SaveIs your employee referral scheme letting you down? Did you start the program expecting big things, only to find that the scheme has failed to even remotely live up to your expectations?

As you survey the wreckage of your failed referral scheme, you might ask yourself whether you should ditch your employee referral program (ERP) altogether. You may be frustrated, but abandoning your ERP would be a shame. Research shows that ERPs, if implemented well, can deliver superior hiring results:

  1. Nearly 9 out of 10 employers and recruiters say that referred candidates are of a higher quality than non-referred candidates.
  2. Referred workers are less likely to quit prematurely.
  3. Referred workers are more likely to be hired and accept offers.
  4. Referred workers are more productive and happier in their jobs.

Your ERP can deliver serious value, but if it doesn’t seem to be working, you need to take action to turn things around. To help you do this, I present three industry secrets that can help you resuscitate your ailing ERP.

1. A Great Referral Program Starts With a Great Employer Brand

Does your business have a great employer brand? Is your staff happy and engaged? Does your staff consistently say that your business is a great place to work — or even a good place to work?

If you can’t give an emphatic “Yes” in answer to these kinds of questions, then the truth is that your organization may not have been ready for an employee referral program to begin with. People don’t want to refer their friends to a business they themselves don’t even want to work for.

If you don’t have a positive employer brand, it’s time to put your ERP aside and fix your brand first. That way, staff members will actually want to share your story and their experiences with their business networks. You will then be ready to restart your referral program and receive a much better return on your investment.

2. Big RefStack O' Casherral Bonuses Will Only Work When You Have Fixed Your Employer Brand

If you are hoping to rely on big referral bonuses to incentivize staff members to refer candidates, then your scheme will most likely fail. A survey of 2000 LinkedIn employees found that the main reason why people refer talent is “to help someone they know find a job at their company”: 76 percent of respondents named this as their reason for referring candidates to LinkedIn, whereas only 40 percent of respondents said they referred candidates in order to get a referral bonus. (Note: Survey participants were allowed to select more than one reason for referring people, hence why the numbers exceed 100 percent).

The lesson here is that a generous monetary incentive will not be enough to generate healthy levels of staff referrals. Once again, you need to sort out your employer brand first and make your business attractive, so that employees will feel comfortable referring people to the company.

This doesn’t mean that you can do without financial bonuses. In fact, they are essential. However, bonuses will only be effective incentives after you have constructed a strong, positive employer brand.

3. The ERP Is Not a Cost-Cutting Opportunity; It Will Require Significant Financial Investment

Because employee referral schemes allow you to circumvent jobs boards, recruiters, and other pay-per-usage hiring services, it’s easy to fall under the illusion that ERPs represent a cost-cutting opportunity. If you want to create a successful ERP, you need to disabuse yourself of this notion.

Ninety-six percent of referrers expect their referral rewards to be in the form of cash, according to the LinkedIn survey mentioned above. It’s also important to note that average bonus size in the most successful referral schemes ranges from about $1000 to $4000.

Cutting CostsAside from shelling out bonuses for successful referrals, you’ll need to invest in your ERP in other ways: implementing the best ERP software, dedicating time and manpower to the design and maintenance of the ERP, etc. If you treat your ERP as a cost-cutting measure, there is a good chance the scheme won’t work out for you. Your ERP may ultimately lower your hiring costs, but that isn’t its primary purpose. Instead, an ERP has one goal: to boost the quality of your hires.



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