How to motivate employees to take part in an employee referral program?
Motivating your employees is the biggest pain point many HR professionals face when dealing with employee referral programs.
They work hard to setup up a structured employee referral program.
They are excited to see how their brand new employee referral program can improve the time, cost and quality of hire.
However, all their hopes and dreams fall flat.
This is because their employees don’t share their excitement and aren’t motivated enough to take help put their company’s in finding qualified candidates.
Check out our Ultimate guide for finding qualified candidates!
According to LinkedIn's research, an overwhelming majority of HR professionals (87%) agree that the number-one way to boost referrals is through better employee engagement.
So how to effectively motivate employees to take part in an employee referral program?
Lure them in with some great employee referral bonus incentives!
According to research, most companies offer cash employee referral bonus:
- Almost 70% of companies reward employees for referring a qualified candidate with a cash employee referral bonus between $1,000 and $5,000.
- Only 15% of companies reward employees for referring a qualified candidate with a few days off.
However, just because most companies use cash prizes, it doesn’t mean that employee referral bonus in a form of a cash prize is necessarily the best way to motivate your employees to take part in an employee referral program.
As a matter of fact, a recent LinkedIn's research reports that the main reason why employees refer candidates is to help their friends and their company:
- 35% of employees refer to help their friends.
- 32% do it to help their company.
- 26% do it to be seen as a valuable colleague.
- Only 6% of employees refer candidates to earn money.
What is the best employee referral bonus idea for your company?
So what is the best way to motivate your own employees to take part in your employee referral program?
The only way to find out what type of incentives would work best for your own employees is to ask them!
Conduct a survey and ask your employees what would motivate them to take part in your employee referral program.
Conducting a research may take some of your time and effort, but it is well worth it.
Best practice advice for conducting an employee referral bonus idea research:
- Keep it simple
Include a list of employee referral bonuses, incentives or rewards.
Ask your employees to choose a few employee referral bonus ideas that excite them the most.
- Be specific
Name specific employee referral bonus, incentive and reward. Don’t be vague.
- Stay real(istic)
Don’t mention awards and bonuses you can’t deliver.
Offer a few examples of different employee referral bonuses types.
Different types of employee referral bonuses
There are 3 main types of employee referral bonuses:
1. Financial employee referral bonus
What is it?
A financial bonus is a type of employee referral bonus in a form of a cash prize.
Who is it for?
This type of employee referral bonus is perfect for employees whose motivation to take part in employee referral programs is to earn money.
A certain amount of money is paid off to an employee who referred a candidate that was hired.
2. Social employee referral bonus
What is it?
A social bonus is a type of employee referral bonus in a form of social recognition and praise.
Who is it for?
This type of employee referral bonus is perfect for employees whose motivation to take part in employee referral programs is to be seen as a valuable colleague.
A CEO publicly gives praise to the best-referring employee in the all-hands company meeting.
3. Altruistic employee referral bonus
What is it?
An altruistic bonus is a type of employee referral bonus in a form of socially responsible gifts.
Who is it for?
This type of employee referral bonus is perfect for employees whose motivation to take part in employee referral programs is to help out their friends and/or company.
Give a donation on your employees’ behalf to their favorite charity/cause.
4 great examples of employee referral ideas
There is a proven shortcut that can help you design your perfect employee referral bonuses: benchmarking.
Learn from the most successful companies and let them inspire your own employee referral bonus ideas!
So what do most successful companies do? What makes them stand out? What kind of employee referral bonuses do they offer?
Here are 4 great examples of innovative employee referral bonus ideas:
1. Employee referral bonus: Trips
➡️ Google’s story:
The best possible employee referral bonus you can provide for your employees is a trip!
It may not be the first thing that comes to your mind, or even your employees’ mind when you ask them what they would like.
However, according to Google, it is what makes employees happy. And I mean really happy. Happier than they would have been receiving a million dollar!
Yes, you read that right.
If you’re not convinced, Bengaluru-based mobile advertising network InMobi tried the same thing.
The result? They raised their employee referral rate by 100%!
➡️ Key takeaway:
Test out Google’s best practice with your own employees!
Even if you can’t afford to offer employee referral bonuses such as:
- Trips to Hawaii
- Cage diving with sharks in South Africa
- Parties in Thailand
- Wine tours in Europe,
find a similar, more affordable options.
There sure is a great weekend getaway destination in your country, or even in your region.
2. Employee referral bonus: Charitable donation
➡️ DigitalOcean’s story:
Another great idea is to structure your employee referral bonuses to serve a good cause.
This is exactly what the DigitalOcean did.
For each referral candidate who is hired, the referring employee received a $3,500 Referral Bonus in addition to a $1,500 charitable donation paid by DigitalOcean on the employee’s behalf.
If the employee chooses to contribute an additional portion of the payout to charity, DigitalOcean matched that added donation.
The result? In 2017, 40% of DigitalOcean’s new hires have been referrals.
➡️ Key takeaway:
Help your employees support a charitable organization in a community that has personal meaning to them.
Besides helping your employees feel great because they’re doing a good thing, it will also enhance your Employer Brand.
It will be a powerful statement about what you care about as a company and an important reason that will make many other talented people choose your company and then refer their friends and colleagues to you as well.
3. Employee referral bonus: Public recognition
➡️ Hewlett Packard Enterprise’s story:
Hewlett Packard Enterprise motivates their employees to embrace the employee referral program by publicly recognizing them as great contributors to their company.
This company builds a culture that honors, respects and recognizes employees who refer qualified candidates.
By recognizing their referring employes as “champions” and celebrating their success, this company makes them into positive examples and role models for other employees.
➡️ Key takeaway:
Recognise and thank your employees for referring great candidates!
Even if their candidate doesn’t end up hired in the end, you should still think of a way to thank them for their time and effort.
Here are few employee referral bonus ideas to get you started:
- Recognize participating employees during company all-hands meetings
- Organize company awards ceremonies
- Thank them in your company’s newsletter
- Have their CEO personally thank them
- Write them a handwritten thank you note
- Make them an office DJ for the day.
Choose the gesture that fits your company culture best.
Even better, come up with your own ritual and employee referral bonus that will make your employees feel appreciated and special.
4. Employee referral bonus: Give them what they love the most
➡️ Distillery’s story:
Distillery is a full-service software development company.
As such, their greatest concern is attracting highly-qualified software developers.
This is why they developed a special employee referral program aimed at getting their current software developers to recommend great candidates.
What they found is that the type of employee referral bonuses is really important.
This is why they decided to reward their referring employees by giving them employee referral bonus in form of the things they love and are most passionate about.
They discovered that software developers like new gadgets and that what’s been working really great for their employees as a referral bonus.
According to Andrey Kudievskiy, Distillery’s CEO:
New gadgets, such as a new iPhone or Apple Watch that has just hit the stores here in the U.S. and is not yet available in Russia work best.
Those hard-to-get bonuses produced a much better result than significantly bigger monetary compensation.
➡️ Key takeaway:
There is no universal best type of employee referral bonuses that works for every company and every employee.
You need to find out what type of employee referral bonus works for your own employees best.
Personalization does make a difference when it comes to employee referral bonus!
Traditional cash employee referral bonuses
If you decide to go with traditional, cash employee referral bonuses, here is what you need to know:
- Generally, the value of cash employee referral bonus ranges from $250 for entry-level positions to more than $25,000 for top executives. (Source: Worldatwork)
- 69% of companies offer cash employee referral bonuses that fall between $1,000 - $5,000. (Source: Meritage Talent Solutions)
Of course, these numbers can vary greatly across different industries and specific positions.
So how to calculate the exact value of employee referral cash bonuses that would be optimal to motivate your own employees?
Let’s hear it form an expert!
Dr. John Sullivan, the head of the Human Management Program at San Francisco State University and an expert in employee referral programs, says that the amount of the employee referral cash bonus must be enough to get your employees’ attention, but not so much as to distract them from their real job.
starting with 2 - 4% of the jobs’ pay and then adjusting as the number of referrals fall short / exceed your needs.
Finally, check out guide to Calculating Bonuses for Employees, which includes detailed instructions on how to calculate different kinds of bonuses.
Looking for more awesome employee referral bonus ideas?
If you’re looking for more awesome employee referral bonus ideas, check out the list of the top 50 employee referral reward ideas.