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A Total Guide to Set up an Employee Referral Program

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A Total Guide to Set up an Employee Referral Program

Most organizations leverage several 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. Hence, organizations need to set up employee referral programs that can deliver the desired results.

What is an Employee Referral Program?

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Employee referral programs enable employees to refer candidates from their personal or professional networks for job openings in their organizations.

When employees are happy and satisfied, they feel naturally inclined to share their experiences in their professional and personal networks.

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

How does an Employee Referral Program benefit Employees?

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This talent acquisition strategy proves beneficial for both participating employees and the hiring organization in the following ways:

How to Design an Employee Referral Program?

Given the advantages of an employee referral program, organizations need to set up the program with its policies and processes.

So, here are the factors that organizations need to consider to create a successful employee referral program:

A Total Guide to Set up an Employee Referral Program

1. Identify hiring priorities clearly


Organizations need to establish their hiring priorities.

To start with, they should list out the open positions for referrals 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

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The employee referral program should inform employees about how it would work and why they should participate in it.

Employees should get a clear understanding of the guidelines for submitting referrals and the criteria for getting incentives for referrals.

3. Set goals and allocate resources

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Setting measurable, specific, and timed objectives is the most essential aspect of establishing a successful employee referral program.

It is also essential to allocate the right budget and resources to ensure the fulfillment of these goals.

Moreover, organizations need to ensure that the employees are aware of these objectives before the program is launched.

This will give them a good understanding of how their referrals can help the organization.

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 engaging.

It should provide comprehensive details such as the available positions,  job descriptions, the skills and experience required, and referral incentives.

The platform should also allow easy integration with various social media channels.

Hence, this would make it easier for the employees to spread the word across their professional and social networks. 

Most importantly, the system should enable the employees to submit their referrals and track their status.

5. Identify common challenges

Implementing an employee referral program is fraught with challenges. 

Identifying the challenges upfront makes the organizations better prepared to handle them as and when they arise.

These common challenges include maximizing employee participation, reinforcing the fairness of the process, and maintaining the novelty and excitement in the program.  

How Does an Employee Referral Program Benefit Employers?

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How to Implement an Employee Referral Program?

A Total Guide to Set up an Employee Referral Program

How an employee referral program is launched can set the stage for its success or failure.

Hence, organizations need to create a buzz around the launch to make the occasion 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.

Hence, it is advisable to create a detailed presentation covering all these details. It can be shared digitally or otherwise with the employees during the program launch.

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

2. Organize a question-answer session with employees

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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.  

Also, it 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

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Employees are generally incentivized for candidates hired through their referrals.

Details of how the referral rewards system works should be part of the launch communication.

Also, to encourage more participation, 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 referrals that 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

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Additionally, the organization should provide support through an email or chat helpdesk, a list of frequently asked questions, and detailed process documentation.

Also, 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

Measure The Impact Of The Program

Monitoring the performance and impact of the program is also critical to its success.

This includes assessing the quality of hires, the recruitment costs and time, and the impact on the workplace culture through the referral program.

Hence, 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 at a lower cost.

Sagar Chaudhuri

Lead author: Sagar Chaudhuri, the Co-Founder and CEO of HiFives. He is an HR Tech Evangelist with over 25 years of experience in the corporate world and entrepreneurship. In the past, Sagar has worked with companies such as Genpact, Infosys, and ICICI Bank, in leadership roles. He has an engineering degree from IIT Kharagpur and an MBA from IIM Lucknow. Connect on LinkedIn

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HiFives is a global employee rewards, recognition and engagement SaaS platform that enables organizations to digitize, automate and transform their employee experience. It is used by 100+ large enterprises, small businesses and startups in manufacturing, retail, technology, financial services and media, across 25+ countries.