Unemployment may be high, but that doesn't change the fact that hiring talented folks for your business is always difficult.

Not only is competition fierce for the very best candidates, but you also need to worry about cultural fit and whether potential hires will jell with your team. Many entrepreneurs turn to referrals.

You already know how your current employees perform, and they're as well versed as anyone in what working at your company is really like. Why not leverage their contacts to find your next employee? The problem, according to Ziv Eliraz, founder and CEO of Israeli social recruiting start-up Zao.com, is that most companies go about getting referrals all wrong.

"Participation in traditional employee referral programs is extremely low, even if you offer incentives for successful hiring recommendations," Eliraz wrote in an email. So how do you run a referral program that actually works? Besides, of course, plugging his own company's product, Eliraz also offered three tips. He writes:

Change the question. Most employers ask, "Whom do you know who would be a good fit?" The majority of employees won’t personally know someone with the right qualifications, so their participation in the effort stops right there. Change the question to, "Whom do you and your friends know?" This broadens the pool of potential candidates and allows all employees to participate.

Widen the circle--offer referral rewards to trusted nonemployees too. Employees are an obvious source to recommend qualified candidates since they know your business and industry well. But don't forget other great sources, such as former employees, suppliers, vendors, and partner organizations. A referral program that leverages these sources as well as employees can deliver more qualified candidates.

Gamify your referral program. Most referral programs only reward the few employees whose recommendations result in a hire. That leaves out everyone else who tried to help--and their efforts are important too. Introduce some friendly competition into the process by making a game of it. Use a leaderboard where employees and departments can see where they stand in terms of referral volume, and reward those who are active in the program with small prizes like movie tickets.

Have you had good results from referral programs?