Guide: how to run your employee referral program

This guide has everything you'll need to get your employee referral program up and running. We'll cover everything from tracking and policy considerations to marketing and promotion. We’ve even included all the templates and sample documents that you’ll need to get started fast.

First off, let’s review the three major components of your referral program and get a high level view of your implementation timeline:

employee referral program

Planning and launching your program may seem intimidating at first but don’t worry, we’ll help you through every contingency.

Here’s a project workflow template that you can use to plan the launch of your program. You’ll want to customize it to match your own timeline. Click here, and select “File” and “make a copy”.

referral tracking spreadsheet

Crafting your program policy

Your program policy dictates the terms and conditions of your referral program. Clear policies set the right expectation for your employees from the get-go.

Strive for simplicity, as complicated rules discourage participation. We suggest you start with our comprehensive sample policy and remove the items you don’t need. Here’s a rundown of the clauses you should consider:

  • Who is eligible?
    • Managers? If so, are they eligible for positions they don’t directly oversee? We recommend excluding all managers so you don’t have to verify, “Who manages whom” every time you make a referral hire.
    • Retail employees? Retail employees usually don’t have company email addresses, so tracking their referrals is more difficult. It’s also harder to solicit referrals from them, as you can’t send them an email. You might consider launching to corporate first and adding retail employees later on.
    • Foreign countries? You might consider excluding foreign based employees at first. That way you don’t have to worry about currencies, languages, and legal requirements.
    • Interns and Temps? Most companies exclude them in pretty much every way. They don’t offer rewards for temp positions, temp workers cannot be referred to permanent positions, and temp workers can’t earn rewards by referring people.
  • Reward Amounts
    • Many companies offer a flat reward amount for all positions. This is done to keep things simple. The majority of our clients offer $250 - $1,000. If you do offer multiple reward tiers, keep the rules simple and predictable. For example, sales jobs are all $250 and engineering jobs are all $500.
  • Payment Schedule
    • Most companies set a waiting period between when the hire is made and when the reward is paid out (usually 90 days). This ensures that the new hire is a good fit and stays with your company. This does, however, make tracking your program more difficult. If you’re concerned about tracking hires over an extended period you ought to just issue reward payments right away.
    • In addition to the 90 days, you’ll want to explain that payment delivery may take an additional 60 days. This gives both you and payroll time to identify the referral hire and deliver the reward.
  • Payment Delivery
    • Most companies have payroll deliver the reward as a bonus included in the referring employee’s paycheck. If you don’t have a lot of employees, you might consider delivering the reward yourself. The one-on-one interaction is a great opportunity for reinforcing your program and improving employee relations.
  • Referring previous employees? You should probably exclude the referrals of former employees, as they already know about your open positions.
  • Referral ownership period? An employee may own a referral for 6 months after making a referral. After 6 months the referral becomes void and another employee can refer the same person.
  • Who was first? If two employees both refer the same person, give credit to the person who reported it first. You should reward the person who followed your referral procedure.
  • “After-the-fact” referrals. Employees must report their referrals BEFORE the candidate is hired, not after. You’d be surprised how often this happens. Most companies cave and issue half the reward anyway, but it’s good to have this written out in your policy so that you have the freedom to enforce it.
  • Good standing? Both the referring employee and the new hire must be employed after 90 days to be eligible. The bonus is invalidated if either party leaves the company.

Tracking referrals

Tracking is perhaps the most difficult part of your referral program. How you track referrals is going to depend in large part upon how you’re currently tracking applicants and hires. This is going to be somewhat tedious. If you are part of a large organization, you should consider purchasing our referral platform, which integrates with your ATS and tracks referrals automatically.

Adding fields to your ATS
  • Referred by (Make this field visible on the job application so candidates can tell you who referred them)
  • Referring Employee ID This acts as a unique identifier for the referring employee. The name that is provided by the candidate won’t always be enough to uniquely identify the referring employee. So when you know whom the referring employee is, you should add this data yourself to the record.
  • Create a online submission form where employees can log their referrals. We recommend using a Google Form. Share the URL with everyone in your company and let them log referrals there. Click here to view a sample one (you can duplicate and customize this yourself from within Google Drive).
Checking for hires

You should check for referral hires every month. Even though you added a ‘referred by’ field to your application form, there’s no guarantee that the candidate will use it. That means that checking for hires isn’t as simple as just looking at that field in your ATS after you’ve made a hire. The only sure way to identify all your referral hires is to compare your complete list of hires against your complete list of referrals, and check for duplicates.

  • Export the complete list of hires from your ATS into a spreadsheet.
  • Then export your complete list of referrals from the referral collection form.
  • Combine the data from both spreadsheets into a single list.
  • Then have Excel search for any duplicates. The duplicates represent your referral hires.
    • We recommend searching for duplicates using the candidate’s last name, as it’s the most reliable way to uniquely identify people. We can’t use first names because some people use nicknames (“Liz” for “Elizabeth” or “Bill” for “William”). And we can’t use email address because people often have multiple addresses (I might refer Jane using her work email “” and she might apply using her personal address “”).
Check every month

Set a time each month to check for hires. The 1st of every month is a great time. We recommend setting a calendar reminder for yourself, so you don’t forget.

Waiting 90 days to pay

If you’ve decided to adopt a waiting period then you’ll need to add a field to your referral spreadsheet called “payment due date”. When you confirm that a referral has been hired just update the payment due date so you don’t forget to pay the referral.

Please note that even though most companies enforce a waiting period, we don’t recommend doing it if you’re worried about the amount of time you’ll spend administering the program. The waiting period adds another layer of complexity to your program that may save you a little money, but add a lot of work.

When you check your spreadsheet for referral hires at the start of the month, also what reward payments are due for referrals that you identified 3 months (90 days) ago. Don’t worry about paying the reward exactly 90 days after the new hire’s start date. Just pay all the bonuses out on a monthly basis. Your referral policy should tell employees that in addition to the 90 day waiting period, reward payments may take up to 60 days for processing.

Paying out the reward

Most people send a note to their payroll department detailing which employees to pay and how much. But you should consider handing out the check yourself. It’s a great opportunity to say thank you.

Marketing your program

Everybody loves referrals, and you won’t have any trouble convincing employees, executives, and hiring managers to get on board.

Before you speak with your employees, there are few people you need to sell on the program first; namely, executives and hiring managers.

Executive Sponsorship

Building a referral culture is essential to the success of your program. The example your executives set will make or break the enthusiasm of everyone else on down the line. Your goal is to convince an executive to sponsor your program. See if they will announce the launch of your new program (or at least give you a quote to include).

Pitching the executive: If your organization is small enough, schedule a meeting with the CEO.

Things to cover in your meeting:

  • Quality people are absolutely essential to the growth of your company
  • Referrals are the highest quality source of hires. They’re your employee’s best former co-workers. Job boards, career fairs, and other sourcing techniques attract unhappy, and often times, unemployed candidates. But referrals are different. These are the people you need to help grow your business.
  • Share some of these referral statistics
  • Ask the executive to announce the launch of your new referral program.
Hiring Managers

Your hiring managers are the first people to feel the pain of an empty position, and have more direct influence over your employees than anyone else. If you can get them on board, they’ll do a better job promoting your referral program than you could ever hope to do.

Your meeting will be similar to the one you had with company executives.

  • Share some of these referral statistics(stats)
  • Explain to them how the referral process works
  • Ask them to call a meeting with their employees and ask for referrals
  • Give them some printed flyers to hang up

After getting your executive sponsor and hiring managers on board, it’s time to launch your program!

  • Pre-launch campaign: The best way to start your program is with a little pre-launch anticipation. Send out one or two pre-launch emails that announce the release date of the program. It’s a good time to announce all the terms and conditions and set the right expectation for how the program will work. For example, you might say, “Our new employee referral program launches next week! These are the rules...”
  • Launch: Like we stated earlier, it’s best to have an executive launch your program for you, either in person or via email. If they won’t send the launch email themselves, at least include a quote from them.

Ongoing monthly emails

  • Your email should explain why you want referrals, how much you’re willing to pay, and how to log referrals. You should include a link to both your online submission form and your program policy. If you can, mention specific jobs that you’re hiring for in that employee’s department. We’ve found that sending an email either once or twice a month is the right frequency.

Face to face

  • If possible, continue to speak to your employees face to face. Do group meetings and one-on-one conversations.
Special campaigns

Your program will need a little pick-me-up from time to time. Special campaigns are the perfect prescription for revitalizing your program. We find that doing a special referral campaign every 4 - 6 months is a phenomenal way to keep your employees engaged. Employees already earn the big cash reward when they source a hire, so your campaign should focus more on submitting referrals. For example, you might raffle off an iPad, giving one raffle ticket for each qualified referral. Or you might give a small gift card for each good candidate who applies. Use your imagination. The important thing is to use a different gimmick each time and to set a short duration. You’re aiming for unexpected excitement and urgency.

Final thoughts

How are you feeling? Are you ready to boost your referrals and lower your hiring costs? We’d love to hear how your referral program goes. Just leave a comment below if you’ve got questions. Good luck from everyone here at EmployeeReferrals!

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