small businesses and startups across 25+ countries in the world, in many industries including manufacturing, retail, technology, financial services and media.