Read This Before You Implement an Employee Referral Policy and Avoid the Common Failures

Research by Ohio State University found that companies with a strong referral program have a 25% more retention rate than those without a referral program. But creating a referral program is not easy. If the incentives are not aligned with what employees want, then everything can fail. If there are no fraud detection mechanisms, then the organization can lose more money and employees than they would gain. There are many more reasons why an employee referral policy fails.

Continue reading to know exactly what an employee referral policy is and what's wrong with poor or ineffective employee referral programs. Also, learn the secret to making a good employee referral policy

What is an ER Policy?

In order to find new employees, many companies ask employees to suggest potential candidates from their social connections. This is called employee referral.

A process designed to create incentives for referees, and ensure they receive those incentives when the referred candidates are finally hired is called an employee referral policy.

If your employees are happy in their roles, they will gladly tell their personal networks about any open positions in your company. Plus, they'll have firsthand expertise to share about working for your organization, so the individuals they suggest are more likely to be a great fit compared to those who come from just looking at your job opening on a third-party website.

Importance of Having a Structured ER Policy

Improved retention rates

In comparison to the people hired through career websites referrals are 13% more likely to remain with the company for at least a year. So, if not much, you can expect your ER program to give your organization higher retention rates.

Improved quality of hire

Employees hired through an employee referral program tend to generate 25% higher profit than those hired by other methods. Also, these referees are also much more likely to embrace the company's values and be a good cultural fit.

Create a high engagement in the workforce

One effective strategy for building a dedicated workforce is to let current workers recommend friends and family members for new opportunities. It's a win-win situation:

Current staff members have a sense of security and worth because they are helping shape the company's trajectory. They will feel good about themselves if the person they recommend gets the job.

New hires who were referred to the company by an existing employee tend to be more invested in the company from the start. And because they already have a friend or mentor they can turn to for help, they tend to assimilate into the culture more quickly.

Help you reach passive candidates

Your most valuable employees are probably part of a larger network of passive applicants who are just waiting for a chance to join a company like yours.

5 Reasons Why An Employee Referral Policy Fail

Despite all these benefits, some employee referral programs still fail to live up to their potential. Before we go on to finding the solutions, let's look at 5 reasons employee referral policies fail:

Lack of transparency & communication

Due to the complexity of the procedures involved, some employees simply refuse to take part in the typical referral programs. If they don't understand how the program works or what's in it for them, they would simply ignore such programs.

If workers were led to believe that they would be rewarded for introducing prospects but were instead given no financial incentive, they could feel duped.

So it's important to keep a transparent policy and communicate all the benefits correctly.

Don't Treat employee as part of your recruitment team

Employees are less likely to refer colleagues and coworkers when the referral procedure takes too long and becomes tedious. An insufficient focus on the applicant experience is a major cause of the failure of employee referral programs.

Too many fields need to be filled out by employees about their reference candidates. For instance, a worker may need to provide information regarding the applicant's previous employment. And so much more.

Some employee referral programs require workers to use a portal to look for open positions and determine whether or not their friends are a good fit for those positions. Employees may wish to refer pals even if they have doubts about whether or not they would be a good fit. Employees should not be expected to play the role of a recruiter for the organization. Don’t forget that this is a referral program they are participating in & not the hiring process.

You are not promoting your employee referral program

Your program will be forgotten if you don't promote it amongst your employees. What we are trying to say here is that if you have a pretty great employee referral program in hand but you are not promoting it then you might just depend on your luck. Because without promoting it you are not gonna go anywhere.

It’s not enough to simply create an employee referral program and expect it to attract candidates. It would be naive to think that sending just one email or talking about it in all hands is enough. People are busy with their work and lives. And hence, forget about the referral program too easily if it's not on top of their minds.

Not leveraging technology

The word "technology" now reigns supreme. It's the driving force behind employment losses, gains, productivity gains, and amusement. The millennial generation currently in the market has the highest concentration of tech-savvy experts.

The youngest members of Gen Z have never known a world without technological advancements. They grow up with social media and smartphones in their hands. Understanding the behaviors and mentality of Generation Y and Z is crucial for successfully engaging them as employer brand advocates.

A referral software program that helps streamline activities, allows employees to share job vacancies across all social media with a single click, and is compatible with mobile devices is what you need. All of these factors are necessary for attracting tech-savvy employees to your referrals.

Rabbit holes

Employee referrals can go down one of two rabbit holes.

1) Having them wait in the same line as the rest of the applications

2) Failure to update the referring party on the application's progress

It can be intimidating for the referrer to put their trust in another person and then have to figure out what to do next. By not following up on a reference, the organization runs the danger of losing the referee's confidence Referral-sourced candidates deserve your undivided attention and prompt follow-up. Referrers should be updated on the status of the application, if only as a courtesy.

How To Draft A Successful Employee Referral Policy That Can Bring Quality Candidates?

Drafting a successful employee referral program is not easy but there are some factors that can help you build one easily. So, in this section, we tell you some factors you must keep in mind while building your next employee referral policy.

Clearly define your ideal candidate

It is the best way to help your employees find the most suitable candidates for the role. When employees know clearly the set of qualities you want they will feel confident when referring to their connections. Mention the following things in your message to employees:

1) what skills and experience does your ideal applicant currently possess

2) the knowledge and abilities pertinent to the position you're hoping to fill

3) geographic location (not necessary if it is a remote position)

Automate by using the right technology

Facilitate the use of your employee referral program by making the process simple for staff and human resources.

Using innovative recruiting solutions like RippleHire,., you can streamline the process of hiring through employee referrals. RippleHire has helped 1 million customers to create recruiting engines from sourcing to employee referrals to offer letters in the last 10 years.

Some of the common problems they solve:

 

Check out more about the employee referral program here.

Establish benchmarks for your employee referral initiative

Set quantifiable recruitment targets to analyze the effectiveness of your employee referral program. Here are a few things you can consider:

1) Quality of Referrals

2) Application Completion Rate

3) Time to Hire

4) Offer Acceptance Rate

5) Quality of Hire

6) Employee Retention Rate

7) Diversity Recruiting

Inform your employee about your employee referral program

Educating employees on your program's goals, the applicant profile, tasks to prioritize, and information on how they may effectively recruit referrals will guarantee the program operates easily and efficiently for everyone involved.

Offer incentives

Providing an incentive for employees to suggest their friends is the most effective method. Depending on the company's culture, referral bonuses for employees may be monetary or non-monetary. These incentives can be handed out after the referred candidate joins or after they complete a certain time period so you can avoid any fraudulent hires. Some examples are:

1) A day off without pay loss

2) A trip to a local destination of their choice

3) Gift cards

4) Recognition in a company newsletter

5) Club memberships

Bottom Line

Employee referral is not something you can just overlook when looking to hire new and worthy talent for your organization. Also, if you do have an ER policy make sure you are putting efforts into promoting it, making it transparent, and using the right technology to back up your recruiting and referral programs.

All the above-mentioned ER policy failure factors and factors to make it successful will guide you through each and every step of your ER policy making. So, make sure you understand it the right way. Let us know if you have other things in mind which can cause an employee referral policy to fail.