3 Ways to Get Better Employee Referrals

Of all the ways to get candidates, the ones you get from referrals are higher quality, cost less to find, and perform better over time than any other type of hire. So I've spent a lot of time thinking about how to consistently generate more referrals. But here's the thing:

Most referral bonus programs are dismal failures.

Over the years I've seen many such programs, with awards up to $20,000 for a successful hire. What I found through hard experience is that the number of referrals generated through a typical referral bonus program is vanishingly small. Worse still - the amount of the referral bonus doesn't matter. You raise the amount higher and higher, but still nothing happens.

So until recently, when people asked me how to set up a good referral incentive program, I didn't have a great answer. However in the past few months I’ve spoken with a few companies who run super-successful referral incentive programs (with 50% or more of their hires coming from referrals), and a clear pattern emerged:

  1. They break up the big referral bonus into a lot of smaller bonuses.
  2. They reward the behavior they want, not just the end result.

Here are three ways you can do this right now:

  1. Give out immediate small rewards, like a $5 Starbucks gift card for every referral, no matter what. Reward the behavior you want.
  2. Establish a leader board: 10 points for tweeting a job opening, 20 points for each referral, 500 points for a hire, etc. Let employees “cash in” their points for big or small rewards.
  3. Have a few super-rare, highly visible rewards, like a one-of-a kind t-shirt only given for a successful hire. Employ the same principle as salespeople ringing a bell whenever they close a deal—make hiring part of the culture.

By giving out small, frequent moments of satisfaction, you keep people engaged, you make hiring more prominent, and you increase referrals.

This can be a complete game-changer for your referrals program.

Thanks & happy recruiting!

PS: In a week or two, I want to start a discussion about candidate rating systems, but for now - what other topics do you want to read about here? Leave a reply below with your suggestions.

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Daniel Chait

Daniel Chait is CEO & co-founder of Greenhouse and has been a technology entrepreneur in New York City for nearly 20 years. Dan is a frequent speaker on the topics of recruiting and entrepreneurship and has presented at numerous venues including General Assembly, the University of Michigan Center for Entrepreneurship, Launch Scale, DEMO Traction, and the Wharton Entrepreneurship Conference. He graduated from the University of Michigan with a degree in Computer Engineering (#GoBlue!). Connect with Dan on Twitter.

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Referral Programs