Employee referral program: 5 reasons your business needs to build one

8 of January, 2025

In today’s business world, finding qualified talent isn’t as easy as most employers would like. With the substantial amount it often costs to place effective job adverts getting new employees can be quite stressful.

There is also the amount of work it takes to actually choose the best candidate for the job. Sure HR recruitment solutions make this process much easier, but even then it still involves sorting through a whole lot of applicants. An employee referral program can help solve this little problem.

What is an employee referral program?

An employee referral program is any recruitment strategy that leverages the network of a company’s current employees to find qualified talents to fill vacancies in the company. The use of rewards and incentives encourage current company employees to recommend candidates for available job positions. Employees who succeed in finding suitable candidates are often given rewards and the candidate is hired if found suitable by the recruitment team.

5 reasons to build an employee referral program

Employee referral programs are highly beneficial to businesses for a number of reasons:

1. Little to no advertisement costs

Compared to the other alternatives, employee referral programs cost very little to run. Since the employees you already have working for your company do all the publicity for you, you have little need to spend more money on adverts. 

2. Flexible reward programs

With an employee referral program, you get free reign over how much you spend. This is because you determine what reward is given to employees whose referrals lead to a hire. These rewards don’t even have to be cash prices. Cash bonuses, paid vacations, and even extra days off are other such incentives are other great options to choose from.

3. Faster recruitment

Due to the direct nature of employee referral programs, these requirement processes typically lead to faster hires than regular recruitment. Unlike typical recruitment processes where you hope the right people see your adverts and send in their applications, here, your employees simply get the word out to candidates they know might be a good fit for the job. A process that might not take anywhere from a few days to a few hours. 

4. Builds stronger work bonds

Employees who get along work better together, leading to a more productive and efficient company. Seeing as current employees are more likely to refer to individuals they get along with, hiring individuals from employee referral programs would only further strengthen the bond between your employees. Plus, new recruits fit into companies better if they find a familiar face in the company.

Are employee-referred hires better than regular hires?

Typically, the performance of a recruit on any job is usually dependent on the competence of the recruit. That being said, employee-referred hires have been found to perform better than their non-referred counterparts given the same level of competence and qualification. They have also been found to stay with the organization longer. 

There are a number of reasons why this is the case. First is the accountability factor associated with employee referred hires. Since these recruits got the job thanks to the recommendations of friends and family members, they tend to put in their best. There is also the loyalty to such job positions that keeps such employees with the company.

Employee referral programs are a great way to find recruits for your company. They are a cost-efficient and fast method, and this makes them perfect for emergency hires. With the help of a recruiter, you can create these referral programs with very little cost and get the right candidate for your job in just a few days. You can manage all these processes and more with Sesame HR.

Cristina Martin

People and Talent Director | LinkedIn | | Web | +post

Professional with over 20 years of extensive experience in various areas of Human Resources (Recruitment, Training, Occupational Risk Prevention, and Personnel Management). Experience in the Management Department: Broad understanding of the company and HR.

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