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Essential Guide to Employee Referral Programs in 2021

Do you remember all those times you were referred to watching a new series on Netflix or amazon by a friend, or you yourself recommended a few to your peer group? Well, that is almost how an employee referral program works. Just subtract the Netflix and amazon parts and add in a potential job opportunity! Confused? Read on to find out more!

What are referral programs?

Essentially what good referral marketing programs do is that they help a company hire candidates via their existing employees! The current employees of the company volunteer to be a part of such a program and have candidates from their peer group referred to an open position in the company they work.

If the program has been implemented and structured well, it will help any company grow manifold by employing the references provided by existing employees. Such referral programs are a win-win-win situation for all the three parties involved; the company, the current employee and the potential hire. Companies are able to hire some of the best candidates with the help of their existing employees, making the new hire feel welcomed and the existing employee valued!


A company needn’t even use a third party employment route like advertising on job portals or even the newspaper. This word of mouth way of recruiting new candidates has, over time, proven to have a lot of benefits without a doubt for everyone involved. 

The benefits:

Though the sole aim of any referral incentive program might be to simply hire new candidates, the program itself has a lot of perks and benefits to offer.

  • Improved quality of hire:

An internal method that helps find the right candidate to fill a job position, a good referral marketing strategy is found to usher in better candidates than the one obtained from traditional hiring sources like advertising and job portals. This is essentially due to the fact that the employees who have brought in the potential hires to be reviewed have by default, already done the initial screening of the candidates.

Since your employees are aware of the qualities and talents you are looking for in a new hire and they also happen to be aware about the work culture of the company, they will automatically veer towards the right people for the job! So, at the end of the day, a company knows that a candidate being brought in to be interviewed has the basic qualities that they need in a future employee.

  • Higher retention rate

Employees that are hired via the process of job referrals have been known to stay with a company longer than those that have joined with the help of job portals and the likes. The employees who are a part of the company’s affiliate program are well aware of the work culture and environment of the company. As a result of this, when they approach people in their peer group regarding applying for the open positions(s) in their company, they are able to provide the potential candidates with a view of what the company is like from the inside.

If the said candidate(s), then decide to enrol as a part of the hiring process, you know that they are happy with your employees’ description of the company’s work environment and are looking to be a part of it as well. If then hired, a company can rest assured that such candidates will stay longer working for them and being a part of their growth!

  • Helps save time and money! 

The hiring process in any company takes a lot of time, energy and effort on the part of everyone, especially the employer and the HR team. If a candidate is brought on by an employee as a part of a referral marketing program, then you already know that they are someone who is trusted by the employee. In such a situation, the initial screenings and the background checks can be surpassed. Contacting them as well is less of a hassle as they will always be in constant contact with your employee. All this together decreases the time and effort it takes to onboard a person to the company, quite generously!

Since you are getting help from your existing employees to bring on new recruits, a company can easily ditch other traditional and costlier methods like paying for advertising or using job boards! This, in turn, saves a company a ton of money, which can then be put to better use in providing the employee bringing in candidates incentives as part of the referral incentive program!

  • Helps make employees feel appreciated!

Trusting an employee with the growth of the company will make any employee feel wonderfully valued and appreciated without a doubt! Offering incentives in the form of cash or kind to employees for bringing in new blood to the company helps them see the employer in an even better light and their trust in the employer increases as well! As a result of this, the productivity of such employees goes up because they too want to give back to the company for trusting them with such a crucial process!    

Make employee referral programs more effective

In order to ensure that the referral marketing programs in a company are effective, there are certain things an employer needs to keep in mind.

  • Keep updating your employees about any new job openings

  • Appreciate and acknowledge referrals from your employees

  • Offer incentives be it monetary or non-monetary or balance both

A good referral incentive program can truly enhance the productivity of the employees and as a result that of the company as a whole! This is why; structured referral marketing programs are the need of the hour to make the companies grow at a better rate, whilst maintaining their core ideals! 

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