Employee Referral Program: How To Get It Right ?

What is Employee Referral?

Employee referral is a recruiting method where employees of the company refer suitable applicants for open roles from their professional, family, or social circles. In return, they are delighted with incentives or rewards in the form of cash prizes or goodies.

Get Employee Referral right with Freshteam Software

Why is Employee Referrals important?

Finding ideal candidates has become increasingly difficult for recruiters in a candidate-driven job market. It has become equally difficult to justify the time, effort, and resources that go into hiring great candidates.

That’s why employee referral is the most reliable, available, and untapped source of candidates for recruiters. HR teams can leverage their connections with current employees and get them to suggest time-worthy candidates.

8 Benefits of Employee Referral Drive


1. Reduces time-to-hire

According to HR technologist referrals are 55% faster to hire. Employees help you reach the most relevant candidates when compared to any other sourcing channel. This cuts downtime spent on the sourcing and screening cycles, time spent on coordination, negotiation, etc.

2. Improves the quality-of-hire

70% of the global workforce is made of passive candidates. The top talent in the industry is most often already employed in a great and secure job. Which means they might not be actively looking out for opportunities though they are open to considering one. Referrals are a great way to reach such candidates. Since your employees are already soaked in your vision and mission, culture, and atmosphere of work, they can spread the word on why anyone should consider a job opportunity with you.

Referrals are the #1 way through which people discover a job – LinkedIn

3. Reduces cost-per-hire

Referrals reduce cost-per-hire because of various reasons. a)Your employees partner with you to source candidates b)They almost take care of the initial screening c)The time-for-hire is reduced, meaning all costs associated with the process are also reduced d) Job advertising costs are cut down

4. Favors employee retention rate

Referrals give your new hires the chance to understand your company from an employee’s point of view even before they come in. So they know what they are signing up for. Also, they have friends in the company who can help them settle in and quickly belong, reducing attrition and spiking retention. It’s also true that employees who refer have faith in the company and stay longer too. Hence your referral program can be an employee satisfaction or happiness check too.

5. Extends a helping hand in aggressive hiring seasons

When you are scaling or trying to fill positions that are hard-to-fill, you could always use an extra pair of hands working alongside you. Employee referrals are a perfect go-to channel when you don’t want to expand your hiring team just for a season.

6. Attracts culture fits

Referrals also make it easy to rope in people who fit right into the culture. They already know someone in the company and are familiar with what the culture is like or work life is like, which directly increases the probability of attracting those who are drawn to it.

7. Promotes your Company Brand

No amount of Glassdoor reviews or culture videos can match up to the words of someone who works in and for the company itself. When your employees reach out to friends and family to invite them to pursue open roles, give them materials, or equip them to promote the company’s employer brand.

8. Fish for customers

Building a connection with them could even bring you, customers. They might vouch for you in the companies they work for.

11 tips to fuel up your employee referral program 


    1. As a part of the referral drive, organize a referral hour where your employees can browse through their friends’ profiles, and quickly grab the bright ones for you.
    2. Involve your marketers in marketing your referral program–They can help you with ideas, content, and you can even host an afternoon where they help colleagues polish their social media profiles (Facebook, LinkedIn, etc) to show where they work and how work-life is which their friends can use to get an idea of your company. 
    3. Ask only for the basic information of the candidate like name, number, email id, experience, etc. Makes it easy for your employees to hand them over to you. Once you have it, you can take it from there.
    4. Reward intent–you will not end up hiring all the candidates your employees referred to. But you can always reward the intent to refer. This would encourage employees to refer actively.
    5. Provide templates or any material (clear job descriptions on an email, culture videos, videos of people talking about their experience in the role, etc)  that they can use as they invite people to pursue jobs in your organization.
    6. You don’t always have to wait for an employee to refer a friend of theirs. You proactively source from their social network and then ask if they would recommend that friend for a role.
    7. Ask more specific questions–Who’s the greatest content writer you have ever worked with? More likely specific questions will bring a few faces to their mind.
    8. Speed up hiring for referred candidates. Keep your employees up to date on what’s happening with their referral. That keeps both the referred and applicant motivated.
    9. Don’t wait for your hiring season. Gather applicants in and out of the hiring season and grow a solid talent pool that you can turn to as roles open.
    10. Always give feedback. Feedback gives candidates an excellent experience, it helps employees align with your hiring goals and refer to the perfect candidates, and it helps your hiring managers describe or chisel their job descriptions with more specifics.
    11. Keep track of the time for the first conversation after someone referred a candidate to you. Treat referred candidates differently from the other candidates, tag them, and put them on a fast-moving track. 

How to market your Employee Referral Drive to your employees?

Eye-catching creative posters around the workplace

Posters are great stimuli to show and remind your employees about your referral programs. Put them up in prominent places in the workplace, they don’t always have to be in the announcement area or on a notice board.

GoDaddy’s LinkedIn Referral program

Three years ago during one of their LinkedIn referral campaigns, the recruiting team at GoDaddy sent mirrors to their employees stating ‘This is what a GoDaddy Recruiter looks like’. With a mirror-like that on your desk, try hard to miss an ongoing referral program.

Rotate your reward system

Keep changing your rewards, seasonally. People are different and have different motivators. Some are driven by monetary incentives, others by recognition, and some others by opportunities for an experience they would never invest in.



Give all active participants a t-shirt that recognizes their participation or efforts. The others will notice and eventually join in.

Flash it on the big screens

Flash all announcements for the program on the huge screens at work–the ones in your lobby, lunch halls, etc.

Make a game out of it

Turn it into a game between individuals or teams and announce a reward for the winning side. You could split teams region wise or roles wise, but make sure they all have an equal opportunity to refer.

Involve your new hires

Ask your new hires for referrals within the first week or their first 15 days, depending on your onboarding period. Introduce them to referring tools and methods at the organization. As a part of the introduction, you can show them a few open roles and encourage them to refer people from their network.

Here’s how HubSpot encourages their new hires to refer:

As a part of their new employee’s induction, Hubspot does a new hire presentation on the Hubspot culture which also focuses on referrals.

They not only show them where they can do it but also teach them how to navigate through their connections to find great people.

Get your leaders to talk about it

If leaders can show they can make it a priority and take the time to emphasize it in company meetings, employees are likely to understand the importance and contribute.

Implementing a referral program with the Freshteam ATS


An ATS system helps you to efficiently run a referral drive and make the most out of it. It eliminates errors and delays and gives everyone involved a smooth experience. In this section, we will walk you through the benefits of using an ATS to run your referral program.

  1. Employees can access a list of all open jobs in one place, anytime. 
  2. There will be no emails flying all across the place, or referrals lost in a flood of emails. Employees can refer candidates through the ATS itself. 
  3. The process is more efficient and transparent because employees can check the status of the referral in the applicant tracking system on their own. This cuts down all follow-up emails/chat.
  4. An ATS offers more screening options, like pre-assessment tests, to help you sift through the applicants pile more quickly and thoroughly.
  5. In Freshteam, you can even set up an automation to automatically screen all incoming referrals based on a certain criterion or condition.
  6. All candidate conversations are under one tab. This gives context on what’s happening with a candidate or where a conversation is, so you can follow up/respond. It smoothens the communication and improves the application experience for the candidate.
  7. Every referral drive is also an opportunity to grow your talent database. An ATS allows you to save the best candidates you meet for later roles if you don’t see an immediate opening for them. 
  8. The reports from your ATS can give you insights on how your referral program is faring–the pace at which the candidates are moving in your recruiting pipeline, bottlenecks, number of conversions at the hiring stage, comparison against other sourcing channels, etc.

Downsides of Employee referrals and how to fight them

Don’t let your diversity take a hit

When you run referral drives, there is a possibility that your employees refer to people that are very similar to them. This can take a hit on your workforce diversity. 

Pinterest wanted to hire women and minority engineers. Their already employees were predominantly male and mostly white or Asian. They used their referral drive to fuel their diversity efforts. Pinterest encouraged and rewarded employees who referred candidates from under-represented backgrounds or communities.

Don’t hire based on recommendations, trust the process

Just because you trust an employee, don’t bypass stages in the hiring process when they refer to someone. Be patient and let your referrals go through the same stages as your other candidates. People’s quality of work and performance is tied to their environments, teams, and the factors that drive them too. Interview, spend time and find out for yourself if the candidate is going to thrive at your organization or not. 

Don’t lean solely on referrals

Employee referrals may be easy to attract and prove very cost-effective for your hiring team, but that doesn’t mean you can hire for all your open roles through referral programs. You need to be invested in other sourcing channels that are scalable and yield high conversions.

Don’t leave your candidates hanging

You may have referrals pouring in through the roof (or without the exaggeration, a lot resumes competing for one role). It might tempt to leave them hanging once you spot a great candidate. Do not yield to that temptation. Take the time to test each candidate properly, communicate to those who referred them, and give feedback. This will ensure a wonderful experience for both your employees and the people they refer to.

Key performance indicators of a good employee referral program

Monitor and measure the effectiveness of your employee referral program – that’s the only way to optimize. Here are pointers on what you should measure and why.

Employee participation

Employee participation is the backbone of your referral program. Everything else comes next. If your employees are not willing to take part, then your referral program is going nowhere near its full potential.

In case of low participation, like we already discussed, market your program better, have attractive rewards, focus on building a great culture into which they will want to bring their friends and family.

Cost per hire / ROI

Compute the cost per hire for all referred candidates and compare it with the cost per hire for other channels. Referrals are definitely one of the best means of hiring budget-wise.

“While measuring the effectiveness of your employee referral program, look beyond the number of resulting hires. Take into account the outcomes such as employee participation, brand reach, number of new candidates added to the talent pool.,”

Repeat referrals

How many of your employees re-refer people? If you see a drop in the number of repeat referrals, you should identify why and fix it. Usual suspects – slow hiring process, lack of status updates on previous referrals, bad candidate experiences previously etc.

Quality of referrals

Number hired from referred – Track the number of candidates you hire from the total number of referred candidates. If you don’t see a good number of conversions, equip your employees with more specific descriptions of the jobs you are trying to fill and the type of people you are looking for.

Track your brand reach: – if there is a way to measure how far your jobs are shared, do it. It does not just have to be your job postings, it can also be other content or videos that lead users back to your careers page or your job portal.

The retention rate of referred candidates

You can’t really conclude the success of your employee referral program by the number of people you hire, the cost you cut down, or the speed at which you are filling open positions. It’s important to consider their performance compared to hires from other sources, and also the time for which they stay in the organization.

That’s all from us. Happy Recruiting!