Best Practices to Jumpstart Your Employee Referral Program

January 15, 2021
Guest Post
Friend of Drafted

This post was originally published on the Lever blog and updated January 15, 2021

Back in 2017, Lever published an infographic from their recruiting benchmarks research for startups and SMBs with insights into how referrals dominate the recruiting process. They uncovered some best practices around employee referrals:

  • Referrals get hired at way higher rates (8% of all referrals are ultimately hired, versus 1.2% across all candidates) than candidates from any other origin.
  • It’s time to step up your employee referral program (ERP).
  • If you don’t have an ERP yet, you’re past due on the time to set one up.

With these findings they ask the CEO of Drafted, Vinayak Ranade, to offer up his expertise to establish some employee referral best practices. Below is what he had to say to the Lever team

When you start tracking your recruiting process in your brand new applicant tracking system (ATS), you realize that the number of hires you get through referrals has steadily declined. You find yourself relying more on expensive outside agencies, hiring just seems to get harder, and more expensive. Then you have a brilliant idea. What if we just took a fraction of the money we pay to headhunters and give it to employees instead? It’s like crowdsourcing our new hires! Duh.

Your new Employee Referral Program (ERP) is launched with a simple email to all employees announcing a referral bonus for anyone who introduces the management team to the company’s next hire. You get an uptick in resumes in your ATS that week from submissions. There’s some buzz going around the office about it. “It’s working!” you think. But by Day 10, all you hear is crickets.

The Talent team starts periodically reminding everyone about the referral program. But after a while the referrals dry up again.

Employee Referral Best Practices

Give a shot of adrenaline and 1,000 volts to resuscitate your ERP with these tactics:

  1. Open up your referral program to your entire community. Also known as a Non-Employee Referral Program (NERP) or an external referral program. Think about it — in the early days of your company, you relied a lot on your social network to get referrals. You asked friends, family, investors, advisors, and partners to help. Why stop now?
  2. Keep it fresh. Experiment with different incentives for referrals. If your budget is $1,000 per referral, it might be cooler to give it in the form of a year’s supply of wine, or a flight to Hawaii.
  3. Be Proactive. No one wakes up in the morning and thinks “I’m going to refer someone today.” But if you ask someone “Hey I saw you know Sue, and she seems like a great Backend Engineer, can you introduce me?” they’ll most likely say yes.
  4. Celebrate the wins. Few things motivate your team more than seeing the awesome results of their actions. Celebrate new hires that come through referrals with the whole team. Give public commendations to a “referrer of the month”, or put up a family tree or leaderboard to showcase your culture of referrals.
  5. Remove psychological barriers. If you simply keep asking someone to think of good people they know, that’s a really, really big ask. They have to mentally scroll through their entire rolodex to figure it out. This can actually induce anxiety and create negative reactions. Make it easy for them to decline referral requests from you, and make it clear that it doesn’t reflect negatively on them.

Everyone knows referrals are the #1 hiring strategy and produce incredible results from a cost, quality, and retention standpoint. Simply starting an ERP without using best practices is like putting a Band-Aid on internal bleeding. Don’t be stuck with a lackluster employee referral program.  — We happen to make tools that help with setting and adhering to employee referral best practices. If you want to have the best ERP (BERP?), the Drafted + Lever integration might be able to help.

This post was originally published on the Lever blog and edited for the Drafted blog. Lever is a Drafted partner that focuses on streamlined, modern recruiting technology.

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