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Top 5 Reasons to Start an Employee Referral Program

Nov 19 , 2015

Offering rewards for quality referrals helps motivate employees to participate in the program.


Employee referral programs can be a source of quality candidates that companies turn to when open positions need to be filled. Although it does take some administrative work to establish and maintain an ERP, most companies have found that it's a worthwhile undertaking and ultimately benefits the company's bottom line. once it is established.

Here are some of the top reasons to start an employee referral program:

1. Referrals are the best source of quality hires.

One of the scary aspects of hiring is that it's possible for a candidate to present well on paper and even in person, but not be able to do the job after being hired. A well-structured referral program means that one of your existing employees vouches for the candidate's ability to do the job well. The numbers bear this out: referrals are 20 percent less likely to quit and are 25 percent more profitable for companies than non-referred candidates, according to AllBusiness.

2. It's a way to let current employees share in the spoils of quality hires.

Rewarding employees for qualified referrals motivates them to become an extension of your hiring department and recruiting team. It's only fair that they should be rewarded for their efforts. Rewards can be anything from public recognition to gift cards or cash bonuses, and there can be different rewards for different levels of referral. Many employees are happy to be recognized or to get an extra vacation day, which doesn't typically cost the company much if money is an issue.

3. There are ways to prevent a constant stream of bad referrals.

One fear about starting an employee referral program is that HR will be deluged with worthless referrals as employees try to cash in. Bad referrals will just end up costing the company money and time as salaried staff are forced to follow up. Selective distribution helps to curb this effect by sending certain job postings only to certain employees. Another effective way to cut down on bad referrals is to ban employees from participating in the program after a certain number of bad referrals.


It's a great feeling to help your company hire quality employees and earn rewards at the same time.


4. ERPs can be automated.

ERPs may seem like a logistical nightmare, but there are software programs that can administer the program for you, and if an ERP is part of your comprehensive recruiting strategy, your recruitment staff can handle the program along with other recruitment strategies. In reality, the company may not have to do much more than make the hires if they set up the program right.

5. It can speed up the hiring process.

The more sources a company has for finding talent, the faster they will be able to find quality candidates and fill positions. An employee referral program can run alongside other resources like the efforts of a recruiter and a talent pipeline to multiply your candidate search efforts and ultimately, broaden your search capabilities.

Contact us at GDH for information about employee referral programs and the comprehensive recruiting services we offer to clients.