5 Common Employee Referral Program Mistakes—And How to Solve Them

The power of successful employee referral programs can’t be overlooked. Referred employees are the #1 source of new hire quality, showing higher retention rates, engagement, and performance. They also get hired faster and ramp up more quickly than non-referred employees.

Despite these numerous benefits, there is still a big disconnect between potential and execution when it comes to employee referral programs. In fact, referrals account for not even 7% of all applicants, showing an enormous missed opportunity. So, where does it all go wrong? Unfortunately, there are several problems that often occur, jeopardizing employee participation and causing you to miss out on this valuable source of talent.

If your company is looking to jumpstart its employee referral program and get the maximum benefit from this channel, consider if you’re guilty of any of these 5 common mistakes...and then work to correct them!


To learn all the ins & outs of creating a successful employee referral program, be sure to download our free eBook, How to Build a Strong Employee Referral Program.


Mistake #1: You haven’t gotten enough buy-in.

For an employee referral program to be effective, you need buy-in from leadership and employees alike. Without support from the top, it will be difficult to secure the resources and investment needed to support the program and drive the level of engagement required for success. At the same time, a successful program is more than just waving a bonus at employees; it requires the tools and resources that can keep them engaged, involved, and eager to participate.

Solution: It all comes down to the bottom line—showing how referrals can save money in terms of recruiting costs, quality of hire, and retention is key to garnering support from the top and getting the resources necessary to foster a successful program. By leveraging your own talent analytics on referred employees, such as the hire rate of referred candidates, retention of those employees, and performance metrics, you’ll be able to show leadership and employees concrete proof of the program benefits.

Mistake #2: You reward results, but not engagement.

The strength of your program relies on driving participation from your team. And one of the biggest impediments is the time it takes to recognize them. Typically, they’ll only receive acknowledgement by way of financial incentives—and that usually only comes after the referred employee is hired and stays on board for a certain period of time. Delaying rewards or bonus payments for three or six months down the line will do little to spur continuous referrals. Even raising the referral bonus won’t always lead to higher engagement; as with everything, employees want instant (and public) gratification.

Solution: Provide instant acknowledgement for every referral, by way of a public shout-out or even a small incentive. For example, Greenhouse customer Axial offers employees a coveted vintage company t-shirt to recognize referrals. As a result, referrals make up 29% of the company’s employees! Providing this sense of recognition to employees shows that you value the employees for participating in the recruiting process, even if their referred candidates aren’t selected. Not only will this demonstrate the importance of the employee referral program, but it will also encourage continuous participation, making referrals a vital part of the company culture.

Mistake #3: Employees find it difficult to submit referrals, and then you leave them in the dark.

Everyone should play a role in recruiting, but technology can often be a gating item hampering your success. Common challenges include a lack of a consistent method for submitting referrals—should they go directly through the hiring manager, or should they submit through the company’s applicant tracking system? At the same time, what happens after an employee makes a referral? Unfortunately, most companies neglect to keep employees informed about the status of their referrals, and without a way to track progress, it will be hard to keep employees engaged and eager and willing to submit their peers in the future.

Solution: Embrace technology solutions that streamline the process and deliver a more consistent approach. Greenhouse allows employees to track referrals they have submitted or that have applied through a customer link. In addition, Greenhouse our partners like EmployeeReferrals.com make it easy to submit a referral in three clicks via an intuitive interface that can be accessed from any device. And RolePoint, which offers automated matching to help candidates match their connections to the most relevant positions, while also researching employees’ social networks to find additional candidates and sending out email updates about the program.

Mistake #4: Not enough employees know about the program.

Inspiring employees to submit referrals is key to creating a steady pipeline of qualified talent. But unless you send continuous reminders, your employees may not even know the employee referral program exists, or they will quickly lose interest.

Solution: Sending ongoing reminders, not just about the program itself, but also highlighting critical roles that need to be filled, will help to create the buzz you need for a successful referral strategy. Making it into a competition will also help to put the employee referral program front and center. (Gamification is all the rage, right?!). For example, Simppler offers a referral leaderboard, where employees can see how they measure against their peers in making referrals, and the winners receive a prize. Making it into a game will garner more interest and encourage employees to dig deeper into their networks to find the best candidates and come out ahead.

Mistake #5: You provide equal rewards for each job.

Some roles are harder to source and recruit, and some gaps will need to be filled faster than others. Yet, a typical employee referral program places equal weight and offers equal rewards for each job opening.

Solution: Prioritizing which jobs are most important is essential to leveraging the power of employee referrals to fill those business-critical positions. According to HR thought leader Dr. John Sullivan, an employee referral program that focuses resources on attracting top talent, game changers, and innovators produces the highest ROI and greatest business impact. Work with hiring managers and company leaders to identify which positions need to be filled first, communicate that need appropriately, and provide appropriate incentives to spur the team to find qualified candidates.

Tying it all together

Employee referrals are one of the most reliable and cost-effective methods for finding talent. But for best results, the program must be well communicated: from the types of positions that need to be filled to the incentives and rewards for putting a referral forward. Just as crucial is making sure it is easy for employees to participate—if they have to jump through hoops just to recommend someone in their network, they won’t be motivated to participate. Overall, the success of the employee referral program is dependent upon continuously driving employees to participate. So, if you’re making any of the above mistakes, now’s the time to solve them.

Learn more about how you can optimize your employee referral strategy by exploring our eBook, How to Build a Strong Employee Referral Program.

Employee Referral Program Ebook

Sesame Mish Headshot

Sesame Mish is Content Marketing Manager at Greenhouse. She is also pursuing an M.S. in Integrated Marketing Communications at Northwestern University. Besides a love for marketing and the written word, she enjoys playing volleyball, doing volunteer work, and rooting for the San Francisco Giants. Connect with Sesame on Twitter and LinkedIn.

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Referral Programs