Employee Wellness Ideas: What is It, and Its Benefits

Ideally, most U.S. companies should already have an employee referral policy already in place. This is because as of recent times, 1 out of 6 – or 16% - of employees currently hired in the U.S. are through referrals alone.

This is because if done correctly, a good referral program can help companies not just have a faster overall recruitment process but also find more talented employees moving forward.

Read on to learn more about employee referral policies, how they can potentially help companies move forward, and most importantly, how to make an effective one from scratch.

What is an employee referral policy?

Employee referral policies are hiring policies where employees take an active role in their company’s hiring process by providing their company with qualified candidates who may be a great fit. It can help provide the company with a more diverse talent pool, all while alleviating the need to spend thousands of dollars in the hiring process.

It's also a cost-effective recruitment strategy as well, since most companies don't have to spend an average of $2,500 for hiring external candidates through job openings. Instead, the employee has the optional responsibility to find new hires for the company. The reduced recruitment costs, paired with successful referrals, can help companies make more money in the long run.

Most companies can alleviate the initial complexity of employee referral policies by consulting with professionals that can help them create a reliable employee referral policy.

What are the benefits of an employee referral policy?

Three words – faster hiring process. Studies have shown that referred employees take less than 29 days to be hired, whereas employees hired through the usual processes will take an average of 55 days.

Employee referral program policies can also increase employee engagement over time. This is because referral policies can make employees feel like they have a “say” in their company’s success. Submitting referral forms is a relatively small thing compared to other recruitment efforts, but it can provide great value to a company if the subsequently hired employee succeeded.

The program's effectiveness can also provide companies with top talent that otherwise won’t apply to them in the first place, making it a better recruiting strategy overall. It also works for the referred employee as well, since they will know at least one person within the company, therefore alleviating any awkwardness moving forward, which can help with employee retention as well.

What should be included in an employee referral policy?

Ideally, the perfect referral program should have two things:

1. An easy process

2. An enticing rewards system

Both these factors have a huge part to play in a company’s referral system’s consistent success versus other recruiting methods. An easier process means that every employee can take part in the process, and an enticing rewards system ensures that every employee is incentivized to try and refer new employees to the company.

A point should also be made for former employees looking to refer potential candidates to either a role that the company is lacking, or their former role. This not only fosters a positive company culture but also helps their HR department have an easier time looking for their replacement.

What are some examples of an employee referral policy?

Although most companies would prefer to provide cash bonuses for a successful referral, organizations can mix it up from time to time to provide a better way to reward employees further. Listed below are some examples of referral bonus payments that companies can undertake once the referrals are successfully hired:

• Gift cards

  A relatively underrated form of referral reward, gift cards can be underwhelming if there is no thought process behind it. Although useful–and 85% of consumers prefer it over cash–it can be a waste of money if there’s no thought behind it.

  To make full use of gift cards as a referral reward, it’s highly recommended for companies to use custom surveys. If chosen correctly, the right survey tool can even provide help with market pay data, which effectively makes it a two-in-one tool.

• Personalized gift

  Mostly aimed at small to medium-sized companies, providing employees that have successfully referred another employee with a small, personalized token of appreciation can make employees feel seen and welcomed.

• Vacation time

  Although only 15% of companies use vacation time as a replacement for cash compensation, its effectiveness still speaks volumes as recent studies have shown that at least 30% of employees would rather have vacation time compared to a bigger paycheck.

• Tiered reward system

  Companies can also utilize a tiered reward system for their referral program to further incentivize their employees. This system incentivizes employees to refer more while acquiring better rewards each time a successful referral has been made.

• Charitable rewards program

  Referral compensation donated to a cause dear and near to an employee’s heart is also a viable option. This helps provide employees with a sense of accomplishment along with helping a cause that they can get behind them as well.

How to create an employee referral policy

Creating an easy-to-follow and effective referral program does not have to be as complicated as it seems, Thus, listed below are steps that companies can take to make their own effective employee referral program.

1. Step 1: Know your objective

   At its backbone, referral systems exist not just to have a quicker and more effective hiring process, but also to help companies have a more diverse hiring practice. Thus, companies should ideally already have a clear objective in mind.

   Ask questions like: Can family members be referred? Can the same candidate be referred by two employees at the same time, and what would happen to the rewards if the above situation happened? Can part-time employees have a say in the matter?

   Questions like these, plus a clear objective in referral programs allows for a significantly faster referral process, which allows companies to grow faster while still retaining top talent as well. Add a consultant’s professional opinion to the mix and companies can even have a more diverse workforce moving forward as well.

   
2. Step 2: Identify the program’s structure

   As mentioned above, the ideal referral system should have an easy process to ensure that every employee can potentially help the company grow more.

   To ease the overall process, companies can use online forms as a medium. Forms by Google, Microsoft, and even Airtable can work as an easy way to collect referrals from employees. However, companies should also take their clients’ preferences into account – especially if they’re looking to diversify further.

   Companies can also invest in a designated referral portal that's specifically designed to ease a hiring manager's burden, along with having a dedicated applicant tracking system within it which usually tracks a candidate's resume as well as tracking open positions.

3. Step 3: Make enticing rewards for employees

   Having a good reward system in place can also motivate employees to make referrals. Any of the compensation methods above can help, but if companies are looking for something that everyone can get behind then cash compensation can work wonders.

4. Step 4: Formalize the policy

   After everything has been decided, the next step is to make it a company policy. This can be done by creating a company-wide mandate that lets every employee refer candidates who they think are a great fit for the company.

5. Step 5: Communicate the policy to all employees

   Lastly, remember to communicate the policy to every employee. This can be done via an informal setting through a memo via a company’s communications channel, or through email if companies are looking for a more formal way to do so. Encouraging current employees can make the program successful and acquire top talents and ensure the referral program's success.

   These steps, though simple, can help companies start their employee referral policy on the right foot moving forward. Add a professional consultant’s opinion to the mix, and your company is well on its way to hiring quality candidates and fostering a better, healthier working environment.