Do rewards make a difference in employee referral?
“If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it you almost don’t have to manage them.”(Jack Welch)
Hiring through employees’ network is gaining ground every day more, with an average success rate of 29%, according to a survey conducted by Drafted in 2017. However, if you want to make the best of employee referrals, you will aim at a hiring rate of at least 40%, which will require you to capitalize on every resource you have from technology to communication and referral rewards scheme.
Giving some extra-cash after successful hiring is the most widely implemented employee referral reward across companies. Yet, money is not the main motivator for people to recommend someone for an open job. Helping someone get to work for a good company or helping the company benefit from high-quality hires are the main reasons LinkedIn employees invoked when asked why they referred people for an open job.
Google and Moz have learned the lesson the hard way. When Google doubled the $ 2,000 employee referral bonus, shockingly for everyone, no real progress was made. In exchange, the employee referral skyrocketed when they decreased application processing time to 48 hours and changed the approach.
For Moz, offering a $ 12,000 bonus upon successful hiring backfired at some point, affecting the organizational culture and the recruitment quality. As Moz CEO, Rand Fishkin, said, the generous bonus “attracted a lot of people interested in the dollars and bonus, but who were not particularly interested in the mission, vision, and culture at Moz.”
Research has shown that offering any reward with a value of maximum $ 4,500 may increase success rate by 8%. Any bonus above this value has no significant impact on the results of an employee referral program.
So, if people’s focus is not on rewards, why should companies even bother considering them as part of an employee referral strategy? The answer is simple: just like an over-fancy reward, the lack of any may have adverse effects on the organizational culture and people’s engagement.
That’s why companies looking for a way to increase their talent pipeline through employee referral may encounter challenges in setting a right balance between rewards’ value and timing. Add to this the need to be innovative and creative to come up with referral bounties that employees enjoy.
Let’s have a look at how some of the best-in-class companies found their way out of dull employee referral rewards.
They offered experiences instead of money
Nowadays, the Millennials dominate the workplace, and they are different not only as workers but also as consumers: 3 in 4 millennials prefer purchasing experiences rather than goods. Engaging them in a company’s employee referral program requires adjustments to their particular needs, including innovative bounties.
Besides the new generations’ preference for experiences, there is another advantage for including them in the rewarding scheme of an employee referral program. Sharing with a co-worker an experience you got access to, as a reward, is a lot easier than sharing info about that fat check you’ve got because your friend Bill is finally on-board. Therefore, rewarding through experiences can be a more efficient way to facilitate informal communication about employee referral across the company.
In 2014, Salesforce awarded the simple fact of making a referral with baseball game tickets and Raizlab, a mobile development company, rewards employees who make referrals with a 4-days trip in Europe, Maine, Las Vegas or Florida (upon referrer’s choice).
More than the reward itself, it’s about enjoying the ride.
Adding a fun, friendly-competition touch to the process of getting the referral bonus is an enough rewarding experience itself. Enterprise Rent-a-Car has built its entire employee referral strategy around the idea of competition held among different regions. A public leaderboard displays the points gained by each region based on the referrals made and the cash bonus at stake is won by the region with the highest number of points.
Cisco is also fond of contests offering to the employees who made referrals the chance to win trips or other prizes as part of Cisco Lotto Program.
They offered tiered rewards
Most of the companies reward the final result of an employee referral, but to encourage this practice, recognition, and rewards could be offered even for the simple fact of contributing.
Activision, a video games developer, seems to have understood people’s need for recognition on every action they take to support their company’s development. That’s why they put together a tiered employee referral program that acknowledges and rewards contribution every step of the way: if the referred person gets invited to the interview, the employee receives a Head Hunter mug; if the candidate receives an offer, the employee gets a sweater as gift, and if the candidate is hired, a cash bonus finds its way to the referrer’s pocket.
They cared about what is meaningful for their employees
Taking into account that the main motivator for referring is to help, some companies came up with rewards that enabled employees to get involved in a cause they cared about. Accenture, for instance, allowed employees to donate part of the bonus they would gain for making a successful referral and, additionally, the company promised to contribute with a similar amount to the same cause.
In 2013, Informatica facilitated for the winners of the employee referral reward to donate the money won to the victims of Philippines typhoon.
Experiential rewards should not exclude money, and vice-versa. It is all about finding the perfect mix that suits your employees’ profile and your organization’s culture. The possibilities are endless and here are a few more tips collected by Talentspotting on how to become creative when rewarding your best referrers:
Make office a better place for your top contributors:
- Offer them branded stationery or t-shirts highlighting their contribution to your employee referral programs
- Upgrade their work phone or car
- Offer them a bike to get to work, pay their car parking lot for a few months or give away taxi vouchers.
Help them have off-work quality time
- Offer them vouchers for going out to dinners or for food home delivery. This way you’re helping them tie bonds with their dear ones.
- Offer them holidays packages, spa sessions or concert tickets.
- Find out what their hobbies are and help them take it to the next level with classes.
Care for their dear ones
- support part of expenditures with a babysitter, children’s birthday parties or children’s education
- Buy Christmas gifts for your employee’s entire family
If you want to get even more inspiration on how to make the best of employee referral rewards, download our whitepaper “100+ bounty ideas to reward your top recommenders”. Talenspotting can also help you with employee referral software that will boost your social recruitment and save you time spent with screening applications, by automatically matching candidates and open jobs. Contact us to request a demo version.
