Cost effective hiring: employee referral schemes

One of the biggest challenges you’ll face as a Founder or People leader of a high growth startup or scaling businesses is cost-effective hiring. Traditional recruiting methods (agency, in-house team) can be expensive and time-consuming, leading to a drain on resources that could be better used elsewhere. They can also leave you footing a bill for unused resource when hiring volumes dip.

A great way to hire in a cost-effective way is through an employee referral program – it’s a cost-effective way to source and hire top talent by leveraging your existing team’s connections and networks and essentially savings the cost associated with sourcing / headhunting.

Here are some ways you can build, roll out and maintain an effective employee referral scheme:

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Create a worthy incentive 🧲

What’s in it for your employees? Ensure there’s an incentive on the table for employees who refer successful candidates. Your team might not realise how much talent exists in their personal and professional networks; a decent incentive should at least encourage them to have a look. The incentive itself could be cash, paid time off or even stock options, for example. That’s something you need to decide based on what’s appropriate for your business – make sure it’s is attractive enough to encourage referrals, but not so significant that it becomes a financial headache.

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Show the benefits, not just the bounty 💫

Make sure your employees understand the benefits of the referral program beyond just the fee / reward they could earn. Fatter pockets – yes – but make sure you also highlight how referrals bring more opportunities to work with talented individuals and mean your team are playing a direct role in growing the business.

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Keep it simple 🚀

Make your referral process as easy and straightforward for your employees to follow as possible. No one wants to feel like they’re taking an exam on the way to make a referral. Keep it digital and keep it succinct: provide clear instructions on the process and explicitly state what information to provide, what constitutes a ‘proper’ referral, where to send it and what to expect. Consider something like a separate (referrals only) company email address, Slack channel or area on the company portal / Notion page.

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What does good look like? 🤩

Set clear expectations for the types of candidates you’re looking for and any technical skills or qualifications required. This will remove any ambiguity over whether submitting a referral is worthwhile for your employee and helps them understand the calibre of talent you’re looking for. Ultimately this will contribute to the increased likelihood of successful referrals for you and the referrer.

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Tell the team about it 📣

Utilise any company-wide communication channels to promote the program before it exists, when it launches and whenever you are about to embark on a hiring spree. Lean on emails, Slack channels and all-hands meetings to remind the team of how it works and what’s in it for them. Externally, you can even use your social media channels to showcase the results of successful referrals and reverse engineer the process by encouraging candidates with connections at your company to get them to make a referral.

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Share the success stories

Tracking the performance of your referral program is the easiest way to assess the ROI and cost-effectiveness of referred hires vs. 📖other sources. However, it’s also a great opportunity to motivate and engage your team. Build excitement and engagement around your program by sharing the success stories with your team; it will help them see the impact of their referrals on the company and create healthy competition between successful referrers.

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Summary

Leveraging employee referral programs is one of the quickest and most efficient ways for founders and people leaders can tap into their existing team’s networks to source top talent in an extremely cost-effective way. It’s a win-win situation for everyone involved – employees get the opportunity to work with talented individuals who they know and trust whilst the company gets access to top talent via streamlined, cost-effective process.

Do you have an employee referral program running in your business? Part of our Ways of Working at Canda includes showing you how to hire great talent cost effectively so you can keep doing it well after we’re gone. That includes building processes you can follow without us, including an effective employee referral program.

Get in touch today for an informal chat about how we can help you achieve that for your business!