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Referral Bonus Programs


Referral_Bonus_ProgramsEmployee referral bonus programs have always been a favored recruitment strategy for many organizations. Each referral bonus program is designed differently from company to company but essentially it is a program where a reward is offered to employees who bring in qualified people for the company. This reward is usually paid out when the referred candidate is hired or after the candidate has been with the company for a period of time. There are many benefits that come with a well-planned referral bonus program. Not only does the referral bonus program help save time and money on recruitment, it also ensures the qualifications of applicants.

Types of bonus programs
There are usually two types of referral bonus programs, informal and formal, depending on the rewards and the process of the program.

  • Informal Referral Programs- Employees work directly with the HR recruitment staff, providing them with referrals. Employees are also awarded directly by the HR management.
  • Formal Referral Programs- The HR department organizes an event advertising the open positions. All departments of the company are involved. Every employee could refer candidates for any department. Awards are usually given out when all positions are filled.

How are employees awarded after a successful referral?
The reward varies from company to company depending on each organization’s needs and culture. Some companies offer cash, some gifts, some award both. Most companies give out the award after the referred candidate has worked for the company for a certain period of time. Some companies award after the candidate is hired, others may choose to award during the interviewing stage.

How to promote referral programs?
In order for the referral bonus program to work, companies must make sure employees know about it. Set up boards that advertise the program at the entrance and exit; email employees about the program; have meetings to let employees know about the referral bonus program. Most importantly, make sure the rewards are appealing to the employees.

Benefits of using different bonus models
Each bonus model offers its own benefits. An informal referral program is ideal in small organizations where there are limited resources for recruitment. It is also easier to track and monitor referred candidates in smaller companies. Formal referral bonus programs are suitable in larger organizations where the recruitment needs are higher and more resources are available for it.

Employee referral bonus programs are a great way for your company to recruit the most qualified candidates. Employees have a very good idea of the culture and nature of the company, and therefore, the referred candidates tend to work very well within the organization. There are many benefits that come with this program making it a very valuable management tool.

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