Good people know good people, right? It’s simple logic that has laid the foundation for such concepts as networking, blind dates, and...referral programs. But contrary to the success rate of being set up by colleagues or friends, referral programs have a strong history of churning out positive results!
According to Dr. John Sullivan of the Wall Street Journal, 88% of 73 major employers surveyed said that referrals are the #1 source for above-average applicants.
In crafting our own employee referral program here at Greenhouse, we considered what other companies were doing and even made sure to avoid common mistakes. As a result, we rolled out a formal referral program last December, and I’m pleased to report that we’ve experienced great success ever since.
In this post, I’m excited to share Greenhouse’s referral philosophy, our process, and our successes, so that you can implement your own effective employee referral program, too.
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
What is our employee referral program philosophy?
We were starting to notice that although we had huge spikes in referrals in our early days as a company, mid to late last year there was a declining trend in numbers of referrals per month (140 in August down to 49 in November). Forty-nine was a strong number (especially given we were still under 150 employees at the company at the time), but we didn’t want that number to continue to descend while our company size grew. It was time for a full-fledged referral rewards program!
Now, we know that many companies choose to go the route of a monetized employee referral program. Carrots are dangled in front of employees to the amount of hundreds or even thousands of dollars. But these rewards are often too far out of reach. In these cases, the reward is granted only if the referred candidate is hired and then it’s not even paid out until that employee reaches their 3-, 6- or even 12-month with the company. We didn’t want to follow this path, as we were worried this method would be demotivating for employees to participate. We also relied on the teachings of social science researcher and bestselling author Daniel Pink, who demonstrates that monetary incentives don’t typically change behavior.
What is our process?
So in order to motivate action in a fun, gamified way we landed on this:
For every referral an employee makes, we give them a ticket (think arcade, not parking). The employee keeps half of the ticket, and the other half gets entered into a raffle that we draw from quarterly. Drawings are conducted at our monthly all-hands meeting. The other tickets can be saved, accumulated, and cashed in for Greenhouse branded swag—which employees can only earn by participating in the referral program.
You may be asking, “Why the two tickets?”. Well, we wanted to achieve a couple of goals:
- Ensure employees feel rewarded and appreciated
- Have these rewards be visible and contagiously sought after by peers.
We’re in the mindset that referrals should be acknowledged—if not celebrated—for all to see (versus being behind closed doors where you’re cutting a check). The raffles have become visible quarterly reminders that have kept the program at the front of employees' minds (which are otherwise focused on their day-to-day jobs). Ultimately, our recruiting team wants to foster a recruiting culture that emphasizes that there is value in every referral made.
As a cherry on top, the employee who makes the most referrals that result in hires in 2016 will win a trip for two (covering airfare and Airbnb accommodations) to a destination of their choosing.
To track referrals, we use our own software. The referral submission tools have helped us make huge strides in building our recruiting culture and its reporting tools have been the source of all our referral stats.
Have we been successful?
At our December 2015 all-hands meeting, our new referral reward program kicked off! We raffled off an Apple TV, Airbnb gift card, and a swanky local restaurant gift card.
The excitement around these new incentives was contagious and we saw an immediate upswing in referrals! From December through September we’ve remained steady at an average of 50 referrals per month. We’ve also exchanged employees’ swag tickets for countless Greenhouse branded keychains, hats, bags, water bottles, and t-shirts which are proudly worn and displayed around the office.
Depending on the size of your company and your specific referral goals, your benchmark may vary from ours. We’ve averaged approximately 5 referrals per hire in 2016, up from about 4 in 2015, which has been a strong influencer to our hiring pipelines. Regardless of how you decide to measure your success, we think it’s important to set a quantitative goal to see the impact of your referral program.
Paying it forward
Whether you’re looking to instate your own employee referral program or have some version of this replace your current monetary rewards program, remember the wise words of Laszlo Bock, author of Work Rules, “Referring someone to come work at your company is intrinsically motivated by an employee's sense of community.” While it may be fun to receive a big chunk of money for a hired referral, it is actually pride and fulfillment in your workplace that will encourage the best referrals—and as recruiters, we want to be sure to give out periodic gentle reminders and continuous big “thank yous.”
Want to see similar results by creating (or revamping!) your own employee referral program that works for you? Be sure to check out our eBook, How to Build a Strong Employee Referral Program. Simply click the button below!