Events — 16 Dec 2024
Employee Referral Programs Examples
Referral programs are tremendous tools. Probably best known for their role in sales, they can revolutionize commercial performance courtesy of organizations such as Affise Reach. However, referral programs can do similarly great things for your recruitment. Employee referral programs’ advantages are legion, and they’re an intuitively good approach.
Just like with the partnerships available at Affise Reach, referral programs benefit from sustained attention, though. A referral program can often wither and die, or at the very least, perform suboptimally if not given the nurturing and exposure it needs. However, with a degree of attentiveness and a dollop of creativity, they can deliver great appointment results.
We’ll start by looking at exactly what an employee referral program is before discovering some choice examples of them in action and seeing how they can take on other roles, such as becoming similar to marketing partnerships.
On the face of it, employee referral programs seem to be the very thing we should be running away from at full pelt. In an era when the objective analysis of data is on the rise, employee referral programs can look like a remnant from an altogether less impartial time – an age when who you knew, not what you knew, determined your life chances. But they deserve our attention, not least because they’re so popular.
So, what are they? Let’s put ourselves in the shoes of a business operator needing a vivacious and outgoing individual to fill a customer-facing vacancy. One route would be to approach HR and go through the person specification with them before instructing them to kick the recruitment process into gear. So far, so ordinary.
Another route pops up when an existing employee turns to this businessperson and says, “Hey, my friend would be absolutely 100% ideal for that job. No question about it.” Our businessperson could say, “Great, tell her to contact the HR department when the vacancy goes on the job boards.”
Or they could seek to harness the information they’re being presented with here. They’re being given an inside track, and it’s the use of such gifts that sets a killer businessperson apart from the herd, right?
The crucial element here is that, should route two be selected, a proper program needs to be instituted so that the process is formalized. And the program is what’s known as an employee referral program.
Here’s how one looks:
So, employee referral programs take the plus points of referral sales models and use them for HR purposes. How closely your business decides to emulate referral sales is up to you. It may be the case that you go down the data-heavy track, which is the kind of approach that benefits from the services of Affise BI and CPAPI. Or you may want to go with something more basic. You’ll know what’s best for your business.
In many ways, employee referral programs are as old as commerce itself, and the reason they’re now so popular is that they deliver some serious advantages.
When it comes to recruiting costs, employee referral gives excellent value for money. A conventional hiring process using a recruiting team and/or career sites can be anything from 4x to 18x the cost.
Statistics show that employees that have been taken on through employee referral tend to stay on longer (only 25% of individuals who were appointed by recruitment boards stay for more than two years, but 45% of employee-referred jobholders stay for more than four years) for companies that restrict their recruitment to career sites).
Employees that have been taken on through employee referral usually take less time to start their new job than those from other recruitment systems.
It’s been observed that employee referrals tend to usher in higher-performing individuals. The reason for this can, in part, be attributed to them being more likely to be a good company culture fit. If the company’s own employee recommends them, they’re not just being recommended because they can sell. They’re being recommended because they can sell in the environment in question.
There have to be downsides, surely. Well, yes. The first one’s an obvious one. If you’re going on someone’s recommendation, you’re laying yourself open to an abuse of your trust. It could be that an individual is being recommended to you simply because your existing employee is thinking that they’ll wake the place up a bit, with practical joking and disruption taking over where once there was professionalism and productivity.
You can, of course, be mindful of this possibility by factoring an element of assessment into your initial contact with them so that you can decide if they’re a qualified candidate. In addition, conduct thorough appraisals regularly, particularly when probation is due to expire. In this way, you can build safeguards into your recruitment strategy, as well as your training and appraisal regime.
It might also be the case that your trusty existing employee has taken part in the referral process simply to grab a piece of whatever incentive you’re offering (see below). You can tackle this one by making incentive delivery dependent on the performance of the new employee.
When the recommender leaves, it can often be the case that the person they recommended goes with them. Just like when a company goes for platform migration, it can seem like an exodus at times. However, employees who are close will tend to leave at the same time, regardless of any referral program.
In other words, this just happens and is the downside of people forming bonds. The fact is, though, that an employee referral program delivers an upside in terms of retention rate increase, which tends to militate against this whole factor.
Again, there’s a parallel here with the world of sales, where rewards and incentives can pop up all over the place. In employee referral, they can come in all sorts of shapes and sizes, and we’ll look at them in more detail when it comes to the examples of referral programs later.
But, to be brief, they usually consist of monetary rewards, extra vacation days, a charity contribution, or praise from one’s seniors, which no doubt helps with career progression. Which of these tends to be preferred by the recipient is somewhat predictable.
All of the examples we look at below have at least one of the following features in evidence. The program benefits from being easy to use, open to all, and transparent in its working. There has to be quick and frequent feedback regarding how referrals are doing, and there has to be some means of contact between the participants, whether it be physically in the same room or remote link-ups, like virtual tours, game nights, or virtual celebrations.
So, if you’re considering a referral program, whether it’s created by you from scratch or it comes as an integral part of platform migration, make sure these features are all in place.
It’s important to think of an employee referral program as a way of finding talent and also promoting the organization. In this way, they’re like marketing partnerships.
Indian brand agency InMobi faced a problem with recruitment in 2015. They had only six people in the company’s recruitment division, which is an inadequate number for the amount of recruitment that the company needed to perform. So they went for employee referral in a big way. They went from employee referral powering 20% of tech hires prior to April 2015 to over 50% afterward.
How did they achieve this growth? This is weird, as it plays counter to the above preference for cash. In short, they stopped paying out cash. Huh? You read that right. Cash was out, and in its place came products and experiences. These included holidays, phones, and, most enticingly, motorbikes. There’s a brand in India called Royal Enfield, and its distinctive look and sound make for a much-prized object of desire that cuts across just about all classes and castes.
To really drive things home, a brand new, gleaming Royal Enfield bike was parked outside the head office every day for employees to covet. This kept the referral program very much in the forefront of everyone’s mind and placed the incentive very much in reach, literally, of all going into work.
Visibility and employee engagement were enhanced with the use of team member huddles, posters, screensavers, and other business communication tools, all reminding the workforce of the wonderful items and experiences (including “crazy parties in Ibiza and Amsterdam”) that could be theirs if they came up with successful hires.
These referral rewards were changed to suit different territories so that American employees were offered a Vespa instead of a Royal Enfield. The US poster was like this:
Further visibility was given when it came time to give the employee referral bonus out. Phones weren’t quietly slipped into somebody’s bag at the end of the day. They were given out with all due ceremony in front of all their workmates by somebody working in a senior role. In some cases, this was the company founder.
The other major contributory factor to InMobi’s success is that its referral program was simple to participate in. There was an easy-to-remember email address to use (referrals@inmobi.com), and social media-friendly updates were issued by companies regarding vacancies that current employees could send out to their networks.
The increase in employee referrals speaks for itself, and the reason InMobi was so successful is that it thought about what its employees would value and then made sure that they knew how to get their hands on these things.
American cloud computing colossus Salesforce is renowned for the rewards it bestows upon its staff. In terms of referrals, in particular, Salesforce staff have received $5.5 million in rewards. It’s due to programs like this that Salesforce has been consistently rated highly as an employer in relevant metrics, including charting at number two in Fortune’s 100 Best Companies to Work For scale.
With Salesforce, it’s not just about how much money they shower on their referring employees. It’s about how they go about the referral program itself. Employees are encouraged to bring along potential candidates to a get-together where employers and recruiters can get to meet the referred candidates in a convivial setting.
In this way, Salesforce has managed to turn the often dry business of recruitment into a fun activity, manifested most clearly by what they call these meetings: Recruitment Happy Hours. Who wouldn’t want to go to one of those?
An added bonus to this route is that a quality candidate who decides it’s not for them or who a hiring manager turns down for this particular role can be considered for another opportunity as and when it arises. The introduction has already been made so that they will be prominent in the recruiter’s mind when more suitable open positions appear.
US computing company Intel came up with a very interesting tweak to the referral model. Looking to increase the prevalence of veterans, females, and ethnic minorities in its workforce, a plan was hatched to use employee referrals to boost the company’s human resources performance in this area.
How did they seek to encourage greater numbers of women and ethnic minorities? Simple. They doubled the reward given to referrers should a successful referral be regarding somebody from an underrepresented group, so the referral bonus went from $2000 to $4000. Rocket science it was not.
Intel set about publicizing the scheme by promoting in-house and sending out press releases to spread the word further afield. The company then went about the task of making the program as easy to use and as accessible as possible, with employees being enabled to make referrals via computer or mobile.
But did it work? Yes. Before the referral program was customized, Intel’s workforce was not exactly a model of diversity, being predominantly (75%) male, with only 4% black and 8% Hispanic. When the reward was boosted, the first year of implementation saw a 44% increase in the numbers being recruited from the earmarked underrepresented groups, with a 33% increase in the number of female senior executive new hires.
Global freelance platform Fiverr needed more staff, so they turned to a company (Zao, since acquired by Pixid) that operated a successful employee referral program that worked like this. When a freelancer shared job postings on social media, they would be awarded points. A leaderboard then showed how that employee was doing in the points race, compared to their fellow freelancers.
Top points performers were then given gift rewards on a quarterly and yearly basis. In a way, though, the rewards themselves became somewhat secondary to the kudos of rising up the table. By “gamifying” referrals, Fiverr turned them into something akin to rewards in themselves, at the same time as boosting the company’s visibility on social media. Clever stuff.
Here’s an example of a leaderboard similar to the one Fiverr used. It looks like some more work needs to be done…
Dutch consulting and computing firm Accenture came up with a referral program incentive that appealed to a less self-interested side. Instead of simply handing out a cash bonus for high referral rates, Accenture encouraged the referrer to donate some of the money to charity. Accenture would then match that donation.
The great thing about this template is that it concentrates the attention on doing good. Referral is not then seen as purely a self-interest-driven activity. It’s for the good of the company and is rewarded, at least in part, by assistance given to a charitable cause. It’s a more elevated way of doing things rather than the usual appeal to self-enrichment.
Accenture’s emphasis on employee referrals goes as far as having an “Applying at Accenture? Employee Referrals can Help” article on its recruitment page. This is a company that has embraced referrals and has turned them into something beneficial to good causes. It’s a good example of how you can get creative with referrals.
There are several ways any employee referral program can bite the dust. Here are some of them.
However, you’ve now seen how the best ones manage to avoid these pitfalls. You can do the same.
Whatever your business, from Affle to Affise, your recruitment can benefit from a thoughtful and careful employee referral program. Add a little imagination and creativity into the mix, and you can take your program places, such as into the realms of competitiveness, self-betterment, and charitable endeavor.
As mentioned already, there are parallels between referral marketing and employee referral programs. Remember that just as an SaaS referral program will need monitoring to ensure its success, so will your employee referral program.
However, run well, your referral program will result in cost-saving, better employee performance, higher retention rates, and, in all probability, a happier workforce, especially if you go for those recruitment happy hours.
Written by
Grace Lau is the Director of Growth Content at Dialpad, an AI-powered cloud communication platform for better and easier team collaboration. She has over 10 years of experience in content writing and strategy. Currently, she is responsible for leading branded and editorial content strategies, partnering with SEO and Ops teams to build and nurture content. Here is her LinkedIn.
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