So you’re thinking of starting an external referral program, that’s awesome! External referrals are a great way to expand your talent pipeline and find new candidates in your company network. We’ll take you through how to set yourself up for success when starting your program and cover everything from getting executive buy-in to driving traffic to your page to collect referrals. But first, let’s get started with a brief history of referrals and the main difference between employee and external referral programs.
Referrals have been a way to expand your network, reach like-minded people, and share great things since the dawn of time. Take off your business hat for a second and think about a restaurant you love - chances are you have told at least some of your friends, family, or coworkers about it. In fact, Julius Caesar in 55 B.C. signed a decree offering 300 sestertii to any soldier that recruited someone to join the Roman army. Referrals have been around forever! Another example, take a look at Gusto - if you refer a friend you both get a $100 Amazon gift card. The core concept of referral programs are to provide an incentive for sharing information that results in a desired outcome.
Hiring and referrals also have a long standing relationship, recruiters have been using referrals to source candidates for quite some time. Chances are you already have some sort of employee incentive program to collect referrals, let’s take a look at the difference between employee and external referrals.
Every company has an ecosystem of people that surround it or what we call your company network - chances are you probably have some sort of system or program in place to capitalize on it. This network is entirely unique to your company, it’s made up of employees, friends, family, former colleagues, fans, customers, partners, and everyone that has some sort of connection to your business. Let’s say your company has 100 employees. If each of them is connected to 500 people, then your company network size is 100 x 500 = 500,000. An employee referral program is designed to capitalize on that company network of 500,000 people and incentivize employees to refer their first degree connections to open roles at your company. Typically, companies offer a reward for a successful referral that results in a hire - this can be anything from a dinner for two, a gift card, or a monetary sum. Your definition of a successful hire can vary as well. A common practice is the new hire must remain at the company for a specified amount of time before the reward is paid out - particularly if you are offering a large incentive. Pretty simple, right?
External referrals take this concept one step further and cast an even wider net to capture people in your extended company network. Take those 500,000 people and double it! Triple it! You are now seeking out your company’s first degree connections and asking them to make referrals. Employee and external referral programs are not that different when you are creating their structure but how you go about sharing each program will differ because you are targeting different audiences.
When it comes to generating interest internally for your employee referral program you have a lot of opportunity and flexibility. You have a direct and constant line of communication with other employees at your company to spread the word about your referral program. You know their email, you see them in the break room, and you even know their boss! You essentially have a captive audience with a vested interest in your program - who doesn’t want a reward for helping out their company?! Generating interest for your external referral program will take a little leg work and strategy but you have a potential to literally double or triple your candidate pool.
Taking your referral program to a larger audience will take some experimentation but the pay off can be worth it. We’re talking about broadening your potential reach to an untapped audience to supplement some of your sourcing efforts and diversify your candidate pipeline. Now we’re going to put on our marketing hat for a minute - (tip: ask your marketing team for advice!) where do you reach the most external people? It’s probably through your company social media accounts, website, careers page, and via email. Putting a link to your external referral program in your email signature is an easy way to showcase your program to a wide audience. You’re probably emailing hundreds of people a day - coworkers, partners, vendors, and potential candidates. Your communication with potential candidates is a huge opportunity to reach more people, job seekers know other job seekers! The key to getting traction with your external referral program is all about access and education. Atlantic Health System kicked off their external referral program by adding a link to their referral page on their social media accounts and careers page. For more examples of how you can promote your external referral program check out our help docs!
Up next, we’ll talk about how to make the case for building an external referral program, establishing an implementation plan and when to bring your plans to your team and company leaders.
You know the importance of establishing a solid referral network to fill your pipeline with new and diverse candidates but outside of your recruiting team people in your company might not know why you’re considering external referrals. You will need to showcase why external referrals are important, who you want to target, program goals, and alignment with both team and company initiatives.
Questions you should ask yourself to get started making your case:
Now we’ll look at where to find some of the information you need to arm yourself for a great presentation.
Where to begin your research:
Success Metric: Do you feel like you can answer any question that is thrown at you about external referrals? If not, you need to collect more information.
Now that you have collected your arsenal of facts and data points to support your case, it’s time to bring it to your team. We encourage you to bring your plan to your recruiting team first to work out any lingering questions and get them on board before presenting to your leadership team.
How to get started with your team:
Once you have fleshed out all the questions, concerns, and to-do’s with your department it’s time to take your plans to your leadership team. Leadership most likely will not shoot down a clear plan that helps reach the company’s goals so make sure you are ready to defend your plan.
Presenting to leadership:
Success Metric: Thumbs up from leadership to move forward. *Note: this may take a few tries if you get shot down the first time don’t get discouraged and iterate on your presentation to gather exactly the information they are looking for to give you a “yes”.
Having a clear agenda and presentation of how to execute an external referral program will not only help get team and executive buy-in but also set you up for future success. Understanding the foundation of an external referral program as it relates to your goals and initiatives is the most important step to getting started. A well thought out and executed program will make all the difference.
Up next, we’ll explore the logistics of setting up an external referral program to tackle goals, policies, prizes, and payouts.
In this section, we’ll go over the four major areas you need to consider when setting up your external referral program. We’ll address policy and payouts, setting goals (short and long term), the recruiting process, and your launch plan. Be sure to work with your team, your champion, and the appropriate leadership members - getting a successful external referral program up and running is a team effort!
Tip: Need a third party tool for easy payouts? Check out Reimbi for simple and fast payouts to referrers.
Success Metric: Have an outside person read through all of it to make sure what they understand is what is actually going to happen.
Think in terms of both short term and long term goals - breaking out your goals will help you not only plan for but achieve success with your program. Short term goals should focus around set up, program rollout, and engagement strategy. While long term goals will focus on Key Performance Indicators (KPIs) and net new candidates in your pipeline.
Short Term Goals
Long Term Goals
Success Metric: KPIs align directly with achieving your goals. KPIs are measurable in terms of goal success. (i.e. we want to see a 10% increase in the number of referrals we are receiving)
Success Metric: You can track referrals from start to finish and are confident candidates won’t fall through the cracks.
Step 1: Brainstorm Strategy
Step 2: Build Your Plan
Sample External Referral Promotion Plans
Tip: Get your marketing team involved! They are experts in generating interest 😊
Success Metric: You are ready to launch at the click of a button. You should be confident walking into a press conference about this external referrals program.
These four areas will help you structure your program and have a clear path forward to success. Remember you can’t expect your external referral program to work all the magic for you - it takes intentional setup, planning, and execution to achieve the desired results. In the final section, we will tackle executing your program and actually generating referrals!
At Drafted, we believe that your company network is your single biggest competitive advantage when it comes to hiring. Our mission is to make it easy for you to leverage your network in the hiring process to find the best candidates. Your network is already powerful, it’s just too much work to make it a priority over the day-to-day of recruiting. Companies that use Drafted see their employee referral numbers go up by 2x, their time to hire drop by 30% and their overall hiring efficiency increase significantly within just a few months.