Successful Hiring Through An Employee Referral Program

Great employees are the foundation of a successful business, but finding them can be challenging. Since word-of-mouth is an effective recruiting tool, it makes sense to use existing staff to help you locate the talent you seek. An employee referral program might just do the trick.

An employee referral program (ERP), whereby employees recommend qualified friends, relatives or colleagues, can be an excellent source of candidates. For the employee whose recommendation leads to a hire, there can be various rewards.


People who already work for you will tend to refer people with work ethics similar to their own. If you have high-quality employees, you will likely receive referrals of the same calibre, leading to an efficient selection process. You’ll save yourself time and money by using fewer recruitment sources and wading through fewer résumés that just don’t fit the bill. And by hiring people who already get along, you’ll have a head start on building good team chemistry.

Employees who are hired through referrals tend to stay with the company longer than other candidates. And unlike other recruiting methods, which tend to draw only active job seekers, ERPs offer access to passive job seekers — qualified people who have not signaled a willingness to move but who might under the right circumstances when encouraged by a friend or a trusted colleague.

An employee referral program (ERP) is great for your staff too. They will value the rewards they can earn, but more importantly, they’ll feel engaged by a company that encourages their input and recognizes their contribution. Because they’ll have a vested interest in the applicant’s ultimate success, employees will also make an extra effort to recommend only the most promising candidates for a position.

But ERPs won’t do away entirely with the more traditional recruitment methods, like employment agencies, job fairs and newspaper advertisements. Instead, think of ERPs as an additional tool in your recruitment tool kit.



Make your program easy to use, or people won’t participate. Here are some tips:

  • Actively promote the program. Publicize successful referrals throughout the workplace, and keep employees interested during lengthy recruiting campaigns with larger prize draws.
  • Decide what incentives you will use. You can award a standard prize each time, or vary the reward depending on the difficulty of filling a position.
  • Make it simple for employees to spread the word about job openings. Have job descriptions available in the staffroom or on a company intranet for easy distribution.
  • Consider implementing communication and training programs to acquaint staff with the rules and policies surrounding recruitment.
  • Develop a standard form to record details, such as an employee’s connection to a prospect, referral dates and when rewards are due.
  • Reward your employee only after the new hire passes a probationary period. This will help limit referrals of lesser-quality applicants.
  • For maximum impact, issue rewards in a lump sum immediately following the probationary period.


Employees may be reluctant to make a recommendation; after all, they wonder, what will the consequences be if the recommended candidate turns out to be a dud? And what happens to a friendship if the recommended person doesn’t make it past probation?

The answer lies in reminding employees that they’re not actually hiring anybody. Instead, they’re making recommendations that will have to wind their way through the company’s usual HR recruitment process. If the candidate makes it through that process, chances are excellent the fit will be right.


Common sense should be used in determining employee rewards. Some firms prefer to pay a reward in portions, with part of the bonus paid at the time of hire, with more after the new employee clears probation and the rest after the recruit reaches the first anniversary with the company. Cash rewards have been shown to get people’s attention, but most employees don’t expect vast sums, and many are happy with other incentives, such as free travel or extra time off.

An ERP should not be regarded as replacing traditional recruitment techniques. But with some companies generating 40 to 60 per cent of new hires through these programs, it’s pretty clear they’ve found a complementary system that works. Remember, too, that ERPs also help foster a corporate culture in which staff take responsibility for recruitment and appreciate its importance to the company.

The above includes material supplied by Jacques Gaumond. © Copyright Canadian HR Reporter, July 17, 2006, excerpts by permission of Carswell, Toronto, Ontario, 1-800-387-5164. Website: