While job boards and social media like LinkedIn can help uncover qualified candidates, there’s another way to source top talent — enlisting the help of your current employees.
You already have an existing team of connected professionals who can help you find the right fit for an open position. An employee referral bonus program is a great way for human resource management teams to find potential candidates and reward team members at the same time.
A successful employee referral program can become a cost-effective recruiting tool that can increase engagement with employees and reward them for their help.
What Is an Employee Referral Bonus?
An employee referral bonus is an incentive provided to a referring employee or current team member who sends in a recommendation for an open position. The reward is often a prize or perk that encourages your employees to participate in the employee referral program.
It allows you to tap into the existing network within your company and offer employees rewards for using their connections to fill part-time or full-time positions.
A referral bonus isn’t just handed out to anyone who submits a name, however.
An incentive program often has strict guidelines for eligibility, so that only successful referrals are rewarded with a payout or other reward motivator. This helps to ensure that current employees can’t take advantage of the reward system.
Instead, they’ll work hard to find top talent recommendations for your human resources team.
Further, when you have an employee referral bonus program, you can help ease the burden of researching and vetting new candidates from HR teams.
4 Different Types of Referral Bonuses Explained
As you work to recruit new employees with a referral bonus system, it’s important to understand the different types of referral rewards you might consider offering. You will want to ensure that you have a strict program in place with clear guidelines so there is no confusion or surprises for employees who help source potential candidates.
Here are four different types of referral bonuses to consider:
1. Bonus Payments
The first type of bonus is a bonus payment. The bonus amount will vary depending on the program you have in place, but a cash bonus or payout is the most common type of referral incentive.
You can decide whether to pay out a lump sum to employees who help fill a position or pay it in parts during specific stages in the recruitment process.
2. Gift Cards
Another great incentive idea for a referral bonus is a gift card. Gift cards are less expensive than some other forms of incentives might be. They can also come in a wide range of experiences, which might appeal to some employees more than other incentive prizes.
However, they might not seem as much of a reward for filling niche or executive roles. Therefore, gift cards might be better options for filling part-time spots or if you are just testing out an incentive program as a new idea for your employer brand.
3. Bonus Packages
Another type of incentive is a thorough bonus package. This can help to reward more team members for their efforts, even if the submitted candidate doesn’t get the role. A compensation package can increase participation in the referral program, although it is more complicated to arrange.
For example, you might offer a:
- Gift card for every potential employee’s name that is submitted
- Cash prize for a candidate that makes it to the interview stage
- Paid vacation for every successful hire
This can help bring more people into the program and reward more employees for their time in finding candidates.
4. Paid Time Off
A final type of incentive for a referral program is paid time off.
Sometimes, employees would rather be rewarded with personal time back instead of a cash reward. You can offer a certain amount of additional paid time off for referrals, or even a paid vacation or destination trip on behalf of the company depending on how successful the referral is.
A small caveat to consider: If you already have an unlimited PTO plan or other time off benefits, this might not be the most powerful motivator for your team members.
Why Your Business Should Offer a Referral Bonus
Now that you know what a referral bonus is and what type of rewards you can offer, let’s dive into the reasons why you should consider this approach in the first place.
An employee referral bonus program can have a significant positive impact on your hiring strategy and process, along with increasing employee satisfaction and levels of appreciation. Here are a few of the top benefits of a referral bonus system:
Referral Bonuses Can Increase Your Chances of Filling a Desired Position
Filling a specific position, especially a management or executive role, can sometimes take your HR department months when it comes to:
- Finding the right candidates
- Scheduling interviews with complex calendars
- Developing the right compensation package
And, if you have important roles standing open, it might even slow the progress of your company’s growth.
Having a referral bonus program can help fill those critical roles quicker and make sure that you have a steady stream of candidates coming in to interview and explore. It also helps you find people who are qualified and vetted to become a team member without having to start your research program from scratch each time you find a potential candidate since your current employees have already vouched for them.
Referral Programs and Bonuses Can Help Alleviate Financial Stressors
There is a clear cost to hire an employee, and that can sometimes reach tens of thousands of dollars for just one role.
The time and money spent finding candidates and bringing them in can also be undone if the new employee only stays in the role for a few months before leaving for another position. That adds even more stress to your recruitment teams and complicates the hiring process even more.
However, a referral bonus program can help alleviate some of the financial and time stressors in your recruiting efforts and help lower the traditional acquisition cost of a new hire. It will bring in a steady supply of candidates to explore, and help the HR team focus on interviewing and building relationships with candidates rather than sourcing them on their own.
Referral Bonuses Can Help Identify Candidates Outside of Regular Networks
When you are searching for new employees, you might have a limited pool of candidates with regular networks and methods of recruitment.
It depends entirely on who sees your job listing or who has a LinkedIn profile that matches some of your exact keywords when sourcing candidates. This can severely limit the quality of applicants you find and the overall pool of talent that you are drawing from for each job.
An employee referral incentive program can help extend your recruiting reach and identify potential candidates outside of traditional recruitment methods in place.
Referrals also tend to be higher in quality than other candidate leads, and they come recommended by existing professionals within your network. This makes them a great source of recruitment that deepens your collection of available talent and helps you find more qualified candidates.
Referral Bonuses Boost Employee Engagement
A final benefit of a referral incentive program is the increase in engagement you can get from your current employee base over a period of time.
While you can ask for referrals without a bonus, there is no real incentive for your team to help out, and you likely won’t get many submissions for candidates. Even small rewards like gift cards help to increase engagement and encourage your teams to want to participate in the program.
In addition, having a referral bonus program can increase employee satisfaction. It increases the odds of participation while helping your employees feel valued and know that their networks matter and their recommendations are respected by the company.
Even if they don’t choose to participate, they still know that if they did, they would be rewarded for their work by the company.
Find Out How Hunt Club Helps Companies Recruit Top Talent
Finding new employees and recruiting top talent isn’t easy. A referral program is a great way to help find new employees, but even some internal networks are limited.
That’s where a recruiting agency like Hunt Club comes in.
At Hunt Club, we specialize in bringing in top candidates for executive and professional positions at your company. We have a talented team of recruiters and an existing network of candidates to help fill your C-level and senior executive roles.
To get started with Hunt Club, contact us to hire the best talent and see how we can support your other recruitment efforts like an incentive program. You’ll see for yourself why Hunt Club stands out from other recruitment agencies and delivers exceptional candidates for your open positions.