Admittedly, there’s a myriad of ways to recruit great employees. But no recruitment option surpasses a well-executed, strategic employee-referral program.

If you pay a headhunter for management talent, it will cost your company thousands of dollars. If you’re hiring workers from temporary help firms, the firms’ “liquidation fees” will cost you several hundred dollars.

In paying referral fees, you’d be much better off paying your valued employees who are also brand advocates.

Employees whom are referred by your current talented workers make for great hires at comparatively little expense and will enhance your culture.

A good employee-referral program provides five advantages:

1. Referred candidates are, in a sense, pre-screened. To stay profitable, your company must have a stellar culture with all stars.

Many companies have learned that referrals are great sources for recruiting the best qualified employees to fit in their culture.

Your employees who refer their friends and relatives have already been vetted. They’re proven great complements to your staff.

If they’re confident in sticking their necks out to make recommendations for the right applicants, you can be confident, too.

That’s because your current employees pre-orient their referrals about your organization. Undoubtedly, they make certain their referred candidates have a pragmatic view – the pros and cons about working at your company.

2. Birds of a feather flock together. Your talented employees refer people similar to them. As an added bonus, the referred candidates will work hard to make sure they don’t embarrass the people who referred them.

3. Referred candidates give you a competitive edge in recruiting. Just as in sales, word-of-mouth advertising is a tremendous asset in recruiting.

If talented persons aren’t job-hunting, they hidden untapped talent. If your competitors don’t know about these persons, you’ve got a built-in competitive edge.

But they’ll consider you as an employer if they’re encouraged to do so by your employees whom they respect and like.

4. Referred employees enhance your retention efforts. They’re more likely to be loyal and stay with you. This is important because you save on recruiting and hiring expenses. They’ll help you to be more profitable.

5. They’ll be assets for their culture. Morale and teamwork are enhanced. A new employee who has been recruited via word-of-mouth by a friend, will get accustomed to your workplace environment more easily.

People like to work with people they like. They’re more likely to socialize with each other after work.

This increases your odds for a fun, relaxed workplace environment. Concurrently, your communication with employees who refer candidates improves even further as they become brand advocates.

Prerequisites for success

Establishing a successful referral program means you have to take certain precautions:

1. Your job descriptions must be well-thought our and specific. Not only is a poorly worded job description a waste for your company, it’ll be a negative in the minds of your brand advocates and referred candidates.

2. To consider referred candidates, your brand advocates must be talented high performers who work at your company. There are exceptions to the rule, but there’s little sense in hiring someone who has quit.

3. Establish a new-hire tenure qualification. Before rewarding your brand advocates for recommending candidates, the referred candidates must work for you for a period of at least six months.

4. Communicate all job openings and your referral program with your team. In this way, your brand advocates will be on the lookout for talented candidates.

Make certain your referral program completely transparent.

Another benefit to such communication, you might notice that one of your current workers is promotable to the position.

5. Give careful thought to what you pay in a referral fee. While it’s true higher referral fees will encourage your brand advocates to work at referring candidates. But be careful, especially concerning management candidates.

Don’t run the risk of encouraging employees to refer just any run-of-the-mill candidates merely to collect some extra money.

It’s highly unlikely that it’ll productive to pay referral fees to workers for recommending candidates to fill management roles. Again, birds of a feather flock together.

6. Make it convenient for brand advocates and their referred candidates. Simplify the referral process and make your branding easy to see for the candidates.

Your online application process should be simple, and anticipate and provide answers to questions to which candidates are likely to ask.

7. Be especially diligent about communicating with referred people. Certainly you don’t want to indiscriminately favor referred candidates.

But you whether you hire them or not, you should be very careful to be prompt, respectful and polite in dealing with them.

Keep your employee in the loop, as well, by informing them about their referrals getting consideration and interviews.

If you don’t hire the referred candidates, merely explain to your brand advocate the situation didn’t work out without divulging too much personal information.

In other words, be cognizant of the impressions you create on the candidate and your brand advocate.

Finally, an important caveat:

To be sure of success, you must guard against the dangers of cliques or nepotism. Unless you have a uniquely talented employee who makes referrals, don’t hire applicants from that same person to fill all your staffing needs.

From the Coach’s Corner, related HR strategies:

For Best Performance, Inspire Employees with Non-Financial Rewards — Money talks, of course, and is a way to motivate employees. But money is not always the chief motivator. Here’s why with some ideas.

Write Better Job Descriptions to Attract Best Talent – 16 Tips — To inspire the best candidates to apply for your opening, there are at least 16 strategies to incorporate in your job description.

HR Trends in Talent Management Using Technology — Despite all the talk about the use of technology in talent management, the majority of human resources departments are behind the curve. Why? A study shows 72 percent of HR departments reveal they’re not using such tools.

Hiring? 4 Pointers on Negotiating Wages with Job Applicants — Some employers have had difficulty in successfully extending job offers to applicants, especially Millennial professionals. It’s not uncommon to interview applicants who aren’t shy in negotiations with their inflated egos and salary expectations. Of course, that wasn’t the case in the Great Recession.

“Human resources are like natural resources; they’re often buried deep. You have to go looking for them; they’re not just lying around on the surface.”

-Ken Robinson


Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.