An Introduction to the Employee Referral Program

Everything you need to know about the new face of recruitment — Employee Referral Program

Employee Referral Program has now become the new face of modern recruitment. Research proves that referral employees are considered to be the best as they take the least amount of time to hire, are very affordable, stay longer with the company, and have the lowest turnover rate.

What is an Employee Referral Program?

An employee referral program is internally organized and structured program employers use to ask existing employees to recommend candidates for open positions from employees’ existing networks.

Why do you need an Employee Referral Program?

To tap into the employee’s network

Passive candidates are more receptive to their friends than recruiters. When an employee reaches out to someone to vouch for their company and their workplace culture in a way that seems more convincing than a recruiter.

To have quality referrals

While referring a candidate the employee, one must makes sure that the candidate is best suited for the company and fits the role perfectly. They know the expectations of being an insider.

The software company Careerify found that referred employees are 23 percent less likely to quit than other hires.

The new hires are beforehand aware of all the responsibilities and expectations of the organization which will only increase productivity.

To reduce time and cost per hire

The position tends to fill faster with referral as you are spending less time in posting, searching, getting details, and recruiting. Referred employees take a shorter time. As we need fewer human hours to fill a position the cost also drops.

Days to hire by the source of application

Days to hire by the source of application

To improve retention rate

According to a report on social recruiting, the best talent often comes from within — through internal hires or employee referrals.

Additionally, a study on employee referral programs indicates that employees hired via referral tend to stay with a company longer than those hired through other channels.

More than half (56%) of employee referrals who were surveyed for the study said they’ve been in their current role for more than five years.

To have better employee engagement

As the employees are involved in the decision making of their team which makes them feel they have a stake in a company’s future.

With the right incentives, they feel more appreciated, happier hence more productivity.

Dr. Sebastian Hubert, Head of Talent Acquisition strategy and Technologies, Siemens said..

Dr. Sebastian Hubert, Head of Talent Acquisition strategy and Technologies, Siemens said..

Various models used by companies for ERP


According to a survey conducted by FirstBird, 70% of companies offer cash incentives for successful referrals between $1000 — $5000 per year

Tiered Reward System

This method is adopted by an online marketplace company, Groupon. For a total incentive of $1000 the employee receives $200 if their candidate gets an interview, $300 more if they’re hired, and the remaining $500 if their candidate stays for more than three months.

Referral reward if a referral works for a specified time period

In this, the referral will be awarded to the employee only if the referred candidate works for the organization for a specified time period of 2 months or 3 months. And the incentives are awarded based on the months. $50 for the months the referred candidate works.

Bonus in the form of referral reward

As the bonus is in the hands of the employee, he is motivated to get more referrals. A domain registrar company GoDaddy saw an increase in referrals after cutting its bonus by two-thirds as they invested this money in their referral program.

Introducing ERP in your company

Set a goal

Organizations should first set a strategic goal that they want to achieve from their employee referral program. A designated page or portal where the employees can post their referred candidates and the admin or leader can keep a track of it.

Process and Participation rules

Figuring who can participate and what are details they want to display to the employee. For example, some companies don’t allow vice presidents and above to participate in the referral program. The HR or the system can update the employee where his referred candidate stands in the hiring process.

Maximize referrals

Communicate openly about their referral and give feedback about the strength and weakness of the candidates they referred which will help them to get better referrals

How referral program can be improved?

Before ATS was developed the employee referral program used to take place using excel which was handled either by a designated leader or the HR manager. The employees can post their referrals via emails, paper copy, or intranet. A simple Excel spreadsheet was used to track employee referrals, including the date of the referral, any contact with the applicant and their relation with the referral.

Through the tracking method, the candidate should be updated on the amount of the reward and the due date for providing it, assuming all plan criteria are met.

With the advancement in technology, more companies started using Applicant Tracking System for hassle-free recruitment and referral programs.

What Applicant Tracking System has to offer?

Adding referrals

When the job posting is shared by the HR, the employees can directly share it with their network.

Referral Tracking

Handling the tracking process can be a tedious job if done manually. With an ATS coupled with a referral system employees can get updates if the referral candidate passes a stage by tracking his position in the hiring process. The employee will have an idea about his referral and how he is doing. This makes the whole process very smooth for employees.

Attract them via Leader boards

Leader board displaying which employee has brought in more number of referrals will help the employees not only to be motivated but also aware of their standing and reward status in the leader board. This creates a feeling of positive competition.

Using an ATS coupled with Referral program in the company will help the management and the HR save time, ensuring all their records are maintained and kept accurately for an easy-breezy referral program.

The easy-to-use Aviahire Referral Portal can serve as the base of operations for your employees, as they become active participants in the recruitment process. They can view open positions, recommend people to these positions, and track the status of their referrals throughout the application and hiring process.

By leveraging the social networks of your employees and creating an employee referral program, you’ll engage a vast pool of talent with a similar cultural fit thereby reducing turnover and streamlining on boarding. Request a demo.

So what are you waiting for? Go get ATS for your company today itself!!

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Suchismita Panda