Employee referral schemes – who does it best?

The talent shortage is a widely recognised theme in the tech industry. Earlier this year, it was reported that the UK loses £63 billion a year due to unfilled jobs in the tech sector alone. We can all relate to the struggle of finding candidates for hard-to-fill vacancies, so it’s no surprise that organisations are turning to existing employees to help with finding top talent. According to LinkedIn, the top way to find a new job is through a referral, and companies can expand their talent pool by 10 times by recruiting through their employees’ networks. Referral schemes come in all shapes and sizes and have been proven to reduce recruitment costs, improve retention rates and result in faster onboarding. But what makes a good referral scheme? We’ve found five companies who’ve all produced completely different, yet successful schemes.

Google- As one of the biggest and most successful companies in the world, it’s no surprise that Google have got one of the best referral schemes out there. Google used to offer a large cash bonus for referrals, which worked well until they doubled the bonus and found that the quality of referrals decreased. With only 6% of employees referring candidates for money, Google’s new incentive of offering trips to destinations such as Hawaii works much better for motivating employees to refer quality candidates.

Let’s face it, not everyone has the same budget as Google. But what we can take from the success of their scheme is that cash isn’t necessarily always the best answer. Experimenting with different incentives such as a day out or team treats are great alternatives that won’t break the bank.

DigitalOcean- Last year, DigitalOcean launched their new referral incentive structure which consisted of a cash bonus for the employee as well as a charitable donation paid on the employee’s behalf. Within a year of launching this new incentive, 40% of DigitalOcean’s new hires have been employed through referrals.

Salesforce- Salesforce have taken a different route with their referral programme. Instead of offering extravagant incentives, the company host regular ‘recruitment happy hours’ where employees are asked to invite their referrals to the office for drinks and games. This scheme creates a great opportunity to build relationships between the candidates and existing team, as well as giving the candidate an insight into the business.

Hewlett Packard- Rather than offering a monetary incentive for referrals, Hewlett Packard have found that their method of celebrating employees has a much greater impact. HP have worked to create a culture that respects employees that refer candidates qualified for the role, and motivate staff to take part by publicly recognising them as great contributors to their company. By using a variety of platforms to thank their employees, HP make sure that their staff feel valued, even if their candidate doesn’t get hired in the end.

Hewlett Packard are a great example of a company that prove you don’t need to spend lots of money to make your employees feel appreciated; a simple ‘thank you’ can go a really long way.

Distillery- Distillery, a full service software development company have developed a referral scheme that focuses on ‘a personal touch’. In order to motivate their staff to recommend other strong candidates, Distillery have found that giving personal gifts that the employees ask for such as phones and smart watches works well for motivating their employees to take part in the scheme.

Distillery’s referral scheme shows their understanding that every employee is motivated by different things, so it’s important to appeal to everyone. Your incentives don’t have to be as extravagant as what Distillery offer, but adding a personal touch to your incentives could make a big impact on success.

What do you need to do to create the best referral scheme for your company?

Educate- Before you do anything, make sure your employees are clear on just how beneficial referrals can be to your company. As one of the top sources for new hires, referrals can benefit your company in a whole host of ways ranging from retention to building a team of like-minded people.

Make it easy- You need to remember that no matter how great your referral incentive is, if the process is too difficult, your employees won’t want to refer anyone. Decide on your process, keep it simple and make sure everyone is clear on what they need to do.

A mixture of incentives- As we’ve discovered, simply offering a cash incentive may not be the best option for your company. Talk to your employees and find out what would motivate them to refer quality candidates. Whether it’s a charitable donation, a trip away or a one off gift, finding out your employees biggest motivator will mean you get the most out of your scheme.

Reward engagement- Instead of only incentivising successful hires, reward everyone who participates in the scheme, even if their candidate isn’t hired. Something small such as a coffee voucher is a great way to thank employees and keep them engaged with your scheme.

So there you have it, some examples of great referral schemes. Don’t be fooled though, referral schemes aren’t the be all and end all; there’s a negative side to them. In our next blog, we’ll be talking about the downfalls of referral programmes and how to avoid them.