For decades, employee referral programs have been known to outperform other hiring sources. The benefits include candidates who know more about your culture and have a higher likelihood to succeed (new hire success), shorter hiring times and decreased recruiting costs.

What I've been most surprised at when talking to other executives and recruiting leaders is that these same companies also invest less in their referral program than other hiring sources that produce mediocre results.

There's a lot of hype about the various ways you can increase employee referral activity within your company, and I'm often asked for my opinion on the highest impact areas to focus on. Here are three ways to get the most out of your employee referral program:

  1. Create a documented employee referral process, procedures and set expectations. If you expect your employees to be engaged with your referral program and to refer professional connections from their network, there should be no surprises. Employees should know what to expect with regards to candidate communication, follow-up and next steps. Having one of your employees receive a call from their referral stating they haven't received any communication from the company a week later is not acceptable and is the quickest way to deteriorate credibility for the program.
  2. Consider rewarding referrals that come from people other than employees. Let's say an employee (Bob) refers someone from his network (Sally) to a software developer position. Sally takes a look at the position and determines while it looks like a great opportunity she isn't in the market for a new position and decides she is happy with her current employer. BUT, Sally knows Bill, whom she met at a networking event and she remembers Bill is relocating to the area. Why wouldn't you consider compensating Sally for referring Bill? Or, split the referral reward between both she and Bob?
  3. Leverage software to do the referral matching for your employees. Having a social employee referral program matters. Why? Inside the average company, employees are busy doing their day jobs while new jobs are being opened and closed throughout the week. Having software to automatically match your open jobs with the professional networks of your employees can dramatically increase the success of your referral program. The responsibility of knowing every job that opens and closes falls to human resources and you shouldn't set that as an expectation of your employees, especially in the midst of 50, 100, 500 + open jobs.

Other advice you'll read or hear when it comes to referral programs will typically be around increasing your referral bonus or having drawings and prizes. While these too can support the program strategy the three areas I've outlined will have the biggest impact on the success of your employee referral program.

Referral programs will continue to be a top resource for hiring. The success of your program really depends on how easy it is to refer and track progress, and the communication parameters you set for everyone involved.

Published on: Feb 17, 2015
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.