Rewarding Recruitment: What Employee Referral Incentives Work Best?

Rewarding Recruitment: What Employee Referral Incentives Work Best?

Employee referral incentives have been used for a long time as a tactic to reward recruitment, but many companies might be surprised to learn they can get better results by spending a lot less on these rewards.

With so many companies actively on the hunt for workers, many have been expanding their talent-attraction efforts across all fronts. That had us wondering about what incentives work best to motivate employees to find and recommend quality people for open roles. So, we did some digging for data that companies can use.

 

Matchmakers are Valuable

According to the experts, there is something to be said about informed matchmaking. Existing employees know a great deal about what it’s like to work in their companies. They also likely know a lot about the person they’re referring for job openings. This makes for the perfect intermediaries, especially when all parties know each other well.

As explained by the Harvard Business Review, “Research has found that referred candidates are of higher quality than applicants from the general public and are more likely both to receive and accept an offer, stay at the job longer, and perform better. This all adds up to spending less time on the hiring process. But not all referrals are equal. Our research finds that employee referrals are significantly better when the referrer and candidate know each other well, compared to when they have a weaker connection.”

 

The Right Rewards

There are many different ways to reward an employee that refers a great candidate. This gives business leaders a bit of creative freedom, depending on what works best for their operations. The focus should be on motivating others to refer quality candidates.

  • Money talks, but not to everyone.
    Financial incentives are the most common and most traditional method of employee referral incentives. The amount a referring employee receives is typically based on the level of the role that’s being filled by their referral, or in some cases the level urgency needed in filling that role. But it’s important to note that while this is considered the standard method, it doesn’t work for everyone. As noted by the National Business Research Institute and other organizations, not all employees will be motivated by a purely financial incentive.
  • Recognition saves money.
    As unbelievable as it may seem, companies may be able to implement an employee referral program that doesn’t cost them a dime. All they have to do is develop an incentive package focused on praise and recognition. According to research from Adobe, praise from a boss or manager is actually more effective at motivating employees than money. Recognition also increases engagement, which can help bring even more high-quality candidates in to apply for open jobs.
  • Vacation time has great ROI.
    Extra days off are a relatively inexpensive offering for most companies as they reward employees for referrals. The best part about providing extra vacation time is that doing so benefits both the recipient and the company. Going back years, study after study has identified a link between days off and better company performance. For example, Forbes reported that “scientific evidence suggests that you and your employees will be healthier and more productive if you take some real breaks throughout the year.”
  • Choose your own incentive.
    Some organizations have opted to let referring employees develop their own incentives, of course with a prescribed set of limitations set by the company. The interesting thing about these choose-your-own incentive programs is they can be incredibly motivating, as people get to select their own rewards. There will be a great variety to what people care about most, but companies may find this method does boost participation and engagement in the process overall. According to LinkedIn, “More and more companies are letting their workers choose their own benefits as a way of listening to and empowering their employees.”

 

Save on Staffing and Rewards

Companies can save a lot of money with a good employee referral program. Finding better applicants cuts a lot of work out of the hiring process, and the right incentives will make employees happy and bring about good returns for the company overall. It’s a profitable and fairly inexpensive method to bring in talented new people and improve satisfaction among existing personnel.

Category Features, Finance