As small businesses compete amid ongoing talent challenges, often with fewer resources than large companies, they may need to get creative in their attraction and hiring efforts.

Employee referral programs allow existing employees to recommend candidates for open positions. The idea behind employee referral programs is that candidates brought in this way will be better suited for the organization because the existing employees have already done the prescreening work. Employees tend to carefully consider possible referrals because they feel accountable to the organization and the person they refer. High performers tend to refer other high performers, which benefits employers.

These programs are a popular recruiting strategy due to their low cost but potential for high impact. Employees are generally successful with referrals because they put their names on the line by endorsing someone else. They also help reach potential new hires that limited recruitment budgets might not be able to access otherwise.

Employee Referral Strategies for Small Businesses

An effective employee referral program can save small businesses time, money and other resources during hiring. Employers can consider the following strategies for establishing and maintaining such programs:

  • Make submitting referrals easy. Clear communication is necessary so that employees know how to submit referrals. This process should be simple, allowing employees to send a resume, provide an email and phone number, or submit a standard form to start the referral process.
  • Incentivize employee referrals. To enhance the appeal of referring friends and family to the company, employers may provide monetary rewards, bonuses or other gifts to current employees who refer quality candidates for open jobs.
  • Keep employees informed. It’s important to keep employees in the loop about the status of their referrals to avoid frustration and increase transparency. For example, let them know when the referral has been received, if interviews are scheduled and where the candidate is in the overall hiring process.
  • Acknowledge good referrers. Public recognition can go a long way with employees, so small businesses should consider awards or public praise to let employees know they appreciate their effort in sending referrals and being brand ambassadors. As such, public acknowledgment is a cost-effective way to increase referrals.
  • Think beyond employees. Referral programs don’t need to rely solely on employee referrals. Companies can decide to open the referral opportunity to additional stakeholders, such as retirees and customers. For example, loyal customers may feel like a part of the company and be eager to refer their friends for open roles.

Amid ongoing talent shortages, employee referral programs can be a cost-effective strategy for attracting and retaining talent, hiring faster and boosting employee morale.

    Feel free to reach out to us to seek assistance with any workplace guidance. We look forward to supporting your needs and contributing to the success of your organization.