Enhance Recruiting Plans and Retention with an Employee Referral Program

by Mark Castillo

Hiring,  Retention

The war for talent has never been greater. Fueled by the pandemic and the Great Resignation, workers are more empowered than ever when choosing an employer. With job seekers being more discerning about opportunities, one of the best ways to discover and retain top talent is to use an employee referral program. Although an employee referral program should not be the only recruiting strategy, it can be a critical source and provide a myriad of benefits to an organization.

3 Advantages of an Employee Referral Program

1. Find higher quality applicants

Research has shown that candidates found through an employee referral program tend to be higher quality applicants.  Employees generally refer people they think possess the necessary skills, abilities, and behavioral traits to be successful on the job. 

Employee-referred new hires are often better performers than employees found through other channels.  Employees will refer people similar to themselves who have the capabilities to excel within the organization and are more likely to be a cultural fit.

2. Improve employee retention

Employees identified through an employee referral program stay with their organizations longer. They assimilate into the organization faster, are more engaged in their work, and are more likely to be satisfied with their work environment.  

3. Employee referral programs are cost-effective

Employee referral programs are also more cost-effective than other recruiting strategies. An employee referral program eliminates or reduces many recruiting costs, including posting expenses, hiring external recruiters, and the hidden costs of lost productivity from unfilled positions. Having current employees serve as “recruitment ambassadors” has a multiplier effect: Employees can identify candidates for the organization at a fraction of the cost of other recruitment practices.

Tips for creating an effective employee referral program

The best employee referral programs are simple and easy to communicate. Keep the process easy to navigate to encourage participation. Here are some of the components of an effective employee referral program1:

  • Ensure support by top management and hiring managers prior to introducing the program. This helps maintain enthusiasm, cooperation, and participation throughout the workforce.
  • Clearly communicate the program to employees at all levels within the organization. Outline employee eligibility requirements, whether hiring managers are eligible for rewards, if relatives can be referred, rewards/prizes, length of program, targeted positions, and employee/applicant procedures.
  • Decide whether the referred applicant must remain employed with the organization a certain period before the reward is given to the employee. Publicize the length of the waiting period to all employees.
  • Establish the minimum requirements and job duties for each position covered by the referral program. Make job description information available to employees for review.
  • Inform all employees of job openings covered under the referral program through updates on the intranet, email, podcasts, streaming video, bulletin boards, newsletters, and organizational and department meetings. In addition, include information about the referral program as part of the onboarding process.

Whether you are creating an employee referral program from the beginning or just need some ideas to enhance your current program, Employers Council can help! Employers Council members have access to whitepapers and other resources on employee referral programs in addition to consulting from experienced HR professionals (for our Consulting and Enterprise levels). We also offer pay-as-you-go outsourced recruiting services, including employee referral program development. 

Contact us today and let us know what kind of recruiting help your organization needs. 


  1. “Employee Referral Programs,” Employers Council. November 2020. Members-only whitepaper. Contact Employers Council about membership for access.
About the author
Mark Castillo