Innovative Reward Techniques for Your Employee Referral Program

When launching a referral program, the foremost thing that organizations need to consider is the “why factor” – why should employees refer? Since referring candidates is not part of their basic job responsibilities, there has to be a compelling reason for employees to consider participating in the program. Unless the reasons are compelling enough to motivate employees to participate, all the effort and time invested in defining and launching the referral program is going to go down the drain.

These compelling reasons form the basis for rewards offered by organizations as incentives to participate in the program. Referral rewards do not merely constitute offering cash incentives for successful referrals, but extend beyond that to include ways of engaging with employees through recognizing and appreciating their contributions to the referral program. A referral reward is only as good as the employees: ultimate recipients of the rewards have to find them motivating. A referral reward, even if it is of high financial value, is worthless if it fails to excite employees to participate. On the other hand, there are many examples of organizations who have achieved a great deal of success in their referral programs through comparatively smaller rewards.

It is therefore essential to first have a good understanding of what motivates your employees before defining the referral rewards. Organizational culture plays a big role in understanding the nature of employees and what is a good motivator for them. For instance, employees in a consulting organization with frequent business travel might find rewards related to travel experiences big motivators. Then again, healthcare professionals might appreciate family outings, like a fully paid family day trip.

Employee referral rewards can broadly be classified as monetary or non-monetary rewards. While most organizations have monetary rewards in place to incentivize people for successful referrals, it is actually the non-monetary rewards that can actually keep employees engaged and active with the referral program.

• Monetary rewards are generally cash bonuses offered to employees if the candidates they refer are hired by the organization. Most organizations release the cash bonus once the hired candidate has been in the organization for a certain period of time — usually 3 months. Apart from this, many organizations also offer supplementary bonuses for niche positions.
• Non-monetary rewards are ways to recognize employee efforts and contribution in small and big ways without doling out money or cash. The big advantage to non-cash incentives is that they are comparatively more cost effective. They can be used to reward employees participating in the referral program even if their referral is not hired. Ability to recognize more employees means more motivated employees and greater participation and enthusiasm among employees.

It is because of the twin benefit of cost effectiveness as well as higher reach that organizations have started experimenting more and more in the realm of non-cash incentives to reward employees for their contributions to the referral program. They have ranged from the usual gift cards and movie tickets to highly adventurous ones, like flying and wine tasting experiences, and family pampering ones, like fully paid vacations to exotic destinations. Another big addition to rewards programs is the concept of gamification: the opportunity to earn redeemable reward points based on how far you have progressed in the referral game.

Below is a list of some of the more innovative referral rewards and recognitions successfully implemented by organizations, to help you get an idea of the kind of thinking that goes into designing rewards for employee referral programs.

• A leading American video game developer has implemented gamification to reward employees because it has a very strong gaming culture. The rewards start small and get bigger and bigger in value as the referred candidate progresses through the recruitment process. For instance, the employee is presented with a “Head-Hunter” mug if his referred candidate receives an interview call. If the candidate is found suitable to be made an offer, the employee receives a sweater. In the case that the candidate is hired, the employee becomes eligible for the referral bonus.
• Accenture, one of the foremost advocates of referral programs, has used the charity concept very successfully int their referral reward program to inspire employees towards a higher and nobler cause. Employees can choose to donate a part of their referral amount to a charity of their choosing, and the company donates a similar amount. Similarly, Informatica was able to triple participation in its referral program by allowing employees to donate the referral bonus to Philippines typhoon relief over a two-month period.
• KPMG has been using micro rewards like gift cards for local coffee shops and other local events and places to improve employee participation in the referral program. They generally offer the gift cards for hard-to-fill and niche positions as a means of rewarding employees for their contributions.
• A leading engineering and service company has been able to achieve a 55 percent rate of employee participation, mainly by displaying leaderboards of top referrers on company boards and in newsletters. This, along with regular mails appreciating the efforts of top contributors, has helped keep employee participation well above industry average.

A good employee referral reward program should strike a balance between cash and non-cash rewards, since both have a part to play in motivating employees. The nature of rewards should be defined based on your company’s own unique culture, which shapes the way employees react to different motivators.