Use Money As An Incentive

Rewards are essential for maintaining program momentum and vitality. A common mistake is establishing benefits that simply aren’t attractive enough to generate referrals. Although rewards don’t always have to be monetary, money does seem to provide the biggest incentive. However, a combination of money and a token of appreciation — such as lunch with the owner as a thank you for a referral that leads to a hire, or a personal note or a mention in the company bulletin — can prove especially powerful, says Washington.

When it comes to how much to bestow, employers should offer $150 at least, if not more, says Washington.

“When you consider the long-term value of a worker, it’s a very small price to pay,” she says.  

St. John favors an even higher amount — depending on the position involved, it could be in the hundreds of dollars, she says. For example, she advises a referral reward as high as $500 for a cleaning technician who stays for a year (although she acknowledges she often gets “push-back” from companies on this). But the key is paying the reward out in increments rather than all at once when the person is hired, she says, especially since 22 percent of turnover happens within the first 45 days after hire.

St. John recommends making payments upon hire, after 60 or 90 days, at six months and then at one year. Another upside to this type of schedule is the referring employee is motivated to ensure the referral stays, she says.

For companies reluctant to set relatively high rewards right off the bat, St. John advises starting lower, for example $100 dollars. Then, if that amount doesn’t seem to be generating referrals, try doubling it.

Regardless of the amount or type of reward involved, immediacy is important. The referring employee should receive at least part — if not all — of the reward right away. 

“They should get the benefit as soon as the person is hired,” says Washington. “Making good hiring decisions is the responsibility of the HR manager or owner; it’s not the responsibility of the referring employee. If the company isn’t excited enough about the applicant to pay a benefit, then that person isn’t a solid candidate to begin with.”

It’s also important to celebrate the new hire and the referring employee. For example, introduce the new employee at a company meeting, welcome him or her aboard and thank the employee who made the referral. Then, if both are still there after a year, celebrate them again, says St. John.

Good employees typically attract good employees. BSCs need to remind their current staff about the referral program and encourage them to recommend applicants. After that, it’s up to management to ensure the program is worthwhile.

“If done correctly, an employee referral program could be your primary resource for new team members,” says Hopkins. “This saves you money on recruitment and incentivizes your employees.” 

Pamela Mills-Senn is a freelancer based in Long Beach, California.